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Facts
The assessee filed an appeal against the order of the CIT(A) which had dismissed his appeal. The CIT(A) had dismissed the appeal on the grounds that it was filed beyond the prescribed limitation period, and the assessee failed to provide sufficient cause for the delay. The assessee's original assessment order was passed ex-parte under section 144 of the Income Tax Act due to non-compliance.
Held
The Tribunal held that while the original appeal to the CIT(A) was filed with a significant delay of 584 days, the delay was partly attributable to the COVID-19 pandemic and an apparent misunderstanding by the assessee's counsel regarding limitation rules. The Tribunal condoned the delay considering these factors and the fact that the assessee should not be punished for the counsel's errors. The matter was remanded back to the Assessing Officer.
Key Issues
The primary issue was whether the delay of 584 days in filing the appeal before the CIT(A) was justifiable and deserved condonation. The secondary issue was the ex-parte assessment order passed against the assessee.
Sections Cited
144, 69A, 115BBE, 234A, 234B, 234C, 143(2), 142(1), 249(3), 249(2), 5
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 896/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2017-18 Shri Jairaj Singh Solanki cuke The ITO, 5/63, SFS Agrawal Farm Vs. Ward-2(4), Jaipur. Mansarovar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AWCPS8587N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Shrawan Kumar Gupta (Adv.) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 07/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 20/08/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Ld. ADDL/JCIT(A)-9, Mumbai dated 10.06.2024 for the assessment year 2017-18, which in turn arise from the order dated 10.12.2019 passed under section 144 of the Income Tax Act, [Here in after referred as “Act” ] by the ITO, Ward-2(4), Jaipur.
The assessee has marched this appeal on the following grounds:- “1.1 The impugned assessment order u/s 144 dated 10.12.2019 as well as the action taken by the Id. AO are bad in law and on facts of the Sh. Jairaj Singh Solanki vs.ITO case, for want of jurisdiction, barred by limitation, without proper approval or satisfaction and various other reasons and hence the same may kindly be quashed.
1.2. The Id. AO has also grossly erred in law as well as on the facts of the case on passing exparty order without providing adequate opportunity of being heard and without considering the material or details filed by the assessee. Hence the entire addition so made may kindly be deleted in full.
2. The Id. CIT(A) has grossly erred in law as well as on the facts of the case in not admitting the appeal and dismissing the same on condonation of delay ignoring the sufficient material and evidences available on record, being the strong case on merit. Hence the order so passed by the Id. CIT(A) in gross breach of law and against the principal of natural justice and liable to be quashed and entire additions so made by the Id. AO may kindly be deleted.
3.1. Rs.9,19,200/-: The Id. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs.9.19.200/- made by the Id. AO u/s 69A on account of credit card payment as income from undisclosed sources and also erred in not considering the materials evidences available on record in their true perspective and sense. Hence the addition so made by the Id. AO and confirmed by the id. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the penalty may kindly be deleted in full.
3.2 The Id. AO has also grossly erred in law as well as on the facts of the case in invoking the provisions of Sec. 115BBE for charging the income at higher rate, the same is not applicable in the present case or income and also erred in invoking the provisions without issuing any show cause. Hence the provisions of Sec. 1158BE so invoked by the Id. AO and confirmed by the Id. CIT(A) is being totally contrary provisions of law and facts on the record, hence the same may kindly be deleted in full.
The Id. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234 A B,C. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full.
The fact as culled out from the record is that the assessee has filed his Return of income on 15.08.2017 declaring total income of Rs. 2,50,040/-. Thereafter, the case was selected for limited scrutiny through CASS for the reason "Credit Card Payments". Accordingly, notice u/s 143(2) was issued on 13.08.2018, which was duly served upon the assessee. Thereafter notice u/s 142(1) of I.T. Act, 1961 along with detailed questionnaire was issued to the assessee from time to time through ITBA for furnishing details/documents/information. However, the assessee neither made any compliance nor sought adjournment. Looking to the above facts and in order to provide one more opportunity Notice u/s 142(1) of I.T. Act. along with a final show cause notice was issued to the assessee on 03.12.2019 to furnish details/documents on or before 09.12.2019 which was duly served upon the assessee through ITBA portal. The ld. AO noted that the assessee failed to furnish any details / documents. In these circumstances, the ld. AO left with no other alternate except to complete the assessment ex-parte u/s 144 of the I.T. Act, on the basis of material available on records.
