VIJAY KUMAR PAREKH,INDORE vs. WARD1(1) INDORE, INDORE

This appeal by assessee is directed against the order dated 30.10.2023 of the Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi arising from order dated 26.08.2014 passed u/s 154 of the Act by CPC for A.Y.2013-14. The assessee has raised following grounds of appeal:

ITANo.549/Ind/2023 Vijay Kumar Parekh “1.Ld. CIT(A) has erred in confirming the action of the AO in not allowing set of loss under the head income from other sources of Rs.687731/- as per provisions of section 70 of the Act.

2. At the outset, we note that the CIT(A) has dismissed the appeal of the assessee in limine being barred by limitation. Ld. AR of the assessee has submitted that the assessee has filed his return of income on 26.09.2013 declaring total income of Rs.15,26,130/-. The return was processed u/s 143(1) on 28th April 2014 whereby an adjustment of Rs.6,84,731/- was made on account of disallowance of claim of set off of loss under the head income from other sources against the business income of the assessee for year under consideration. Ld. AR has submitted that the assessee filed a petition u/s 154 on 5th August 2014 and thereafter did not receive any communication from the department/CPC. Only when the assessee came to know about the said fact on 23.01.2023 through outstanding demand position as available on the e-filing portal of the department the assessee filed the appeal before the CIT(A) and explained the cause of delay. The CIT(A) has declined to condone the delay on the ground that the assessee has not explained sufficient cause for inordinate delay of 3189 days. Ld. AR has referred to the affidavit filed by the assessee before the CIT(A) explaining the cause of delay placed at page no.13 & 14 of the paper book and submitted that the assessee has explained the reasons of delay being not aware about the order of CPC passed u/s 154 of the Act and came to know only in the month of January Page 2 of 9 ITANo.549/Ind/2023 Vijay Kumar Parekh 2023 when the assessee noticed outstanding demand position as available in the e-filing portal of the department. Thus, the Ld. AR has submitted that there was no communication/service of the order dated 26.08.2014 passed u/s 154. Ld. AR has referred to the provisions of section 249 and submitted sub-section (2) provides the limitation of 30 days for filing the appeal before the CIT(A) from the date of service of notice of demand relating to the assessment or penalty or the date on which intimation of order sought to be appeal against is served. Thus, Ld. AR has submitted that the limitation shall be counted only from the date of service of the order passed u/s 154 of the Act. He has pleaded that the delay in filing the appeal before the CIT(A) be condoned and matter remanded to the record of the CIT(A) for deciding the same on merits.

ITANo.549/Ind/2023 Vijay Kumar Parekh 4. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee filed the appeal before the CIT(A) on 20th June 2023 against the order of CPC passed u/s 154 on 26.08.2014. Therefore, the appeal was filed after a gap of almost nine years from the date of order passed u/s 154 of the Act. The assessee explained the cause of delay in the affidavit and submitted that the assessee was under bonafide belief that the objection raised by the assessee u/s 154 to allow the set off the loss against the business income was accepted as the assesse did not receive any communication after the said objection was raised. The assessee explained that he has not received any communication/order passed u/s 154 of the Act by the CPC and therefore, he was unaware of the said order. The CIT(A) has dismissed the appeal of the assessee by recording the facts and reasons in para 6.1.1 as under:

“6.1.1 In affidavit submitted, perusal of para 3), 4), 5) 6) & 7) shows lackadaisical manner in which facts are presented. No cause for delay is forthcoming from narration that no speaking order was received by the appellant and was unaware of this order. It needs to be noted that "for sufficient cause" delay needs to be derived and presented from chronology of events and it cannot be explained post facto. I find that no documents have been submitted which can explain such a long delay except assertion that it was not aware of the order passed and under bonafide belief that the objection raised under the provisions of section 154 to allow the set off the loss to the business income was accepted; cannot be a sufficient cause to condone delay.”

ITANo.549/Ind/2023 Vijay Kumar Parekh 4.1 Thus, the CIT(A) has stated that no cause of delay is forthcoming from narration that no speaking order was received by the assesse and was unaware of this order. Further the CIT(A) has given reason that no document has been submitted which can explain such a long delay except assertion that assessee was not aware of the order passed u/s 154 of the Act. Finally the CIT(A) has dismissed the appeal in para 6.1.5 to 8 as under:

