AMALENDU KUMAR MODAK,KOLKATA vs. INCOME TAX OFFICER , 50(1), KOLKATA

O R D E R

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

A. Grounds concerning dismissal of the Appeal, consequent upon the rejection of Condonation Petition , duly presented with regard to delayed filing of Appeal . A1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) was not at all justified in dismissing the Appeal on the ground of its belated filing , though the Appellant had , by presenting necessary condonation petition , as accompanied by pertinent corroborating evidence, Amalendu Kumar Modak; A.Y. 2017-18 had substantiated the existence of constraining reasons so as to signify genuine and bona fide reasons for such delay . (Issue : Arbitrary rejection of Condonation Petition , explaining the reason for delay in filing the Appeal ) A2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in summarily rejecting the circumstances leading to such delay , after ignoring the evidence, which inter alia, included necessary admission of lapse as to the delay , at the end of the erstwhile Advocate cum Tax Consultant , and as such in not appreciating that the Appellant could not be accused of any mala fides , negligent conduct or evasive motive in this connection . (Issue : Rejection of Condonation despite the proven negligence of the erstwhile Tax Advocate) A3. Even otherwise, the Ld. CIT(A) had , while deliberating on the merit of the Condonation Petition , most arbitrarily founded his rejection decision , solely on the length of the delay , rather than underlying circumstances and merit of the condonation, duly explained and corroborated by the Appellant , a senior citizen. (Issue : Rejection of the delay solely on the ground of the length thereof, rather than the underlying reasons). B. Grounds concerning legality of the Reassessment Proceeding. B 1. That on the facts and circumstances of the case and in law , given the alleged escapement of Rs. 41,72,360/- i.e., less than Rs. 50 lacs, in the light of Amendment , effected in Sec. 149, vide Finance Act, 2021, from 1st April, 2021 , the impugned Sec. 148 Notices for being issued beyond three years from the end of the relevant assessment year, the same is barred by limitation , under sec. 149(1)(a) . ( Issue : Given the magnitude of alleged escapement , the reassessment was barred by limitation ). B 2. Without prejudice to Ground No. B1 above, even otherwise, the successive notices issued under section 148 and thereafter, under sections 148A and Sec. 148 , had been devoid of any legality and would , thus, deserve being quashed , in the absence of their respective sanctions , vide Amended sec. 151(ii) , by Officials of Chief Commissioner rank. ( Issue : Given the magnitude of alleged escapement , the reassessment was barred by limitation ). B3. Without prejudice to Ground No. B1 and B2 , above, the Reassessment Proceeding , especially, the issue of notices/orders under sec. 148A and 148 for not having complied with the mandatory Faceless Mode , Sec. 151A read with the Rules , prescribed in this behalf, is unlawful and thus, liable to be nullified in its entirety. ( Issue : Reassessment Proceeding is not maintainable for not having complied with mandatory methodology , i.e., through Faceless Mode). Amalendu Kumar Modak; A.Y. 2017-18 Grounds on Merit C 1. That on the facts and circumstances of the case and in law, the addition of Rs. 41,72,360/- being the Cash deposited in Bank during the Demonetization phase, after treating the same as Unexplained” under section 69A and therefore, subjection of the same to Tax at rate specified in section, 115BBE, had been founded on conjectured and prejudiced stand ,rather than on duly adduced evidence in support of its nature, source and reflection in the Books of Account . ( Issue : Addition under sec. 69A had been based on conjectured and prejudiced view , contrary to fully evidenced records ). C2. That on the facts and circumstances of the case and in law , the treatment of cash deposit in Bank of Rs. 4172360/- during Demonetization Period, to be “ Unexplained” , vide section 69A , had been grossly arbitrary and devoid of any merit , as the same had evidently formed part of realisation of the proceeds of Retail Sales from several customers , vide the Audited Accounts, Detailed Cash Summary of the relevant period , the volume of Sales reflected therein and so on . ( Issue : Omission to appreciate that the Cash so deposited , had evidently stemmed from Retail Turnover of substantial amount, duly reflected in the Audited Books and Records) .”

3. At the outset, the ld. AR submitted that the condonation of delay was denied by the ld. CIT (A). The ld. CIT (A) has mentioned that there was delay of 212 days for which a deficiency letter was issued to the assessee. The assessee filed written submission for the delay along with an affidavit. A prayer for condonation of delay in filing the appeal is at page no.13 and 14 of the appellate order and is reproduced as under:-

“RE: AMALENDU KUMAR MODAK PAN : AEKPM9399G A.Y. 2017-18 SUB: Appeal filed u/s 246A on 27.1.2024 against the order u/s 147/143(3) for the A.Y. 2017-18-submisison of prayer for condonation of delay in filing the appeal Most humbly it is being submitted before your Ld. Authority as follows:

1. 1. That the appellant is a Sr. Citizen engaged in distribution trade ( as a sole proprietor) in consumer durables and earns his living from that trade or business. Amalendu Kumar Modak; A.Y. 2017-18 2. That the appellant had been regular in filing his return of income in accordance with the provisions of the Income tax, 1961.

