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Facts
The assessee, an engineer, inadvertently offered salary income for AY 2017-18 instead of AY 2016-17 in his return for AY 2016-17, leading to a demand of Rs. 1,21,710/-. He later realized the mistake and attempted rectification, but the appeal was dismissed by the CIT(A) due to a significant delay of 2185 days.
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A), opining that the delay was not due to malafide intention but an inadvertent mistake. The Tribunal also noted that the assessee took prompt steps once the mistake was realized.
Key Issues
Whether the delay in filing the appeal before the CIT(A) should be condoned, and if so, whether the appeal merits consideration on merits.
Sections Cited
143(1), 249(3), 139(4), 154, 234
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Income Tax Appellate Tribunal, SMC-‘B’ BENCH : BANGALORE
Before: SMT BEENA PILLAI & SHRI LAXMI PRASAD SAHU
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 06.03.2024 passed by Ld.Addl/JCIT(A)-9, Mumbai for A.Y. 2016-17 on following grounds of appeal:
Page “1. The order of the authorities below in so far as it is against the appellant is opposed to law, equity and weight of evidence, probabilities, facts and circumstances of the case.
2. The appellant denies himself liable to be assessed to a total income of Rs. 10,02,194/- for the impugned assessment year 2016-17 on the facts and circumstances of the case.
3. Grounds on dismissal of appeal by the first appellate authority on delay: a. The learned Addl. CIT(A)-9, Mumbai is not justified in dismissing the appeal of the appellant by holding that there was no sufficient cause for delay of 2184 days in filing the appeal, on the facts and circumstances of the case. b. The learned Addl. CIT(A), has failed to appreciate that the reasons furnished for delay in filing the appeal constitutes 'reasonable cause' and ought to have condoned the delay by exercising the powers conferred under section 249(3) of the Act, on the facts and circumstances of the case. c. The dismissal of the appeal on delay has resulted in collection of taxes on income which has not been earned by the appellant, thus, defeating the basic tenets of the taxation law, on the facts and circumstances of the case.
4. The learned Assessing Officer erred in law in making adjustments under section 143(1), surpassing its limited scope to carry out prima facie adjustments and arithmetical corrections and consequently the adjustments made are required to be deleted.
The adjustment is made under section 143(1) is made without providing any opportunity of hearing to the appellant, thus violating the principles of natural justice on the facts and circumstances of the case.
6. The learned assessing officer has disallowed the credit for TDS without corresponding reduction in the income on the facts and circumstances of the case.
That it is a settled proposition of law that "consent cannot confer jurisdiction" on the facts and circumstances of the case.
The appellant denies the liability to pay interest under section 234 of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied is not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case.
The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 10. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest on justice and equity.”
Brief facts of the case are as under: 2.1 The assessee is an Engineer and worked as an Intern with M/s. Intel Technology India Private Limited for the assessment year 2016-17 i.e., on a monthly stipend of Rs.28,000/-. It is submitted that, the assessee filed his first return of income for the assessment year 2016-17 on his own on 30.07.2017 u/s. 139(4) as he did not have any contact of tax professional and was informed by his colleagues that filing return of salaried employee is not cumbersome, and that one can manage on his own. It is further submitted that, the assessee while filing the return of income for assessment year 2016-17 entered the salary of financial year 2016-17 (A.Y. 2017-18), instead of stipend earned for financial year 2015-16 relevant to assessment year under consideration. This happened, as he was unaware of the difference between the financial year and assessment year.
2.2 It is submitted that, the assessee claimed TDS of financial year 2016-17 (A.Y. 2017-18) while filing the return of income for Page 2015-16 relevant to assessment year under consideration which was disallowed by the Ld.AO as such it was not reflecting in the 26AS of the financial year 2015-16. However, the income returned by the assessee in the income tax return was accepted though it pertained to financial year 2016- 17 (A.Y. 2017-18).
2.3 It is submitted that, the salary earned during assessment year 2016-17 was Rs.2,82,350/- as reflected in 26AS, whereas the salary for assessment year 2017-18 was Rs.10,02,194/- which was wrongly offered in the assessment year 2016-17 inadvertently. Accordingly demand of Rs.1,21,710/- was raised by the Centralised Processing Centre, Bangalore ("CPC') vide intimation under section 143(1) dt: 14.09.2017 disallowing the claim of TDS claimed considering the incorrect income offered by the assessee.
