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Facts
The assessee filed an appeal against an order sustaining a disallowance of Rs. 38,74,377/- made under section 143(1) for unpaid bonus. The assessee had paid the bonus before the due date of filing the return, but the CPC made the disallowance. Several rectification applications were filed with the CPC and the jurisdictional AO, but they were not decided.
Held
The Tribunal noted that the assessee made earnest efforts to get the mistake rectified and that the delay in filing the appeal before the CIT(A) was due to exploring alternative remedies. The Tribunal condoned the delay in filing the appeal before the CIT(A) and held that the matter needs verification of the claim.
Key Issues
Whether the disallowance made under section 143(1) for unpaid bonus is justified when the bonus was paid before the due date of filing the return, and whether the delay in filing the appeal before the CIT(A) can be condoned.
Sections Cited
143(1), 43B, 139(1), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 702/JP/2024
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 702/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2017-18 cuke Jaipur Rugs Company Private DCIT, Vs. Limited CPC, Bengaluru G-250, Mansarovar Industrial Area, Mansarovar, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCJ 6934 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. P. C. Parwal, CA jktLo dh vksj ls@ Revenue by : Sh. Anup Singh, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 06/11/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 13/12/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM
The present appeal is because the assessee dissatisfied with the order of the Commissioner of Income Tax (Appeals)-11 Mumbai dated 18/03/2024 [ for short CIT(A) ] for assessment year 2017-18. The said order of the ld. CIT(A) arise because the assessee filed an appeal against the order dated 18.01.2019 passed under section 143(1) of the Income Tax Act, by DCIT, CPC, Bengaluru making disallowance.
“1. Under the facts and circumstances of the case the Hon’ble Addl/JCIT(A) 11, Mumbai has grossly erred in law as well as facts in sustaining the disallowance of Rs.38,74,377/- made in intimation u/s 143(1) on account of unpaid bonus u/s 43B of the I T Act, which was allowable as per the provisions of Section 43B of Income Tax Act as the same was paid before the due date of filing of Return of income for the assessment year.
Under the facts and circumstances of the case the Hon’ble Addl/JCIT(A)- 11 Mumbai has grossly erred in law as well as facts in rejecting application for condonation of delay and dismissing the appeal stating that “Since condonation of delay is not granted, there is no need to adjudication on merits of the case”.
Under the facts and circumstances of the case the Learned Addl/JCIT(A) 11, Mumbai has grossly erred in law as well as facts in sustaining disallowance of Rs.38,74,377/- ignoring that- (i) As per ITR form 6 there is no option to put the amount of payment under section 43B on or before filing of ITR u/s 139(1) of the IT Act, 1961 (ii) Appellant was under the process of filing of application u/s 154 for rectification of mistake, three time online at CPC portal and 2 time off line with AO. Neither CPC grant the relief nor Jurisdictional AO has processed the 154 applications, therefore it constitutes the valid reason for filling an appeal. (iii) They grossly erred in ignoring the facts that there is a gap of 56 days between filling of tax audit report and filling of ITR Form No.6 (04.10.2017 to 29.11.2017) ignoring the applicable provision u/s 43B.
That the Appellant assessee craves for a leave to add, alter and amend any Grounds of appeal at the time of appellate hearing.”
3. Succinctly, the fact as culled out from the records is that the assessee-appellant filed return of income u/s 139(1) dated 29.11.2017 vide acknowledgement no. 319425571291117declaring total income of Rs.10,06,81,360/-. The AO(CPC) while processing the return u/s 143(1) on 18.01.2019 made adjustment of Rs.40,31,300/- u/s 43B on account of appellant-assessee filed rectification application u/s 154 on 11.02.2019, 22.05.2019 & 19.06.2019 stating that the unpaid bonus of Rs.40,31,300/- as reported in the tax audit report has been subsequently paid between 13.10.2017 to 30.10.2017, i.e. before due date of filing of return of income.
Therefore, the adjustment made u/s 43B is prima facie incorrect. Even though the assessee moved three different applications that mistake being apparent was not rectified by CPC. Thereafter assessee filed an application u/s 154 to the jurisdictional AO on 09.12.2022 but no rectification order was passed by him.
