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Facts
The appeal arises from an order dated 02.03.2023 by NFAC, Delhi for AY 2017-18. The assessee is a cooperative society that claimed deduction u/s 80P(2)(a)(i). The AO disallowed the deduction of Rs. 5,22,794/-, stating the principles of mutuality were not followed due to nominal members. The assessee's appeal before the CIT(A) resulted in an ex-parte order.
Held
The Tribunal condoned the delay in filing the appeal, noting that the delay was not attributable to the assessee and was due to a reasonable cause, emphasizing substantive justice over procedural technicalities. The issue of disallowance of deduction u/s 80P was remitted back to the CIT(A) for a decision on merits.
Key Issues
Whether the delay in filing the appeal should be condoned and if the disallowance of deduction u/s 80P was justified.
Sections Cited
80P(2)(a)(i), 234B, 249(2), 249(3), 250, 253(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 02.03.2023 passed by NFAC, Delhi for A.Y. 2017-18 on following grounds of appeal:
At the outset, the Ld.AR submitted that there is a delay of 407 days in filing the present appeal before this Tribunal. He has filed the affidavit of the assessee explaining the cause that led to the delay. For the sake of convenience, the same is scanned and reproduced hereinbelow.
2.1 The Ld.AR submitted that the assessee received all the notices for hearing before the Ld.CIT(A) which was forwarded time and again to the tax consultant. He submitted that, it was not in the knowledge of the assessee that the then tax consultant was not taking necessary steps regarding compliance before the Ld.CIT(A), as a consequence of which an ex-parte order was passed on 02.03.2023.
2.2 The Ld.AR submitted that assessee became informed regarding ex-parte order being passed belatedly. The Ld.AR submitted that immediately the assessee approached the present AR and an appeal was filed before this Tribunal. He prayed that the assessee was under a bonafide belief that, the notices forwarded by assessee to the then tax consultant was being taken cognizance of by the erstwhile tax consultant. He thus prayed for the delay to be condoned as there is no malafide mistake / intention that could be attributable on the assessee in causing the delay in filing the present appeal before this Tribunal.
2.3 On the contrary, the Ld.DR though vehemently opposed the condonation of delay was of the opinion that the issue should be decided on merits.
We have perused the submissions advanced by both sides in the light of records placed before us.
2.4 It is noted from the affidavit filed by the assessee that, the assessee was diligently following up with the notices by forwarding it to the tax consultant, however for the best reasons known to the tax consultant, assessee was not represented before the Ld.CIT(A). Under such circumstances, we do not find any malafide intention on behalf of assessee for not appearing before the Ld.CIT(A) as well as in filing the present appeal before this Tribunal belatedly as the assessee was not aware about the appellate order being passed. In our view, the assessee has made out a reasonable cause for the delay that caused in filing the present appeal before this Tribunal. It is also noted that there is no malafide intention on behalf of assessee in not filing the appeal before this Tribunal within time. Nothing to establish any such intention has been filed by the revenue before this Tribunal. In our opinion there is a sufficient cause for condoning the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 in support of his contentions.
2.5 We place reliance on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:- “The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de 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 subserves the ends of justice that being the life-purpose of 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. 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. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”
2.6 Considering the submissions by both sides and respectfully following the observation by Hon’ble Supreme Court, we find it fit to condone the delay caused in filing the present appeal as it is not attributable to the assessee.
2.7 In any event, though the procedural law pertaining to the limitation has been drafted to construe it strictly, the fact remains that, considering such technicalities will not advance the cause of justice.
2.8 We take support from the observations of Justice Krishna Iyer wherein he has quoted at various occasion while dealing with technicalities that “any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities”. Even Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 has laid down a ratio of similar principles. Respectfully following the thoughts propounded by Late Hon’ble Justice Krishna Iyer, as well as various decisions of Hon’ble Supreme Court on similar issues, I condone the delay caused in filing the present appeal before this Tribunal. Accordingly, we condone the delay in filing the present appeal before this Tribunal.
On merits of the case, we note that the addition made is disallowance of deduction claimed u/s. 80P of the act. The Ld.CIT(A) did not decide the issues on merits, based on the ratio of Hon’ble Supreme Court in case of Mavilayi Service Co- operative Bank Ltd. v. CIT reported in 431 ITR 1 as well as Kerala State Co-operative Agricultural and Rural Development Bank Ltd. vs. AO reported in (2023) 154 taxmann.com 305 as the case may be. We remit this issue back to the Ld.CIT(A) to consider the claim of assessee based upon the evidences furnished in accordance with law and having regards to the ratios laid down by Hon’ble Supreme Court in the decisions referred to hereinabove.
Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law. Accordingly, the grounds raised by the assessee stands partly allowed for statistical purposes. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 24th July, 2024.