2.4 It is further submitted that, the assessee could not revise the return of income, as it was filed belatedly under section 139(4) of the Act. The assessee thereafter received intimation, wherein there was tax demand of Rs.1,21,710/-, after which the assessee approached the Income Tax Department, Mysore. However, the assessee could not get any relief and was informed that the return of income is processed by CPC at Bangalore, and was advised to file rectification request under section 154 of the Act.
2.5 It is submitted that, the assessee accordingly filed rectification request on 18.09.2017. Upon filing the rectification
Page 2017- 18 on 27.10.2017 and the assessee was under a bonafide belief that the demand for assessment year 2016-17 stood rectified.
2.6 It is also submitted that, the assessee received refund for assessment years 2018-19, 2019-20, 2020-21, 2021-22 and 2022-23, which further strengthened belief that the there was no outstanding demand.
2.7 The assessee thereafter received mail on 20.09.2023, wherein it was proposed to adjust refund of assessment year 2023-24 against demand of assessment year 2016-17. The assessee in response to the proposal filed reply on 21.09.2023 objecting to the said proposal by following the steps laid down in the mail. It is submitted that, the assessee thereafter approached a Chartered Accountant who informed the assessee to provide him with copies of form 26AS, income tax return, 143(1) intimation, offer letter etc., and a period of 10 days lapsed in collating the required documents.
2.8 The Chartered Accountant on perusal of the documents advised the assessee that appeal is to be filed against the 143(1) intimation dt:14.09.2017, and accordingly the appeal was filed before the Ld.CIT(A) on 07.10.2023, though the due date to file the appeal was 14.10.2017, resulting in a delay of 2185 days for the reasons mentioned above.
Page 2.9 The Ld.CIT(A) did not condone the delay by observing as under: “2.12. Further, from the facts of the case it is clear that the statutory right to appeal which was vested with the appellant was not exercised within the stipulated time u/s. 249(3) of the Act. Thus, it is clearly a case of lapse and is a direct result of deliberate inaction on the part of the appellant. In view of the above, the delay of 2184 days in filing of appeal in this case is not condoned as no "sufficient cause" has been shown under section 249(3) of the Income Tax Act for the appellants failure to file the appeal within prescribed period of limitation u/s 249(2) of the Act r.w.s 5 of the Limitation Act. Since, the delay in filing of appeal has not been condoned, consequently the appeal of the appellant becomes non-est and therefore the same is not admitted.”
2.10 Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.
The Ld.AR submitted that assessee is a salaried employee during the year under consideration, and undertook to file his return of income on his own, due to which a mistake happened on his behalf by considering the salary received for A.Y. 2017-18 and wrongly offered to tax in A.Y. 2016-17. The CPC raised a demand of Rs.1,21,710/- as assessee did not file the return of income on the salary income reflected in 26AS for the relevant year under consideration. This mistake of assessee was realised only at the time when he received the mail on 20.09.2023 wherein the refund for A.Y. 2023-24 was proposed to be adjusted against the demand for A.Y. 2016-17.
3.1 The Ld.AR submitted that this was an inadvertent mistake that was realised by the assessee and immediately assessee
Page Ld.CIT(A) that caused delay. It is submitted that there was no intention on behalf of the assessee of any malafide nature. He placed reliance on the decision of Hon’ble Karnataka High Court in case of CIT vs. ISRO Satellite Centre in by order dated 28.10.2011 wherein Hon’ble Court was pleased to condone the delay of 5 years in filing the appeal before the Ld.CIT(A). Coordinate Bench of this Tribunal in case of Smt. Shakuntala Hegde, Legal Heir of Mr. Ramakrishna Hegde vs. ACIT in ITA No. 2785/Bang/2004 by order dated 25.04.2006 Hon’ble Madras High Court in case of CIT vs. K.S.P. Shanmugavel Nadar reported in (1987) 30 Taxmann 133 (Madras) Hon’ble Cochin Tribunal in case of M/s. Midas Polymer Compounds Pvt. Ltd. vs. ACIT in ITA No. 288/Coch/2017 by order dated 25.06.2018 Hon’ble Bombay High Court in case of Anatek Services Pvt. Ltd. vs. ACIT in ITA No. 102 of 2018 dated 11.02.2022 3.2 He submitted that, the assessee had filed condonation petition which was not allowed. Reliance was also placed on the decision of the Hon'ble Apex Court in the case of Collector, Land Acquisition Vs. MST.Katiji and Others (1987) 1987 taxmann.com 1072 and also in the case of Concord of India Insurance Co. Ltd., Vs Smt. Nirmala Devi and Others 118 ITR 507.