Sh. Jairaj Singh Solanki vs.ITO 3.1 The ld. AO noted that as per information available with the department during the year under consideration the assessee has owned following two credit cards:-
ICICI Bank Ltd. 4477473909672003 2. ICICI Bank Ltd. 5177194444786005 During the year under consideration the assessee made payment of Rs. 9,19,200/- against these credit cards. During assessment proceedings, the assessee has failed to explain the source of payment of Rs. 9,19,200/-. Several opportunities were provided to the assessee, however he failed to file any explanation with regard to sources of such payment. In view of this an amount of Rs. 9,19,200/- added to the total income of the assessee as income by him from undisclosed sources u/s 69A of I.T. Act, 1961. The Total Income assessed is taxed u/s 115 BBE of the Act at the rate of 60%.
4. Aggrieved by the above order of the Assessing Officer the assessee preferred an appeal before the ld. CIT(A). After perusing the submissions of the assessee, the ld. CIT(A) has dismissed the appeal of the assessee. The relevant finding of the ld. CIT(A) is as under:-
Sh. Jairaj Singh Solanki vs.ITO “3.4. I have carefully considered the appellant's submissions above. I am unable to agree with the appellant's reasons on account of the following: i. In the present case, the appellant has merely filed an affidavit enumerating the sequence of events leading to his filing of appeal for AY. 2017-18. Affidavit has been used by the appellant to explain the gross negligence on his part. I am unable to accept the appellant's attempts to explain the delay by filing of an affidavit in view of section 3 of the Evidence Act. Affidavit evidence is not admissible unless the law specifically permits it. Affidavits are not included in the definition of evidence in section 3 of the Evidence Act. Therefore, without a particular court order, an affidavit cannot typically be used as evidence. A careful perusal of Section 3 would show that the affidavit is not included in the definition of "evidence", and can be used only if the Court permits it for sufficient reasons. An affidavit can be termed to be "evidence" within the ambit of Section 3 only in those cases where the same is filed at the instance or under the direction of the Court or law specifically permits for proof of anything by affidavit. Thus, the filing of an affidavit or one's own statement, in one's own favour, cannot be regarded as sufficient evidence for any Court. Thus, the affidavit filed by the appellant can at best be termed to be self-serving. No cognizance of the same is taken. ii. However, the appellant's letter dated 21/07/2021 filed before the CIT(A)-1, Jaipur is discussed and adjudicated. The letter inter alia states that the delay was caused due to the following: a). The impugned order was sent by the AO electronically and not received by him physically. He did not check the e-mail. b). Covid pandemic. Appellant was misguided by relatives and known persons that he had to pay 15% of the tax before filing appeal, which he could not because of covid which impacted his business. c). Appellant is illiterate. He was not having counsel to guide him. d). His wife is suffering from heart problem and Tuberculosis. And he was disturbed. As regards the appellant's plea of covid relaxation, the Hon'ble Supreme Court of India in Miscellaneous Application No. 29 of 2022, among others, provided relaxation in view of COVID-19 Pandemic and directed to exclude the period of limitation till 28th Feb 2022. As per Sh. Jairaj Singh Solanki vs.ITO Point No. III of Para 5 of the order, the Apex Court mandated that in cases where the limitation period would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. The appeal in the instant case ought to have been filed on or before 16/01/2020. Hence the appeal of the appellant was not covered by the relaxation granted by the Hon'ble Supreme Court. Hence, this reason for delay is devoid of any merit. iv. The appellant has stated that the order was served electronically but he could not understand the same since he is illiterate and that could not get proper professional guidance which caused the delay. The law is well settled that mere shifting of onus and ignorance cannot justify a belated filing of appeal. The appellant's plea of ignorance is covered by the well-known latin maxim "IGNORANTIA JURIS NON EXCUSAT i.e. ignorance of law is no excuse. If this maxim is relaxed, every appellant will take the plea that it did not know the law and impossible for the respondent to prove that the appellant knew the law in question. Recently the Calcutta High Court in the case of Sri Sunil Kumar Manna vs Gaffar Molla & Anr on 12 September, 2023 held as under: "26. I am dealing with the question of validity of the grounds for condonation of delay, I find it convenient to refer to the principle laid down in Swadeshi Cotton Mills (supra), particularly in paragraph 3- "3 Every individual is deemed to know the law of the land. The courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within limitation. Therefore, the argument that he is not a literate person who could not get proper professional guidance is not one that can be accepted in law, more so when he has continuously failed to comply with the notice u/s. 143(2) of the Act as well as subsequent notices. There is no satisfactory explanation for that delay. I am unable to accept this plea. It cannot be disputed that the onus to show that sufficient cause exists for condonation of delay lies upon the applicant. It is obligatory upon the applicant to show sufficient cause due to which he was prevented from filing the appeal in time. v. The appellant has given the reason of wife's illness, however the same has remained uncorroborated for lack of any evidences. I am therefore unable to accept this plea.
