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Income Tax Appellate Tribunal, A BENCH : BANGALORE
Before: SMT BEENA PILLAI & SHRI LAXMI PRASAD SAHU
ORDER PER BENCH Present appeals arises out of order passed by the Ld.CIT(A) – 11, Bangalore dated 29.01.2024 for A.Ys. 2012-13 to 2018-19. to 429/Bang/2024 Page 2 of 30 2. The appeals arises out of the quantum proceedings passed in the assessment order u/s. 153A r.w.s. 143(3) r.w.s. 153D and penalty appeals passed u/s. 274 r.w.s. 271(1)(c) and u/s. 274 r.w.s. 271AAB of the act. The details of the assessment / penalty orders impugned before the Ld.CIT(A)/NFAC as under:
I) Quantum appeals for A.Ys. 2012-13 to 2018-19: The Ld.CIT(A) has noted that for A.Ys. 2012-13, 2013-14 and from 2015-16 to 2017-18, the assessment order has been passed u/s. 153A r.w.s. 143(3) r.w.s. 153D of the act. Additionally, for A.Y. 2014-15, the appeal was filed against order u/s. 154 and for A.Y. 2018-19, the appeal was filed against order u/s. 143(3) r.w.s 153D.
II) Penalty appeals for A.Ys. 2013-14, 2015-16 to 2018-19: The penalty orders were passed by the Ld.AO u/s. 274 r.w.s. 271(1)(c) of the act for A.Y. 2013-14 and 2015-16 to 2016-17. Further for A.Y. 2017-18 to 2018-19, the penalty orders were passed u/s. 274 r.w.s. 271AAB of the act.
Brief facts of the case are as under: 3.1 A search and seizure u/s. 132 of the act was carried out in case of assessee on 04.01.2018. The case was centralized and notice u/s. 153A was issued to assessee for A.Y. 2012-13 to 2017-18. In response to the notice u/s. 153A, the assessee filed return of income for the assessment years 2012-13 to 2017-18 on 08.02.2019. to 429/Bang/2024 Page 3 of 30 3.2 For A.Y. 2018-19, being the searched year, it was noted that assessment u/s. 143(3) of the act was completed vide order dated 31.12.2019 pursuant to the return of income u/s. 139(4) filed on 31.03.2019. The assessment was thus completed u/s. 143(3) r.w.s. 153D of the act.
3.3 Against the additions made in the above referred assessment orders, the assessee preferred appeal before the Ld.CIT(A) with delay as under: Date of Date of Date of Whether appeal AY order passed service as filing is filed with time by AO per Form 35 AY 2012-13 30.12.2019 30.12.2019 14.03.2023 1139 days delay AY 2013-14 30.12.2019 30.12.2019 11.03.2023 1136 days delay AY 2014-15 21.06.2021 21.06.2021 11.03.2023 598 days delay AY 2015-16 30.12.2019 30.12.2019 11.03.2023 1136 days delay AY 2016-17 30.12.2019 30.12.2019 11.03.2023 1136 days delay AY 2017-18 30.12.2019 30.12.2019 11.03.2023 1136 days delay AY 2018-19 30.12.2019 30.12.2019 11.03.2023 1136 days delay
Penalty appeals 274 r.w.s. 271(1)(c) Against the penalty orders passed u/s. 271(1)(c) of the act for A.Ys. 2013-14 & 2015-16 to 2016-17, the assessee filed appeals before the Ld.CIT(A) belatedly as under: Date of Date of order Date of Whether appeal is AY service as passed by filing filed with time per Form 35 AO AY 2013-14 30-03-2022 30-04-2022 11-03-2023 315 days delay AY 2015-16 18-03-2021 18-04-2021 11-03-2023 692 days delay AY 2016-17 18-03-2021 18-04-2021 11-03-2023 692 days delay AY 2017-18 18-03-2021 18-04-2021 12-03-2023 693 days delay AY 2018-19 18-03-2021 18-04-2021 12-03-2023 693 days delay
Penalty appeals 274 r.w.s. 271AAB The Ld.CIT(A) noted that assessee for A.Y. 2013-14 and 2015-16 to 2018-19 filed appeals against the penalty orders passed u/.s 271AAB belatedly as under. Date of Date of order Date of Whether appeal is AY service as passed by filing filed with time per Form 35 AO AY 2013-14 30-03-2022 30-04-2022 11-03-2023 315 days delay AY 2015-16 18-03-2021 18-04-2021 11-03-2023 692 days delay AY 2016-17 18-03-2021 18-04-2021 11-03-2023 692 days delay AY 2017-18 18-03-2021 18-04-2021 12-03-2023 693 days delay AY 2018-19 18-03-2021 18-04-2021 12-03-2023 693 days delay