On feeling unsuccessful on the issue of getting rectification the assessee ultimately decided to challenge that intimation dated 18.01.2019 by filling an appeal before the ld. CIT(A) on 06.02.2023. From the issue of intimation to the ultimate of filling an appeal there was delay in challenging that intimation by 1459 days. Because the assessee was exploring the alternative remedy available in the law. As the appeal filed before the ld.
CIT(A) was not filed in time the same was dismissed wherein the ld. CIT(A) observed that the reasons cited by the assessee-appellant in respect of delay in filling of appeal have been persuaded however it could not be dismissed.
As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee, he has filed the written submissions in respect of the various grounds raised by the assessee and the same is reproduced herein below:
Submission:- 1. It is submitted that there is no dispute as to the fact that assessee has paid bonus of Rs.40,31,300/- between 13.10.2017 to 30.10.2017 for which the relevant evidences of payment was filed before the appellate authority as evident from Pg 5-6 of the appellate order. Thus when the payment of bonus has been made before due date of filing of return, no disallowance u/s 43B can be made. The assessee made earnest effort to get it rectified from CPC but CPC has not considered the same and therefore rectification application was filed on 09.12.2022 before the jurisdictional officer but since he also did not pass any rectification order, the assessee filed appeal on 16.02.2023. Thus there is a sufficient cause in delayed filing of appeal. It is a settled law that technicalities should not come in way in imparting the substantial justice. In this connection reliance is placed on the following decisions:- S. Nagaraj Vs. State of Karnataka 4 SCC 595 Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to any one. Rule of stare decisions is adhered to for consistency but it is not as inflexible as Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher Courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its preparation shall result in miscarriage of justice, then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order Difference lies in the nature of mistake and scope of rectification. Difference lies in the nature of mistaken and Jaipur Rugs Company Pvt Ltd. vs. DCIT scope of rectification, depending on if its is of fact or law. But the root from which the power flows is the anxiety to avoid injustices. It is either statutory or inherent. The latter is available where mistake is of the Court. In Administrative Law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order.
Collector, Land Acquisition Vs. Mst. Katiji & Others 167 ITR 471 (SC) The legislature has conferred the power to condone delay by enacting section 5 of the Indian Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on ‘merits’. The expression ‘sufficient cause’ employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subverses the ends of justice that being the life-purpose for the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that: (1) Ordinarily a litigant does not stand to benefit by lodging an appeal late. (2) Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) ‘Every day’s delay must be explained’ does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common sense pragmatic manner. (4) When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Making a justice-oriented approach from this perspective there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the ‘State’ which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even-handed manner. There is no warrant for according a step motherly treatment when the ‘State’ is the applicant praying for condonation of delay. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file pushing and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant non grata status. The Courts, therefore, have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression ‘sufficient cause’. So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits".
Ram Sumiran & Others Vs. D.D.C. AIR 1985 (SC) 606 Delay of 6 years condoned on the ground of ignorance to meet the end of justice.
Esha Bhattacharjee Vs. Managing Committee of Raghunathpur, Nafar Academy and others 2013 (5) CTC 547 The principals involved and the approach needed while considering the application for condonation of delay are broadly culled out as under:- i) There should be a liberal, pragmatic, justice-oriented, non- pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice. ii) The terms "sufficient cause" should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact situation. iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. iv) No presumption can be attached to deliberate causation of delay but, gross negligence on the part of the counsel or litigant is to be taken note of. v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact. vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice. vii) The concept of liberal approach has to encapsule the conception of reasonableness and it cannot be allowed a totally unfettered free play. viii) There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation. ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach.