Sh. Jairaj Singh Solanki vs.ITO vi. Another reason given is that the appellant was not familiar with the electronic mode of service. I am unable to accept this plea in view of the fact that the appellant was e-filing his return and as a businessman was in the business of taxi hiring and had also made use of credit cards which are all digitally and electronically used. Thus, the appellant was digital and electronically savvy. Further, Clause (b) of sub-rule (2) of Rule 127 of the IT Rules, 1962 states the following: “For communications delivered or transmitted electronically- (i) email address available in the income-tax return furnished by the addressee to which the communication relates; or (ii) the email address available in the last income-tax return furnished by the addressee; or (ii) in the case of addressee being a company, email address of the company as available on the website of Ministry of Corporate Affairs, or (iv) any email address made available by the addressee to the income-tax authority or any person authorised by such income-tax authority" Hence, the pleas of the appellant is devoid of any merit and liable to be rejected. 3.5. An appeal has to be filed within the stipulated period, prescribed under the Law. Belated appeals can only be condoned, when sufficient reason is shown for delay. The appellant who seeks condonation of delay therefore must explain the delay of each day. It is true that the Courts have held a pedantic approach must not be adopted while condoning delay in filing of appeal and explanation of each day's delay should not be taken literally, but the fact remains that there must be a reasonable explanation for the delay. In the present case, the reasons cited are not reasonable by any measure and bereft of an attempt to explain the delay by showing sufficient cause warranting condonation of the same. The inordinate delay is attributable to the gross/sheer negligence on the part of the appellant and not sufficient cause which prevented him from filing the appeal within limitation date. The delay is considerable and it cannot be disputed that the onus to show that sufficient cause exists for condonation of delay lies upon the applicant. It is obligatory upon the applicant to show sufficient cause due to which he was prevented from filing the appeal in time. 3.6. The Hon'ble Apex Court in the case of Maji Sinnemma Vs Reddy Sridevi 2021 SSC online SC 1260 dated 16/12/2021 has held as under.
Sh. Jairaj Singh Solanki vs.ITO "Even though limitation may harshly affect the rights of a party, but it has to be applied with all its rigour when prescribed by the statute. The expression sufficient cause cannot be liberally interpreted if negligence in action or lack of bonafide is attributed to the party. If the court starts condoning delay where no sufficient cause is made out by imposing conditions, then that would amount to violation of statutory principle and showing utter disregard to logistics". 3.7. The Hon'ble Supreme Court in the case of Ajay Dabra vs Pyare Ram & Ors arising out of SLP (C) No. 15793/2019 dated 31/01/2023 dismissed the delay condonation applications filed under Section 5 of the Limitation Act, 1963, declining to condone a delay of 254 days. because the reasons assigned for the condonation were not sufficient reasons for condonation of the delay. 3.8. I am further fortified by the decision of the Hon'ble Supreme Court in the case of Balwant Singh (Dead) vs Jagdish Singh & Ors, dated 08/07/2010, where it has held in para 6 that "Law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribed and the courts have no power to extend the period of limitation on equitable grounds". The order supra also refers to various judgements where it has been held that "here is no question of construing the expression sufficient cause liberally either because the party in default is the Government or because the question arises in connection with the impleading of the legal representatives of the deceased respondent. The provisions of the Code are with a view to advance the cause of justice by applying the principle of 'reasonable time This, however, does not mean that the Court should readily accept whatever the appellant alleges to explain away his default. The decision supra also holds that Section 5 of the Limitation Act is to apply para material. Section 3 of the Limitation Act requires that suits or proceedings instituted after the prescribed period of limitation shall be dismissed. However, in terms of Section 5, the discretion is vested in the Court/Appellate Authority to admit an appeal or an application, after the expiry of the prescribed period of limitation, if the appellant shows sufficient cause for not preferring the application within the prescribed time. The expression sufficient cause' commonly appears in the provisions of Order 22 Rule 9 (2), CPC and Section 5 of the Limitation Act, thus categorically demonstrating that they are to be decided on similar grounds.