The Ld.CIT(A) thus noted that there was an inordinate delay in filing the appeals before him. The assessee pleaded before the ld. CIT(A) in quantum appeals for A.Ys. 2012-13 to 2018-19 as under:
ITA Nos. 418 to 429/Bang/2024 Page 5 of 30 Assessment Year 2012-13 to 429/Bang/2024 Page 6 of 30 Assessment Year 2013-14 Assessment Year 2014-15 ITA Nos. 418 to 429/Bang/2024 Page 9 of 30 Assessment Year 2015-16 ITA Nos. 418 to 429/Bang/2024 Page 11 of 30 Assessment Year 2016-17 Assessment Year 2017-18 Assessment Year 2018-19
Similar submissions were provided by the assessee in the penalty appeals filed against orders for A.Ys. 2013-14 & 2015-16 to 2016-17 u/s. 271(1)(c) and 271AAB of the act for A.Ys. 2013- 14 & 2015-16 to 2018-19 which has been reproduced in the impugned orders passed by the Ld.CIT(A) for the relevant assessment years under consideration.
Based on these submissions, the Ld.CIT(A) was of the opinion that the delay in filing the appeal is not a matter of few days or months, but the delay is in years, which is extraordinary in nature, and that, the assessee has not been able to prove with facts and evidence that there was no gross negligence or deliberate inaction or lack of bonafide in filing the appeals belatedly. The Ld.CIT(A) relying on the principle embodied in the dictam “vigilantibus non dormientibus jura subveniunt”, held that, the delay cannot be condoned simply because, the assessee’s case is hard and calls for sympathy or merely out of benevolence to seek relief. The Ld.CIT(A) thus held that the assessee failed to make out sufficient cause for the delay to be condoned and dismissed all the appeals filed against the assessment / penalty orders. to 429/Bang/2024 Page 15 of 30 9. Aggrieved by the orders of the Ld.CIT(A), the assessee filed appeals before this Tribunal.
The Ld.AR submitted that the assessee was under a bonafide belief, that the appeals were duly filed by his representative. However, it was only on the receipt of the tax recovery notice in respect of the outstanding demand issued by the department on 11.11.2022, that the lapse in filing of appeal came to notice. It was then submitted that, the assessee immediately took necessary steps to file stay application before the Ld.Pr.CIT that was rejected, as assessee did not file any appeals before the first appellate authority disputing the demand raised in the assessment orders. It was submitted that, the assessee approached the present representative who advised to file appeals against the assessment / penalty orders, thereby causing the delay as noted by the Ld.CIT(A) in the respective orders.
The Ld.AR submitted that, assessee filed affidavits before the Ld.CIT(A), requesting to condone the delay u/s. 5 of the limitation act, 1963 which was not appreciated. It is submitted that, no benefit is derived by the assessee by not filing the appeals in time. In fact, it has caused huge hardship as the assessee has faced the demand thereafter. He submitted that, the assessee was very much under the bonafide belief that, the then representative had filed the appeals against the assessment / penalty orders, and therefore great injustice will be caused to the assessee, if the delay is not condoned and appeals are not heard on merits.
The Ld.DR on the contrary, submitted that, the assessee is a defaulter in presenting the appeals before the Ld.CIT(A) thereby causing huge delay. He thus submitted that, the appeals may be dismissed in limine, without adjudicating the same as the delay was substantial and it is only due to the negligence of the assessee for which the delay shall not be condoned.