“6.1.5 The procedure in appeal laid down by the Faceless Appeal Scheme, 2020 notified via S.O. 3296(E) dated 25.09.2020 is reproduced as below for ready reference. "Procedure in appeal.-(1) The appeal referred to in paragraph 3 shall be disposed of under this Scheme as per the following procedure, namely:__ (i) the National Faceless Appeal Centre shall assign the appeal to a specific appeal unit in any one Regional Faceless Appeal Centre through an automated allocation system; (ii) where the appellant has filed the appeal after the expiration of time specified in sub-section (2) of section 249 of the Act, the appeal unit may, - (a) in case, it is satisfied that the appellant had sufficient cause for not filing the cient appeal within the said time, admit the appeal; or DEPARTMEN (b) in any other case, reject the appeal, under intimation to the National Faceless Appeal Centre; As mentioned above reasons proffered by appellant are not sufficient cause with proper explanation. 6.1.5 I find that delay of 3189 days is an inordinate delay. A pragmatic approach can be espoused when delay is short. While interpreting 'sufficient cause' vs advancing cause of ITANo.549/Ind/2023 Vijay Kumar Parekh 'substantial justice', period of delay can not to be ignored out of hand. Such a long delay will also cause grave prejudice to revenue. State as a party to this litigation need to be given equal treatment. Decision of Hon'ble Punjab & Haryana High Court in the case of CIT v. Ram Mohan Kabra is relevant, which reads as under: "The provisions relating to prescription of limitation in every statute must not be construed so liberally that it would have the effect of taking away the benefit accruing the other party in a mechanical manner. Where the Legislature spells out a period of limitation and provides for power to condone the delay as well, then such delay can be condoned only for sufficient and good reasons supported by cogent and proper evidence." Now, it is a settled principle of law that provisions relating to specified period of limitation must be applied with their rigour and effective consequences. In case of JCIT Vs. Tractors & Farm Equipments Ltd., [2007] 104 ITD 149 (Chennai)(TM) delay was not condoned by the Hon'ble ITAT as it was due to negligence and inaction on part of appellant which could have very well be avoided by exercise of due care and attention. Hon'ble ITAT in the case of ITO V. Hemraj Onkarji Mali, [2009] 311 ITR (AT) 416 (Indore) decided that there was no reasonable cause for delay on part of revenue. A conscious decision had been taken by senior officer of the rank of Commissioner not to file appeal. No proper steps were shown to establish that cause was beyond reasonable doubt for delay. In the case of Madhu Dadha Vs. ACIT, [2009] 317 ITR 458 (Mad.) Court while dismissing appeal noticed that assessee had not explained cause of delay in filing appeal. It held as under- 14. At this juncture, we have to be guided by the judgment reported in [1990] 1 LLN 457 in the case of T.N.M. BANK LTD. v. APP. AUTY., SHOPS ACT. In that particular case, the Division Bench of this court has held that, Page 6 of 9 ITANo.549/Ind/2023 Vijay Kumar Parekh We are of the view that the question of limitation is not merely a technical consideration. Rules of limitation are based on principles of sound policy and principles of equity. Is a litigant liable to have a Damocles' sword hanging over his head indefinitely for a period to be determined at the whims and fancies of the opponent?" In that decision, this Court has held that the delay of 285 days in preferring the appeal could not be condoned. It was held that the condonation of delay was not justified on facts and evidence of the case. As rightly pointed out that the Rules of limitation are based on principles of sound public policy and principles of equity. Though there is no presumption that the delay is occasioned deliberately or on account of culpable negligence, if the admitted facts in that case are taken note of, there is no doubt that the delay on the part of the appellant is deliberate and the appellant is clearly guilty of culpable negligence. Such negligent attitude of the appellant was not taken care to preserve the right of appeal and having been slept over for more than 558 days and not explained the delay without any reasonable doubt, the appellant cannot avail sympathy or discretion of this Court.

ITANo.549/Ind/2023 Vijay Kumar Parekh 4.2 The CIT(A) has not gone into the reasons explained by the assessee that prior to month of January 2023 the assessee was not aware about impugned order u/s 154 of the Act. Once the assessee has specifically stated that the impugned order passed u/s 154 was not communicated/served upon the assessee then this fact was required to be ascertained from the record as to whether order passed u/s 154 of the Act was communicated to the assessee as per provisions of section 182 r.w. Rule 127 of Income Tax Rules. Accordingly in the facts and circumstances of the case and in the interest of justice, we set aside the impugned order of the CIT(A) and matter is remanded to the record of the CIT(A) for deciding the same afresh after giving a finding on the point whether the order passed u/s 154 of the Act was served or not on the assessee. Needless to say the assessee be given an appropriate opportunity of hearing before passing fresh order.

Order pronounced in the open court on 24 .04.2024.