On the contrary, the Ld.DR vehemently opposed the condonation of delay in filing the appeal before the Ld.CIT(A) by Page submitting that the assessee has failed to explain everyday’s delay and cannot take a pedantic approach in respect of the same. We have perused the submissions advanced by both sides in the light of records placed before us.
5. We note that the delay in filing the appeal before the Ld.CIT(A) amounts to 2185 days. However, on going through the submissions of the Ld.AR and the affidavit filed by the assessee along with the application for condonation of delay, the delay cannot be considered to be the one caused due to any malafide intention. In fact, we find the reason submitted by the assessee that caused the delay is a mistake on behalf of assessee at the personal level. We also note that, upon realising the mistake committed by the assessee, he immediately took necessary steps to represent his case before the authority. It is further emphasised that the assessee is not a continuous defaulter and therefore no intention to evade any taxes for the relevant Assessment Year could also be attributed. This can be understood from the salary earned by the assessee for the relevant AY that has been the basis for the demand. It is noted that for the relevant Assessment Year, assessee had earned a salary of Rs.2,82,350/-.
5.1 Further we also note that, the assessee filed rectification petition on 18.09.2017 trying to rectify the return filed for the relevant assessment year offering the income for A.Y. 2017-18. The assessing authorities subsequently issued refund for A.Y.
Page 2017-18 on 27.10.2017 and therefore there was a reason to bonafidely believe that the demand for A.Y. 2016-17 stood rectified. There is no dispute on the fact that even for subsequent assessment years, the refund due for assessee was issued. We therefore are of the opinion that no malafide intention could be attributable to the assessee in such facts for the year under consideration.
5.2 In Collector, Land Acquisition, Anantnag and another v. Mst. Katiji and others reported in (1987) 167 ITR 471, a two-Judge Bench observed that the legislature has conferred 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 subserves the ends of justice, for that is the life- purpose for the existence of the institution of courts.
5.3 The learned Judges emphasized on adoption of a liberal approach while dealing with the applications for condonation of delay as ordinarily a litigant does not stand to benefit by lodging an appeal late and refusal to condone delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated. It was stressed that there should not be a pedantic approach but the doctrine that is to be kept in mind is that the matter has to be dealt with in a rational
Page commonsense pragmatic manner and cause of substantial justice deserves to be preferred over the technical considerations.
5.4 It was also ruled that there is no presumption that delay is occasioned deliberately or on account of culpable negligence and that, the courts are not supposed to legalise injustice on technical grounds as it is the duty of the court to remove injustice. In the said case the Division Bench also observed that the State which represents the collective cause of the community does not deserve a litigant-non grata status and the courts are required to be informed with the spirit and philosophy of the provision in the course of interpretation of the expression “sufficient cause”.
We are therefore of the opinion that there was sufficient and reasonable cause that led to the delay in the present facts of the case and that there was no gross negligence or deliberate inaction or lack of bonafide that could be imputed upon the assessee in order to deny the contention.
6.1 Further, the principle that emanates from the decisions relied by the Ld.AR referred to hereinabove, is that, in the matter of condonation of delay in filing the appeals beyond the period of limitation, the quotes are empowered to condone the delay provided the litigant is able to demonstrate “reasonable and sufficient cause” in preferring appeal beyond the period of limitation. Based on such principles, we condone the delay in filing the appeal before the Ld.CIT(A) by the assessee. We
Page Ld.CIT(A) who shall consider the claim of assessee in accordance with law by granting proper opportunity of being heard. Accordingly, the grounds raised by the assessee stands partly allowed for statistical purposes. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 28th June, 2024.