MR. N. NACHIMUTHU,SALEM vs. ITO, SALEM

This appeal of the assessee was directed against the order of the Commissioner of Income-Tax (Appeals), Salem dated 22.08.2016. The grievance of the assessee in this appeal is with regard to dismissing the appeal of the assessee by the CIT (Appeals) without condoning the delay of 131 days in filing the appeal before him.

The fact of the case is that, the assessee carried the appeal against the assessment order before the CIT (Appeals) belatedly by 131 days. The assessee filed condonation petition accompanied with appeal stating that the assessee hired a Chartered Accountant by name Shri Muruganandam, Chartered Accountant, Erode. In the course of assessment proceedings the above Chartered Accountant refused to appear before the Income Tax Officer and the assessee himself appeared before the Assessing Officer on 24.03.2014. The assessee has only studied upto 12th Std and he was not well versed with the income tax proceedings. The Assessing Officer assessed the total income at ₹90,05,564/- as against the returned income of ₹2,38,150/- vide assessment order dated 31.03.2014. The assessee received a notice under Section 221 (1) of the Income Tax Act, 1961, (in short ‘the Act’) on 18.06.2014 from the Assessing Officer to appear before him on 27.06.2014, in connection with the demand of ₹36,24,480/-. Then only, the assessee came to know about the seriousness of the issue and the assessee filed the appeal challenging the assessment order. Thus there was a delay of 131 days in filing the appeal before the CIT (Appeals). However the CIT (Appeals) observed that there is no good and sufficient reason in filing the appeal belatedly. Accordingly, he dismissed the appeal. Against this, the assessee appealed before us.

We heard both the parties and perused the material available on record. There was a delay of 131 days in filing the appeal before CIT (Appeals) against the assessment order. The assessee filed the condonation petition as discussed in earlier para, stating that it is due to wrong representation and non-availability of proper advice from the assessee’s Chartered Accountant and the assessee was not aware of the correct proceedings of the case. To this effect, the assessee filed condonation petition accompanied with affidavit dated 20.08.2016 which was filed before the CIT (Appeals). In the opinion of CIT (Appeals), there was no good and sufficient reason for filing the appeal belatedly before him. The Jurisdictional High Court considered the appeal in the case of Shri Sreenivas Charitable Trust v Deputy Commissioner of Income Tax, (2006) 280 ITR 357 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.

In this case on our hand, the issue arises for consideration of merit is with regard to addition towards unexplained investment under Section 69 of the Act. Therefore the issue raised by the assessee is required to be adjudicated by CIT (Appeals), otherwise dismissing the appeal without condoning the delay may result in 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. 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 the case on our hand, it is appropriate to decide the issue on merit after condoning the delay by CIT (Appeals), as this delay is very short delay, not inordinate delay and the reason stated by the assessee found to be bona fide, is held by Madras High Court in the case of CIT v K.S.P. Shanmugavel Nadar [1985] 153 ITR 596 wherein observed that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation and that delay of 131 days cannot be said that inordinate delay. Accordingly, we condone the delay of 131 days caused before the CIT (Appeals) in filing the appeal and we remit the issue raised by the assessee with regard to addition made under Section 69 of the Act, to the file of the CIT (Appeals) for his decision in accordance with law.

In the result, the appeal of the assessee is partly allowed.