We have heard the rival submissions and perused the materials available on record.
13.1 From the orders of Ld.CIT(A), we note that for all the assessment years under consideration, the orders have been passed without considering the issues on merits as the Ld.CIT(A) did not condone the delay in filing the appeals. The Ld.AR has pleaded before us that, the Tribunal may condone the delay in filing the appeals before ld. CIT(A) and remit the matter to the file of Ld.CIT(A).
13.2 It was vehemently submitted before us that, the assessee after receiving the assessment orders consulted the present advocate and, on his advice, immediately filed the appeals as the remedy available to the assessee. The Ld.AR submitted that, the assessee was always under the bonafide belief that, the previous representative has filed the appeals against the assessment / penalty orders. Thus, the reason explained by the assessee amounted to be a reasonable cause, for not filing the appeals in time. At this time, it is appropriate to to 429/Bang/2024 Page 17 of 30 mention the decision of Hon’ble Supreme Court in the case of Concord of India Insurance Company Ltd. Vs. Smt. Nirmala Devi & Ors. reported in 118 ITR 507 (SC), wherein it has been held that; “the mistake of the counsel may in certain circumstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground”. Hon’ble Supreme Court thus held that, there is a mistake of the counsel and therefore, the delay in filing the appeal was to be condoned.
13.3 On a query by the bench in respect of the explanation regarding delay due to the previous representative of the assessee, the Ld.AR furnished affidavit by the previous representative that reads as under: to 429/Bang/2024 Page 23 of 30 On perusal of the above affidavit, it is apparent that there was communication gap between the assessee and the erstwhile representative and the erstwhile representative during the relevant time was held up with addressing the financial issues faced by the company where the assessee was a Director. In support, we refer to para 4-11 of the affidavit reproduced hereinabove. At this juncture, it deserves to be noted that the limitation period in the present appeals expired at the beginning of outbreak of covid 19 pandemic and the entire country was engulfed in fear and chaos. It is pertinent to also note that even Hon’ble Supreme Court suomoto made empathetically clear by not only excluding the period from 15.03.2020 to 28.02.2022 for computation of limitation period but also carried forward any balance limitation remaining, further granted a period of 90 days from 01.03.2022. In our view, the benefit of the above period must be granted to the assessee.
13.4 Having regard to the affidavit filed by the erstwhile representative, we place reliance on the decision of Hon’ble Cochin Bench of this Tribunal in the case of Midas Polymer Compounds Pvt. Ltd. dated 25.6.2018, condoned the delay of 2819 days by observing as follows: “6. We have heard the rival submissions and perused the record. There was a delay of 2819 days in filing the appeal before the Tribunal. The assessee has stated the reasons in the condonation petition accompanied by an affidavit which has been cited in the earlier para. The assessee filed an affidavit explaining the reasons and prayed for condonation of delay. The reason stated by the assessee is due to inadvertent omission on the part of Shri to 429/Bang/2024 Page 24 of 30 Unnikrishnan Nair N, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel’s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay. 6.1 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 filed an affidavit saying that the appeal was not filed because of the Counsel’s inability to file the appeal. The Revenue has not filed any counteraffidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (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 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, commonsense and pragmatic manner. (4) 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 nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on to 429/Bang/2024 Page 25 of 30 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 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. 6.2 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 nondeliberate delay. In the case on our hand, the issue on merit regarding allowability of deduction u/s. 80IB of the Act was covered in favour of the assessee by the binding Judgment of the jurisdictional High Court. Moreover, no counter-affidavit was filed by the Revenue denying the allegation 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 Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned.”
13.5 On examining whether the reason stated by the assessee in condonation petitions are sufficient to condone the delay and there exists sufficient cause for not presenting the appeals within the period of limitation under the statute, the assessee must show that it was diligent in taking appropriate steps and the delay was caused notwithstanding with its due diligence. If it to 429/Bang/2024 Page 26 of 30 appears to be guilty of latches or negligence and does not take appropriate steps to pursue its remedy till about the close of the period prescribed for filing of appeal, it must be prepared to have its remedy barred without expecting condonation. Still, it is for the party concerned to explain the reasons for delay and it is not the function of concerned authorities often to find cause for delay. The Court/authority has to examine whether the sufficient cause has been shown by the party for condoning the delay, and whether such cause is reasonable or not. In the present case in hand, the assessee explained the delay in filing the appeals before the ld. CIT(A) was on the reason that the assessee presumed the appeals were filed by the representative who was handling the case at that point of time, and it was only on receipt of the recovery notice that the lapse was realized. This being the position, it constitutes a sufficient cause for filing the appeals belatedly. Further, on perusal of the affidavit filed by the then representative, we are of the opinion that due to the circumstances that existed, the lapse that occurred on behalf of the representative cannot be attributed to the assessee for which assessee could be punished.
13.6 In case of People Education & Economic Development Society Vs. ITO reported in 100 ITD 87 (TM) (Chen), it was held that; “when substantial justice and technical consultation 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 non-deliberate delay”.
13.7 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not able to file the appeals within the period of limitation. The cause for the delay therefore deserves to be considered, when there exist a reasonable cause, and therefore the period of delay may not be relevant factor. In support, we rely on the decision of Hon’ble Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Hon’ble Madras High Court thus condoned nearly 21 years of delay in filing the appeal. As compared to 21 years, delay of about 1000 to 2000 days cannot be considered to be inordinate or excessive.
13.8 Hon’ble Madras High Court in the case of Sreenivas Charitable Trust reported in 280 ITR 357 held that, no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Hon’ble Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the to 429/Bang/2024 Page 28 of 30 expression "sufficient cause" should receive a liberal construction. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression "sufficient cause" should receive a liberal construction. In opinion of this Tribunal, this decision of Hon’ble Madras High Court is applicable to the present facts of the case. A similar view was taken by Hon’ble Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad).
13.9 Hon’ble Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) reported in 277 ITR 1 condoned the delay of 180 days when, the appeal was filed after the pronouncement of the Judgment of the Hon’ble Supreme Court. It is also to be noted that the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. Hon’ble Supreme Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi reported in AIR 1978 SC 537 held that, non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by Hon’ble Supreme Court, there is sufficient cause for condonation of delay. Hon’ble Supreme Court also observed that; “It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. Condonation of delay is the to 429/Bang/2024 Page 29 of 30 discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay deserves to be condoned, irrespective of the duration/period.”
13.10 Hon’ble Supreme Court has clarified the distinction between an 'explanation' and an 'excuse', emphasizing that, mere excuses wouldn't suffice; a satisfactory and acceptable explanation was required. The Court added, “there is no formula that caters to all situations and, therefore, each case for condonation of delay based on existence or absence of sufficient cause has to be decided on its own facts. We therefore feel that we feel that the reasons assigned by the assessee and the then representative for condonation of delay on account of the assessee and inability to present the appeals within time, deserves consideration. We are therefore of the view that, there is a reasonable cause in filing the appeals belatedly before ld. CIT(A), as delay was neither willful nor wanton but was due to the circumstances beyond the control of the assessee.
13.11 In view of the above discussion, we condone the delay in filing the appeals before ld. CIT(A) belatedly and the appeals are admitted for adjudication by exercising the power u/s 253(5) of the Act. The Ld.CIT(A) dismissed the appeal without considering and appreciating the contentions urged by the assessee in the affidavit filed before him. Consequently, the impugned orders are to 429/Bang/2024 Page 30 of 30 in violation of principles of natural justice, and the same deserves to be quashed. We thus remit the entire issue disputed in all these appeals to the file of Ld.CIT(A) to decide afresh in accordance with law after giving a fair opportunity of being heard to the assessee.
In the result, all the appeals of the assessee are partly allowed for statistical purposes. Order pronounced in the open court on 29th May, 2024.