Jaipur Rugs Company Pvt Ltd. vs. DCIT x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such litigation. xi) It is to be borne in mind that no one gets away with fraud, misrepresentation or interpolation by taking recourse to the technicalities of law of limitation. xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception. xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude." K.S. Bilawala Vs. PCIT (2024) 297 Taxman 464 (Bom.) (HC) Para 5 of this decision is reproduced as under:-
Therefore, the phrase ‘genuine hardship’ used in Section 119(2)(b) of the Act should be considered liberally. Respondent should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred to enable the authorities to do substantial justice to the parties by disposing the matters on merits. While considering these aspects, the authorities are expected to bear in mind that no applicant stand to benefit by lodging delayed returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. 2. In view of the above facts and judicial decisions, it is evident that in the present case assessee made earnest effort to get the mistake in making disallowance u/s 43B rectified from the AO(CPC)/ jurisdictional AO but since the jurisdictional AO did not pass any order the appeal is filed which is a good & sufficient cause for delayed filing of appeal. Hence in the interest of substantial justice, the matter be sent back to AO with the direction to delete the adjustment made u/s 143(1) after verification that bonus has been paid before due date of filing of return.”
The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee cannot be made remedy less on the one side the ld. FAO/CPC or that of the JAO did not decide the rectification application moved by the assessee and when the same was challenged before the ld. CIT(A) the same dismissed merely on should have considered the overall aspect of the case. The assessee being regular tax payer the genuine grievance of the assessee needs to be addressed. It is not in dispute by the revenue that the assessee has not paid the bonus as it was added. The facts of the paying the bonus are already on the record of the ld. JAO and in the interest of the substantial justice the matter be remanded back to the file of the JAO with direction to verify the claim of the assessee and delete the disallowance made by the CPC.
The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). The ld. DR also submitted that the assessee failed to justify the delay and making the rectification application cannot be made shelter the inaction on the part of the assessee.
We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee has raised as much as three grounds of appeal all related to the challenging the intimation dated 18.01.2019 wherein the disallowance of Rs. 40,31,300/- u/s 43B of the Act on account of unpaid bonus as per Form 3CD dt. 04.10.2017.
application u/s 154 on 11.02.2019, 22.05.2019 & 19.06.2019 stating that the unpaid bonus of Rs.40,31,300/- as reported in the tax audit report has been subsequently paid between 13.10.2017 to 30.10.2017, i.e. before due date of filing of return of income. Therefore, the adjustment made u/s 43B is prima facie incorrect. Even though the assessee moved three different applications that mistake being apparent was not rectified by CPC.
Thereafter assessee filed an application u/s 154 to the jurisdictional AO on 09.12.2022 but no rectification order was passed by him. On feeling unsuccessful on the issue of getting rectification the assessee ultimately decided to challenge that intimation dated 18.01.2019 by filing an appeal before the ld. CIT(A) on 06.02.2023. From the issue of intimation to the ultimate of filling an appeal there was delay in challenging that intimation by 1459 days. Because the assessee was exploring the alternative remedy available in the law. As the appeal filed before the ld. CIT(A) was not filed in time the same was dismissed wherein the ld. CIT(A) observed that the reasons cited by the assessee-appellant in respect of delay in filling of appeal have been persuaded however it could not be transpired an abnormal situation / sufficient ground and thereby the was dismissed.
Before us the ld. AR of the assessee submitted that issue being apparent placed on record. Since the assessee could not get results even though the assessee moved as many as 4 applications for rectification of unwarranted disallowance. Thus, one the assessee feel that they left with the remedy less by not attending the rectification the appeal was filed with a delay of 1459 days and the said delay was not condoned by the ld. CIT(A). The bench noted that when the assessee moved as many as four application on rectification of the unwarranted disallowance and the same being not attended the intimation being the apple of discord was challenged by filling an appeal and the reasons advanced are sufficient to condone the delay of 1459 day for filling the appeal before the ld. CIT(A) and therefore, we condone the delay. Having done so we are of the considered view that the issue also needs verification of the claim of the assessee and therefore, we restore the matter of disallowance to be sustained or deleted to the file of the ld. AO, who will verify the claim of the assessee-appellant and pass a speaking order within six months from the date the order is served by the assessee to JAO. At last, the bench direct the assessee-appellant to file all the documents before the ld. AO along with the copy of this order and upon that ld. AO will grant sufficient opportunity of being heard to the and pass the speaking order in accordance with the law. statistical purposes.
Order pronounced in the open court on 13/12/2024.
Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 13/12/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Jaipur Rugs Company Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- DCIT, CPC, Bengaluru 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 702/JP/2024) 6. vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत