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Facts
The assessee filed their income tax return for AY 2017-18 declaring Nil income. The case was selected for scrutiny, and the Assessing Officer (AO) made additions including unexplained cash credit, shortage of gross profit, and disallowance of interest on diversion of funds. The assessee appealed to the CIT(A) but the appeal was dismissed on the grounds of delay in filing.
Held
The Tribunal held that the delay in filing the appeal before the CIT(A) was not deliberate and that substantial justice should be preferred over technical considerations. The Tribunal condoned the delay and remitted the issue back to the CIT(A) for fresh adjudication on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) should be condoned. Whether the additions made by the AO are justified on merit.
Sections Cited
68, 115BBE, 234-A, 234-B, 250, 143(2), 142(1), 143(3)
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Income Tax Appellate Tribunal, BANGALORE “C” BENCH, BANGALORE
Smt. Ravishankar Shylaja The Income Tax Officer Main Road, Didderu Ward - 1, Davangere Honnalli Taluk vs. Davangere 577230 PAN – BCVPS3804G (Appellant) (Respondent) Assessee by: Ms. Sunaina Bhatia, Advocate Revenue by: Shri Ganesh R. Gale, Standing Counsel Date of hearing: 13.06.2024 Date of pronouncement: 06.08.2024 O R D E R Per: Keshav Dubey, J.M. This appeal at the instance of the assessee is directed against the order of ADDL/JCIT(A)-1, Pune / NFAC dated 15.02.2024 vide DIN & Order No. ITBA/APL/S/250/2023-24/1060971886(1) passed under Section 250 of the Income Tax Act, 1961 (the Act) for the Assessment Year (AY) 2017-18.
The assessee has raised the following grounds of appeal: - “1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT[A] is not justified in refusing to condone the delay in filing the appeal on the ground that the appellant has failed to explain the substantial delay nor any documentary evidence to show that the delay was justified under the facts and in the circumstances of the appellant's case. 2.1 The learned CIT[A] ought to have appreciated that the appellant accountant who looking after the business affairs of the appellant has misplaced the relevant papers and documents and the same were not handed over to the Smt. Ravishankar Shylaja Authorised Representative in time and also on account of Corona Virus threat prevailing in the state, many of the appellant's office staff are on leave and thus, the appellant was prevented by sufficient cause in filing the appeal within time under the facts and in the circumstances of the appellant's case.
The learned CIT[A] erred in not adjudicating the ground challenging the addition of Rs. 7,207/- being the shortage of gross profit for sale of HSD tank of 5,200 litres and Rs. 2,217/- for sale of MS of 1,400 litres under the facts and in the circumstances of the appellant's case.
4. The learned CIT[A] erred in not adjudicating the ground challenging the addition of Rs. 70,500/- as unexplained cash credit u/s 68 of the Act under the facts and in the circumstances of the appellant's case.
5. The learned CIT[A] erred in not adjudicating the ground raised
challenging the disallowance of Rs. 6,44,264/- out of the interest paid under the facts and in the circumstances of the appellant's case.
6. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies herself liable to be charged to interest u/s 234-A and 234-B of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled.
7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”
3. The brief facts of the case are that the assessee filed his return of income for AY 2017-18 on 20.12.2017 declaring Nil income. Thereafter the case was selected for complete scrutiny under CASS and accordingly notices were issued u/s. 143(2) as well as 142(1) of the Act from time to time calling for the details. In response to the above notices the assessee had furnished the details as called for by the Assessing Officer (AO) along with the books of accounts maintained by the assessee. The AO vide order u/s. 143(3) of the Act dated 23.12.2019 assessed on a total income of Rs.7,24,188/- as detailed below: - i. Unexplained cash credit u/s. 68 r.w.s. 115BBE of the Act amounting to Rs.70,500/-; ii. Gross profit on account of shortage claimed in the case of HSD tank (1) 5,200 litres and MS 1,400 liters amounting to Rs. 9,424/-; and iii. Out of the transaction Rs.80 lakhs the assessee has diverted funds to non-business purposes and therefore interest payment on CC A/c to the extent of Rs.6,44,264/- was disallowed and brought to tax.
Smt. Ravishankar Shylaja Aggrieved by the assessment completed u/s. 143(3) of the Act the assessee preferred an appeal before the CIT(A).
The ld. ADDL/JCIT(A)-1, Pune / NFAC dismissed the appeal on the sole ground that the assessee was not having sufficient cause for the delay in filing the appeal and accordingly the appeal filed by the assessee is held to be invalid and not maintainable being out of time. Aggrieved by the order of the ADDL/JCIT(A)-1, Pune / NFAC the assessee filed the present appeal before the Tribunal.
