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Facts
The assessee's appeal was dismissed in limine by the Addl/JCIT(A) due to a 25-day delay in filing. The reasons cited for the delay were the election code of conduct and ill health of the staff. The assessee argued that on identical facts, a coordinate bench had condoned a 45-day delay.
Held
The Tribunal held that in cases where substantial justice and technical considerations are pitted against each other, substantial justice should be preferred. Condoning the delay would prevent unjust enrichment to the state and uphold the principle that government cannot retain tax not authorized by law. The Tribunal relied on the Supreme Court's judgment in Collector, Land Acquisition v. Mst. Katiji and Ors.
Key Issues
Whether the delay in filing the appeal can be condoned based on the reasons provided by the assessee, and if so, whether the issue of deduction u/s 80P(2)(d) of the Act requires reconsideration.
Sections Cited
250, 80P(2)(d), 57
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Income Tax Appellate Tribunal, “SMC - C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K
Per George George K, Vice President:
This appeal at the instance of the assessee is directed against the Order of Addl/JCIT(A) dated 18.03.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
At the outset, I notice that Addl/JCIT(A) has dismissed the appeal of the assessee in limine by not condoning the delay of 25 days in filing the appeal before him. Copy of the condonation application and affidavit filed before the First Appellate Authority (FAA) is placed on record. The main reason for the delay was due to the election code of conduct and ill health of the staff. The CIT(A) has not condoned the delay by stating that there is no reasonable cause for filing the appeal belatedly and dismissed the appeal of the assessee in limine.
Aggrieved by the Order of the Addl/JCIT(A), assessee has filed the present appeal before the Tribunal. The learned AR submitted that on identical facts, the Bangalore Bench of the Tribunal in the case of Karnataka Power Corporation Ltd., Employees Credit Co-op. Society Ltd., Vs. ITO in (Order dated 19.06.2024) had condoned the delay of 45 days and restored the matter to CIT(A) to consider the issue on merits.
4. The learned Standing Counsel was duly heard.
I have heard the rival submissions and perused the material on record. The FAA has not condoned the delay of 25 days and dismissed the appeal of the assessee in limine. The reasons stated in the condonation application / affidavit before the Addl/JCIT(A) is due to the ill health of the staff and election code of conduct. The Bangalore Bench of the Tribunal in the case of Karnataka Power Corporation Ltd., Employees Credit Co-op. Society Ltd., (supra), by placing reliance on the judgment of the Hon’ble Supreme Court in the case of Collector, Land Acquisition Vs. MST Katiji and Ors reported in 167 ITR 471 (SC), had condoned the delay of 45 days and restored the matter to the CIT(A) for considering the issue on merits. The relevant finding of the Bangalore Bench of the Tribunal reads as follows:
“3. We have heard the rival submissions and perused the materials available on record. We have carefully gone through the reasons advanced for delay in filing the appeal before NFAC belatedly by 45 days (1 day of date of receipt of assessment order or date of filing of the appeal before NFAC to be excluded). The assessee advanced reason that due to Election code of conduct in the month of December, 2019 to February, 2020, regular meeting of the Board of Directors were disturbed and as soon as Board meeting was held, the case was discussed so as to take decision to file appeal before the NFAC. Accordingly, there was a delay in filing the appeal before this Karnataka Power Corporation Limited Employees Credit Co- Op. Society Limited, Mandya Tribunal and this was unwanton and prayed that delay may be condoned. 3.1 We find that there is a sufficient reason in filing the appeal belatedly before NFAC and this sufficient cause should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is a prime factor while considering the reason for delay. In this case on hand, the issue for consideration on merit is regarding granting of deduction u/s 80P(2)(d) of the Act. This issue was squarely covered by the earlier decision of coordinate bench in the case of Kotekar Vyavasaya Seva Sahakara Sangha Niyamitha in to 454/Bang/2024 dated 1.5.2024, wherein the issuing of granting of deduction u/s 80P(2)(d) of the Act has been remitted to the file of ld. AO with following observations: "6. We have heard the rival submissions and perused the materials available on record. As regards the claim of deduction u/s 80P(2)(d) of the I.T. Act, we direct the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest / dividend income out of investments with co-operative society, as observed by Hon'ble Supreme Court in the case of Kerala State Co- operative Agricultural and Rural Development Bank Ltd. in Civil Appeal No.10069 of 2016, order dated 14.09.2023, the same is entitled to deduction u/s 80P(2)(d) of the I.T. Act. 6.1 Without prejudice to the above, we make it clear that if the interest earned by assessee from the banks is considered under the head "Income from other sources", relief to be granted to the assessee u/s 57 of the Act in accordance with law. Accordingly, the issue is restored to the file of ld. AO for de-novo consideration with the above observations." 3.2 Therefore, on merit, the issue is in favour of the assessee but there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee explained the reason for delay, which was very reasonable. As against the petition filed by the assessee for condonation of delay, the revenue has not filed any counter application to deny the contention made by the assessee. While considering the similar issue, the Hon'ble Supreme Court in Karnataka Power Corporation Limited Employees Credit Co-Op. Society Limited, Mandya the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471), wherein held that when substantial justice and technical consideration are pitted against each other, the cost of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. In the case in hand, the issue on merit regarding granting of deduction u/s 80P(2)(d) of the Act is already decided by the coordinate bench. Moreover, no counter petition filed by the revenue denying the submission made by the assessee. It is not the case of the revenue that the appeal was not filed deliberately, therefore, we have to prefer substantial justice, rather than technicality in deciding the issue as observed by the Supreme Court, if the application of assessee for condoning is rejected it would amount to legalised injustice on technical ground when Tribunal is capable of removing injustice and to do justice. Therefore, we are bound to remove the injustice by condoning the short delay of 45 days and technicalities. If the delay is not condoned, it would amount to legalizing an illegal order, which would result in unjust enrichment on the part of state by retaining the tax relatable thereto. Under the scheme of constitution, government cannot retain even a single pie of individual citizen as tax, when it is not authorized by an authority of law. Being so, considering the facts and circumstances of the case, we condone the delay of 45 days in filing the appeal belatedly before the NFAC and after condoning the delay in filing the appeal before NFAC, we are of the opinion that the issue in dispute with regard to granting of deduction u/s 80P(2)(d) of the Act is required to be looked into at the end of ld. AO as observed by this Tribunal in the case of Kotekar Vyavasaya Seva Sahakara Sangha Niyamitha in to 454/Bang/2024 dated 1.5.2024 cited (supra) as in para 6 & 6.1 as reproduced in earlier para pf this order at para 3.1 above. Accordingly, the issue in dispute with regard to granting of deduction Karnataka Power Corporation Limited Employees Credit Co- Op. Society Limited, Mandya u/s 80P(2)(d) of the Act is remitted to the file of ld. AO for fresh consideration.
In the result, appeal of the assessee is partly allowed for statistical purposes.”
In light of the above Order of the Bangalore Bench of the Tribunal in the case of Karnataka Power Corporation Ltd., Employees Credit Co-op. Society Ltd., (supra), which is identical to the facts of present case. I condone the delay of 25 days and restore the matter to the CIT(A) to consider the issues on merits. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.