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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 16.08.2017 passed by learned Commissioner of Income-Tax (Appeals), Ujjain [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 21.03.2016 passed by learned ACIT, Circle-2(1), Ujjain, [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2013-14, the assessee has filed this appeal on following grounds:-
(i) That the ld. ACIT has disallowed interest expenses of Rs. 44,32,883/- u/s 36(1)(iii) of I.T. Act and added to the total income of the assessee. (ii) That the ld. ACIT has withdrawn deduction of Rs. 1,00,000/- u/s 80C, Rs. 4,546/- u/s 80D, Rs. 2,500/- u/s 80G.
Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 2. Heard the learned Representatives of both sides at length and case- records perused.
The Registry has informed that as per Form No. 36 filed by assessee- appellant, the impugned order dated 16.08.2017 was served upon assessee on 25.08.2017. Therefore, this appeal must have been filed by 24.10.2017, but it was actually filed on 01.06.2022 after a delay of about 4 years and 220 days. Ld. AR for the assessee submitted that the assessee has filed a prayer for condonation of delay supported by an affidavit dated 01.05.2023. The said affidavit is reproduced below:-
Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14
Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14
Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 4. Referring to above affidavit, Ld. AR submitted that there was a CBI inquiry going on against the assessee and his family in respect of a bank loan. The enquiry started in May 2017 and still continuing causing mental agony to assessee throughout the period. Further, the assessee had to suffer imprisonment also due to which he was not a position to look into personal affairs including filing of appeal. Finally, when the assessee got acquittal from imprisonment in May, 2022, immediately thereafter he arranged to file appeal without further delay in the month of June, 2022. Ld. AR submitted that the delay in filing of appeal is due to such onerous circumstances and not because of any lethargy, negligence or mala fide intention of assessee. Ld. AR submitted that by making delay in filing appeal, the assessee does not stand to derive any benefit. Ld. AR also submitted that the assessee’s case is meritorious and if the delay is not condoned it will seriously damage the assessee. Placing reliance upon decision of Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387, Ld. AR prayed to take a judicious view qua the assessee, condone delay and proceed with appeal.
5. In the case of Collector, Land Acquisition vs Mst. Katiji (Supra), the Hon'ble Supreme Court held:
“The expression ‘sufficient cause’ employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice -- that being the life-purpose for the existence of the institution of Courts.” The Hon’ble Court also made following observations:
“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 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 Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
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.
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 do so.”
In the instant case, applying the guidelines set out by Hon’ble Supreme Court, we find that there is no culpable negligence or mala fide intention on the part of the assessee in delayed filing of present appeal. We find that the assessee could not deal with personal matters including filing of present-appeal due to certain proceedings against him. We do not find anything on record to suggest that there was a deliberate attempt to take any kind of benefit by late filing. Therefore, in such circumstances, we find that there exists sufficient and reasonable cause for condoning the delay and as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. Even the Ld. DR for the Revenue, taking into account the exceptional situation of assessee, was fair enough to leave the matter to the wisdom of Bench. Therefore, in exercise of powers under section 253(5) of the Income-tax Act, 1961, we hereby condone the delay in filing present appeal and proceed to adjudicate on merits.
GROUND NO. 1:
In this ground, the assessee has challenged the disallowance of Rs. 44,32,850/- made by the AO out of deduction of interest expenditure claimed by assessee u/s 36(1)(iii).
Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 8. On perusal of assessment order, it emerges that the assessee claimed total deduction of interest expenditure of Rs. 55,90,409/- on unsecured loans of Rs. 4,65,57,647/- taken from different sources. The AO found that the assessee had given loans & advances of Rs. 3,69,40,693/- reflected in the Balance-Sheet as on 31st March, 2013 without charging any interest. When the AO confronted the assessee to explain as to why interest deduction should not be disallowed on proportionate basis, the assessee did not file any explanation. Therefore, the AO made disallowance of Rs. 44,32,883/-. During first appeal, the assessee made certain submissions which are re-produced by CIT(A) in para no. 3 of appeal-order. However, vide para no. 4.1, the CIT(A) rejected submission of the assessee and upheld the disallowance.
Before us, Ld. AR filed a Written-Submission and argued assessee’s case on the same line of reasoning as mentioned therein. We re-produce below the Written-Submission:
Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14
Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 10. On consideration of Ld. AR’s submissions, we find that the assessee is pointing out three fallacies in the disallowance made by AO, namely (i)
Certain loans/advances were made during the year and they remained outstanding for a broken period and not for whole year, still the AO has made disallowance for full year; (ii) Certain loans/advances were mere opening balances brought forward from preceding year, they were not given during the year and still the AO has made disallowance; and (iii) Major advance of Rs. 1,95,19,500/- for purchase of a plot and Rs. 16,00,000/- for construction of house were not in the nature of advances, still the AO has made disallowance. More or less similar submissions were also made by assessee during first-appeal before CIT(A). When we examine these submissions in the light of what is noted by AO in assessment-order, we find that the AO has simply mentioned “Hence, interest amount of Rs. 44,32,883/- was to be charged on advances given by the assessee at the average rate on which interest was also paid by the assessee.” Thus, we find that the AO has not given any working or calculation as to how he has arrived at the disallowance of Rs. 34,32,883/-. Therefore, in absence of complete details, we are unable to adjudicate the assessee’s objections.
Therefore, we are of the considered view that the present case is fit for remand to AO who shall take into account the submissions of assessee, take a reasoned decision thereon and work out the correct amount of disallowance without being influenced by his previous order. Needless to mention that the AO shall give reasonable opportunities to assessee and the Shri Rajesh Prajapati, Ujjain, Assessment year 2013-14 assessee shall also participate in the proceedings. This ground is allowed in these terms.
GROUND NO. 2 :
During hearing, Ld. AR for the assessee clearly admitted that the assessee is not pressing this ground. Therefore, this ground is dismissed as not pressed.
Resultantly, this appeal is partly allowed for statistical purposes.
Order pronounced in the open court on 17.07.2023.