3. That the appellant depends on a local tax practioner /advocate for filing his income tax returns and for other compliance matters, and had never faced any consequences for lapse of any compliance related issues under Income tax Act. l9ôl.till recently for die AY :2017-18.

4. That the ITR for the AY 2017-18 was selected for scrutiny u's 147 of the Act.

5. That the advocate of the appellant Mr. Sujit Kumar Roy had furnished all papers and documents required for the purpose of aforesaid assessment proceedings U/S 147 of the Act. The appellant had supplied all relevant papers documents to the aforesaid Mr. Sujit Kumar Roy for the purpose. and he had no idea about the proceedings carried on under FACELESS mode as was explained by the said advocate tax consultant.

6. That suddenly on 11.01.2024 a letter has been received from the said tax consultant (who is an advocate) along with an income tax order raising a huge demand and I fell really sick on knowing the implications of the order through an expert C.A. as the said tax consultant did not do anything for filing of appeal and even he did not know about the order till recently on 11.01.2024. The copy of the letter received from the tax consultant Mr. Sujit Kumar Roy is attached hereto.

7. That in view of the facts stated herein as above the appellant could know about the order u's 1471143(3) only on 11.01.2024 and he had no knowledge about the order before that as there was no physical delivery of the order to the registered address of the appellant Now, in view of the above factual circumstance it is humbly prayed before your Ld. Authority to appreciate the cause of delay and oblige by condoning the delay and save this appellant from huge loss that may have to be suffered for no fault of his. The appellant shall remain ever grateful for your kind allowance of condonation in the matter. An affidavit has been filed already in this regard_, a copy of the same is again attached hereto.”

4. The assessee has also filed a letter from the tax consultant dated 11.01.2024, Mr. Sujit Kumar Roy, the content of which are extracted as under:-

“Dated : 11.01.2024. To Mr. Amalendu Kumar Modak Garia Main Road, Karer Ganga, Laha Bagan, Srirampur, Garia, Kolkata-700 084. Amalendu Kumar Modak; A.Y. 2017-18 Dear Amalendubabu, Hope you are keeping well health wise now. Attached hereto please find the copy of assessment order of income tax for assessment year 2017-18. It was delivered to the e-filing site of yours in the month or May, 2023. Due to some of family issues and other pre- occupations I could not visit your e-filing account in time after the complete submission of required particulars in course of assessment proceedings under FACELESS procedure. There is a demand of high amount - so please arrange for filing of an appeal. Thanking you, Yours faithfully. “ 5. The ld. CIT (A) was of the view that the appellant needed to provide a valid reason or demonstrate and explain the circumstances of the delay. The reason for denying the request for condonation of delay of 112 days is as extracted hereunder:-

“The contention of the appellant is perused. When an appeal is filed beyond the statutory time limit, the Appellant need to provide a valid reason or demonstrate exceptional circumstances for the delay. The appellant must be able to demonstrate that there was “sufficient cause” which obstructed his action to file Appeal beyond the prescribed time limit. Thus, the condonation of delay is not automatic but is based upon on the facts of the case. The next question arises whether delay was excessive or inordinate. I have considered the submissions and perused the submissions of the appellant. As far as the delay in filing the appeal by 212 days is concerned, one has to admit that the delay involved is inordinate and not marginal. Personal problems or financial constraints per se could not constitute a reasonable cause, it is settled position of law that it is only marginal delays that can be condoned, and not inordinate delays. A liberal view ought to be taken in terms of delay of few days. However, when there is inordinate delay, one should be very cautious while condoning the delay. The delay of 212 days cannot be condoned simply because the appellant’s case is hard and calls for sympathy or merely out of benevolence to the party seeking relief. In granting the indulgence and condoning the delay, it must be proved beyond the shadow of doubt that the appellant was diligent and was not guilty of negligence whatsoever. The sufficient cause within the contemplation of the limitation provision must be a cause which is beyond the control of the party invoking the aid of the provisions. The Supreme Court in the case of Ramlal v. RewaCoalfields Ltd., AIR 1962 SC 361 has held that the cause for the delay in filing the appeal which by due care and attention could have been avoided cannot be a sufficient cause within the meaning of the limitation provision. Where no negligence, nor inaction, or want of bona fides can be imputed to the appellant a liberal construction of Amalendu Kumar Modak; A.Y. 2017-18 the provisions has to be made in order to advance substantial justice. Seekers of justice must come with clean hands. In the present case, the reasons advanced by the appellant do not show any good and sufficient reason to condone the delays. The delays are not properly explained by the appellant. There is no reason for condoning such delay in this case. The delay is nothing but negligence and inaction of the appellant which could have been very well avoided by the exercise of due care and attention. Further the appellant has not shown from record that any efforts were made for filing of the appeal on time. It is the duty of the appellant to file the appeal within the stipulated time provided under the Act unless the appellant is prevented by a reasonable cause from filing of the appeal in time.” As in view of the ld. CIT (A) there existed no sufficient or good reason for condoning in-ordinary delay of 212 days of fling the appeal, the appeal was dismissed as barred by limitation.