Before us the ld. A.R. of the Assessee vehemently submitted that the ld. ADDL/JCIT(A)-1, Pune / NFAC dismissed the appeal on the sole ground that the sufficient cause for delay in filing appeal is not established. The ld A.R. drew our attention on Sl. No. 14 of Form 35 where the assessee has clearly mentioned that there is a delay in filing the appeal and at Sl. No. 15 of the said Form in response to grounds for condonation of delay the assessee has filed separate sheet enclosing therein. Further the learned A.R. of the assessee drew our attention to the application for condonation of delay filed before the CIT(A), which are part of the appeal bunch filed before us.
The learned D.R., on the other hand, supported the order of the CIT(A) and submitted that the assessee was given ample opportunities to file the reasons by issuing various notices u/s. 250 of the Act. However, no response was filed with respect to the substantial delay of about 4 months in filing the appeal. Further the DR submitted that the cause given by the assessee is very general & unverifiable and therefore the ld. CIT(A) is correct in dismissing the appeal for want of sufficient cause for delay in filing the appeal.
We have heard the rival contentions and perused the material on record. It is undisputed fact that the assessee has filed the appeal before the ld. CIT(A) with a delay of 3 months 9 days. On perusal of the record we find that an Smt. Ravishankar Shylaja application for condonation of delay was filed before the ld. CIT(A) stating that the Accountant, who was looking after the business affairs of the assessee has misplaced the relevant papers and documents, as a result of which the relevant papers and documents could not be handed over to the learned A.R. in time. Further, on account of corona virus threat prevailing in the state many of his office staffs were on leave and hence the reason for the delay was beyond the control of the assessee and prayed for condoning the delay of 3 months and 9 days in the interest of justice & fair play. We find that in Para 4.2 of the order the ld. CIT(A) on the one hand observed that no reason was given by the Appellant and also the assessee has not filed any response/reasons with respect to the substantial delay of about 4 months in filing the appeal. Further the ld. CIT(A) is of the view that the assessee neither submitted its own affidavit along with the petition for condoning the delay nor has submitted any documentary evidence to show that the delay was justified. On the other hand, in Para 4.4 of the order the ld. CIT(A) observed that the reason given by the appellant appears to be a lame excuse and the cause as explained by the appellant does not appear to be reasonable and sufficient. Before us the learned A.R. of the assessee filed an affidavit sworn before Notary Public dated 11.06.2024 stating that there was delay of 132 days in filing the aforesaid appeal before the ld. CIT(A) due to the fact that the erstwhile Accountant, Shri Manjunath, P., who was looking after his account and assessment matters had misplaced the relevant papers and documents and for this reason the relevant papers and documents could not be handed over to the learned A.R. before the disruption caused by Covid-19 pandemic. Thereafter owing to Covid-19 pandemic there was a lockdown imposed by the Government of India/Government of Karnataka and having regard to the Central Board of Direct Tax Circular No. 8 dated 30.04.2021 providing various relaxations from 15.03.2020 including extending time for filing the appeals before the CIT(A) and the CBDT Circular No. 10/2021 dated
Smt. Ravishankar Shylaja 25.05.2021, the aforesaid limitation stands extended until further orders as ordered by the Hon'ble Supreme Court in Suo Moto Writ Petition (Civil) No. 3 of 2020 vide order dated 27.04.2021 and accordingly there was only effective short delay of 52 days in filing the appeal before the ld. CIT(A).
In the case of Collector, Land Acquisition v. Mst. Katiji & Ors. Reported in (1987) 167 ITR 471 (SC), the Hon'ble Supreme Court laid down six principles. For the purpose of convenience the principles laid down by the Hon'ble Supreme Court are reproduced hereunder: - i. Ordinarily, a litigant does not stand to benefit by lodging an appeal late; ii. Refusing to condone delay can result in a meritorious matter being thrown 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. iii. “Every day’s delay must be explained’ does not mean that pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. iv. When substantial justice and technical consideration are pitted against each other, the 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. v. 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. vi. It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Being so, when substantial justice and technical consideration are pitted against each other, the cause 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 our opinion this is a fit case to condone the short delay of 132 days in filing the appeal before the ld. CIT(A). Accordingly, the delay is condoned.
After condoning the delay, in our opinion, it is appropriate to remit the issue in dispute with regard to the merit of the addition made by the ld. AO to Smt. Ravishankar Shylaja the file of the ld. CIT(A) as he failed to adjudicate the same. Accordingly, the issue in dispute is remitted to the file of the ld. CIT(A) for fresh adjudication.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 6th August, 2024.