Sh. Jairaj Singh Solanki vs.ITO 3.9. Recently, the Hon'ble Supreme Court in the case of Pathapati Subba Reddy (Died) by Legal Heirs & Ors vs. The Special Deputy Collector (LA) arising out of SLP (C) No. 31248/2018 dated 08/04/2024 declined to interfere with the decision of the Hon'ble High Court in refusing to condone the delay in filing of appeal. It has held that - "the provisions of the Limitation Act have to be construed in a strict sense whereas section 5 has to be construed liberally. In order to advance substantial justice, though liberal approach, justice oriented approach or cause of substantial justice be kept in mind but the same cannot be used to defeat the substantial law of limitation contained in section 3 of the Limitation Act. Courts are empowered to exercise discretions to condone the delay if sufficient cause had been explained, but that exercise of power is discretionary in nature and may not be exercised even if sufficient cause diligence". 3.10. In the present case, the appellant has not adduced any reasonable cause which prevented him from filing the appeal for 584 days. 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. Respectfully following the ratio in the decisions of the Hon'ble Supreme Court supra, delay of 584 days in filing of appeal is not condoned. Also, the delay of 584 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 appellant's 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. Keeping in view the facts and circumstances and the decision of the Hon'ble Courts and also the fact that since the appeal of the appellant is not admitted, the grounds of appeal raised by the appellant are not adjudicated on merit and the appeal is Dismissed.”
5. As the assessee did not receive any favour from the appeal so filed before ld. CIT(A). The present appeal is filed against the Sh. Jairaj Singh Solanki vs.ITO said order of the ld. CIT(A) before this tribunal on the grounds as reiterated in para 2 above. To the support the contention raised the ld. AR of the assessee filed the following evidence:-
S. No. Particulars Page No. 1. Copy of IT Return with computation of total income 1-3 2. Copy of RC of vehicle 4 3. Copy of bank account details 5 4. Copies of credit card statements 6-50 5. Copy of bank statements 51-60 6. Copy of detail of expenses through credit card. 61-66 7. Copy of e-proceedings portal 67-68 8. Copy of application for condonation of delay and affidavit. 69-74 9. Copy of WS to CIT(A) 75-81
During hearing, the ld. AR of the assessee submitted that the assessee has filed the appeal in online mode which is delayed by 584 days and the ld. CIT(A) has not condoned the delay without appreciating the fact of the case that the assessee has filed the appeal in time in online mode. The ld. AR of the assessee also submitted that if the period of covid covered by the decision of the apex court in the suo moto proceeding the delay is only for a 2 and half month only. This fact has not been appreciated by the ld. CIT(A). So out of 584 days 485 days are covered by the covid extension and the balance period being 99 days and that too on account of the nature of business of the assessee being taxi driver running hard to earn his bread and butter and that after the covid
Per contra, the ld. DR supported the order of the ld. CIT(A) and submitted that the assessee is supposed to file the appeal in time which is delayed by 584 days and therefore, the delay not required to be condoned. Even the assessee remained non- compliant in the assessment proceeding and the assessment order is ex-parte and if that of the matter if the bench feel the matter be remanded back to the file of the ld. AO.
We have heard both the parties and perused the materials available on record. The bench noted from the order of ld. CIT(A) that the appeal of the assessee was dismissed by the ld. CIT (A) for want of non-prosecution of the appeal and without pointing out to the assessee that the appeal filed by the assessee was time barred. In support of this contention we have seen the notices issued and there is no mention of defect allowing the assessee to explain the delay on merits. The ld. AR of the assessee in support of the delay before the ld. CIT(A) filed an affidavit of the counsel wherein the delay of 584 days has been explained saying that it was the wrong understanding of the counsel about the limitation of Sh. Jairaj Singh Solanki vs.ITO filling an appeal before the ld. CIT(A). We have seen the reasons provided by the ld. AR of the assessee by filling in an affidavit of the ld. AR representing before the ld. CIT(A). Thus, considering that aspect of the matter that when the assessee has no role to act and the delay was on account of the ld. AR of the assessee the assessee should not punished. Even the bench noted that in fact the delay if we considered the period of covid the day is of 99 days which considering the nature of profession assessee carrying being taxi driver is required to be condoned. Considering that set of facts placed before us we are of the considered view that there is reasonable cause for the assessee to file the appeal before the ld. CIT(A) with 584 days delay and therefore, considering that aspect of the matter we are of the view that the assessee has sufficient and reasonable cause for not filling the appeal before the ld. CIT(A) and thus we condone that delay. As it is evident from the record that the order in this case is ex-parte before the ld. AO and therefore, considering that aspect of the matter we hold to remand back the matter to the file of the ld. AO who will decide the issue based on evidence and submission of the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO.
Sh. Jairaj Singh Solanki vs.ITO 9. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 20/08/2024.