7. The ld. DR had no objection in sending the matter back to the ld. CIT (A).

“6. The Courts and the quasi judicial bodies are empowered to condone the delay if a litigant satisfied the Court that there were sufficient reasons for availing the remedy after expiry of the limitation. Such reasoning should be to the satisfaction of the Court. The expression "sufficient cause, or reason" as provided in Sub-section (3) of Section 249 of the IT Act is used in identical position in the Limitation Act and the CPC. Such expression has also been used in other sections of the IT Act such as Sections 274, 273, etc. The expression "sufficient cause" within the meaning of Section 5 of the Limitation Act as well as similar other provisions, the ambit of exercise of powers thereunder have been subject-matter of consideration before the Hon'ble Supreme Court on various occasions. In the case of State of West Amalendu Kumar Modak; A.Y. 2017-18 Bengal v. The Administrator, Howrah Municipality AIR 1972 SC 749 the Hon'ble Supreme Court while considering the scope of expression "sufficient cause" for condonation of delay has held that the said expression should receive a liberal construction so as to advance the substantial justice when no negligence or inaction or want of bona fide is imputable to party.

1. 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 out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest then 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 on a rational commonsense pragmatic manner.

4. When substantial justice and technical considerations are pitted against each other, 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 non-deliberate delay.

5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on 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 judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to so. Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the "State" which was seeking condonation and not a private party was altogether irrelevant. Keeping in mind the above authoritative pronouncement of the Hon'ble Supreme Court, it is an admitted position that the words "sufficient cause" appearing in Sub-section (3) of Section 249 of the Act should receive a liberal construction so as to advance substantial justice.

8. Adverting to the facts of the present case, it is seen that on the receipt of the demand orders, the assessee has forwarded the copy to the tax consultant for further action. The assessee itself is not aware why the tax consultant has not filed the appeals. Moreover, in the first appeal there is a delay of only 30 days, which is not a substantial one. The assessee would not gain anything by filing the appeal late. There is no mala fide imputable to the assessee. The delay in our considered opinion in filing the appeal is a result of negligence or inaction on the part of the tax consultant. It must be remembered that in every case of delay there can be some lapse of the litigant concerned. That alone is not enough to turn down the plea and to shut the doors against him, If the explanation does not smack of mala fide or it is not put-forth as a part of dilatory strategy, the Courts must show Amalendu Kumar Modak; A.Y. 2017-18 utmost consideration to such litigant. As observed by the Hon'ble Supreme Court in the case of N. Balakrishnan (supra), the length of delay is no matter. It is the acceptability of the explanation. That is the only criteria before condoning the delay. At the most for the inaction or a little negligence, the assessee can be burdened with the cost. But his right of hearing of the appeal on merit ought not to be shut. Considering the overall facts and circumstances of the case and in the larger interest of justice, we are of the opinion that these appeals deserve to be allowed. We condone the delay in filing the appeal before the learned CIT(A) and restore the matter back to the learned first appellate authority, who will decide the appeals of the assessee on merit. ……………”

9. Though in the case relied upon the appeal was restored to the First Appellate Authority on payment of ₹3,000/- as cash as there were four appeals, however, we do not find it a fit case for imposition of any cost as in this case, the assessee is a 71 years old person and there is sufficient cause for the delay. Hence, respectfully following the decision of the co-ordinate Bench in the case of Shakti Clearing Agency (P) Ltd. (supra), we find it fit case for condonation of delay. The ld. CIT (A) ought to have condoned the delay. We restore the appeal to the file of the ld. CIT (A) to decide the appeal on merits after granting adequate opportunity. Other grounds of appeal relating to the merits of the case shall also be adjudicated upon by the ld. CIT (A).