BIREN DHIRAJLAL SHAH,GANDHINAGAR vs. THE ITO WARD-1, GANDHINAGAR
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Income Tax Appellate Tribunal, ‘’ D’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED & SHRI TR SENTHIL KUMAR
आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned two appeal have been filed at the instance of the Assessee against the separate orders of the Learned Commissioner of Income Tax (Appeals), Ahmedabad, arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12.
The assessee has raised following grounds of appeal:
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The Ld.AO has erred by making order u/s.69, as there are no investments by the assessee. 2. Due to bankruptcy of assessee, the assessee has not made any follow up before any authority under income tax office. 3. We may allowed to add or alter or modify the ground of appeal. 3. At the outset, we note that there was a delay of 1607 days in filing the appeal by the assessee. There were condonation petition and affidavits filed by the assessee. The reasons specified therein for the delay was ill health and bankruptcy eventually running away from the society and police which has created lot of stress upon the assessee. The assessee has also filed the affidavits vide dated 23rd July 2021 and 23rd January 2024 in support of his contentions. The assessee has also filed medical bills, reports, prescriptions, and other correspondence relating to his ill health and cheque bouncing case filed before the Magistrate Court upon him to justify the delay and seek condonation.
In view of above the Ld. AR for the assessee before us submitted that the delay in filing the appeal occurred due to unavoidable situations. Therefore, the delay in filing the appeal should be condoned.
On the other hand Ld. Sr. D.R. submitted that the delay is inordinate and therefore vehemently opposed to condone such a huge delay and relied upon Madras High Court Judgment in the case of Royal Stitches (P.) Ltd. Vs. DCIT reported in [2023] 156 taxmann.com 361 (Madras) wherein it is held that where assessee had not given ‘sufficient cause’ for condoning huge delay of 1072 days in filing appeal, delay could not be condoned.
We have perused the records and heard the rival submissions of both the sides. There was a delay of 1607 days in filing the appeal by the assessee before us. Certainly, the delay is significant. But length of the delay becomes insignificant if there was sufficient cause for such delay which prevented the assessee in filing
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the appeal. As such we need to consider the cause for the delay and not the length of the delay. Accordingly in our considered view when there was a reasonable cause, the period of delay may not be relevant factor. The Hon’ble Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors reported in 153 ITR 596 held as under: “Since in this case the assessee had been prosecuting other remedies, the time taken by those proceedings should naturally be taken while determining the question whether the assessee had sufficient cause for not presenting the appeal in time. Therefore, the revenue was not right in submitting that the appeal filed under section 17 was an appeal against the original order of assessment under the Act, which was passed about 20 years ago, as it was evident that the appeal was against an order of rejection of relief by the assessing authority. Thus, though the Tribunal's view that there was no question of limitation in such cases, was not correct yet the AAC was right in condoning the delay and entertaining the appeal.” 6.1 From the above we note that the Hon’ble Madras High Court was pleased to condone the delay for 20 years approximately by holding that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Thus, the delay in the instant case is just of 1607 number of days which cannot be considered to be inordinate or excessive in comparison to the delay of 7330 days approximately.
6.2 The next controversy arises what is the sufficient cause, it has not been defined anywhere under the Act but refers to an occasion which is beyond the control of a normal person. What is beyond the control of a person, the test of reasonable approach under normal circumstances should be applied. As such no hard and fast rule can be applied to figure out the weather there was sufficient cause for the delay. It depends upon case-to-case basis. However, the Hon’ble Courts in the series of judgements have held that while condoning the delay the expression of sufficient cause should be construed for advancing substantial justice to the party concerned. For evaluating sufficiency of cause and then, for deciding condonation of delay, following principles laid down by Hon'ble Apex Court in the case of Mst. Katiji (167 ITR 471) should be kept in mind: (i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
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(ii) 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. (iii) "Every day's delay must be explained" does not mean that a pedantic approach should be taken. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common-sense pragmatic manner. (iv) 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. (v) 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. (vi) 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. 6.3 From the above judgment of the Hon’ble Apex Court, we note that the substantial justice deserves to be preferred rather than deciding the matter on the basis of technical defect.
6.4. It is trite law that where a case has been presented in the Court beyond limitation, the petitioner has to explain the Court as to what was the "sufficient cause" which means an adequate and enough reason which prevented him to approach the Court within limitation as held by Hon’ble Supreme Court in the following cases:
(a) Basawaraj v. Land Acquisition Officer, (2013) 14 SCC 81: "9. Sufficient cause is the cause for which the defendant could not be blamed for his absence. The meaning of the word "sufficient" is "adequate" or "enough", inasmuch as may be necessary to answer the purpose intended. Therefore, the word "sufficient" embraces no more than that which provides a platitude, which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case, duly examined from the viewpoint of a reasonable standard of a cautious man. In this context, "sufficient cause" means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has "not acted diligently" or "remained inactive". However, the facts and circumstances of each case must afford sufficient ground to enable the court concerned to exercise discretion for the reason that whenever
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the court exercises discretion, it has to be exercised judiciously. The applicant must satisfy the court that he was prevented by any "sufficient cause" from prosecuting his case, and unless a satisfactory explanation is furnished, the court should not allow the application for condonation of delay. The court has to examine whether the mistake is bona fide or was merely a device to cover an ulterior purpose. (See Manindra Land and Building Corpn. Ltd. v. Bhutnath Banerjee (AIR 1964 SC 1336 Mata Din v. A. Narayanan [(1969) 2 SCC 770), Parimal v. Veena [(2011) 3 SCC 545] and Moniben Devraj Shah v. Municipal Corpn. of Brihan Mumbai (2012) 5- SCC 157].)”
(b) Ajay Dabre v. Pyare Ram 2023 SCC Online SC 92: ‘13. This Court in the case of Basawaraj v. Special Land Acquisition Officer while rejecting an application for condonation of delay for lack of sufficient cause has concluded in Paragraph 15 as follows: "15. The law on the issue can be summarised to the effect that where a case has been presented in the court beyond limitation, the applicant has to explain the court as to what was the "sufficient cause" which means an adequate and enough reason which prevented him to approach the court within limitation. In case a party is found to be negligent, or for want of bona fide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, there cannot be a justified ground to condone the delay. No court could be justified in condoning such an inordinate delay by imposing any condition whatsoever. The application is to be decided only within the parameters laid down by this Court in regard to the condonation of delay. In case there was no sufficient cause to prevent a litigant to approach the court on time condoning the delay without any justification, putting any condition whatsoever, amounts to passing an order in violation of the statutory provisions and it tantamounts to showing utter disregard to the legislature." 14. Therefore, we are of the considered opinion that the High Court did not commit any mistake in dismissing the delay condonation application of the present appellant. 6.5. Thus, it is crystal clear from the above legal proposition that the discretion to condone the delay has to be exercised judiciously based on facts and circumstances of each case.
6.6 We also note that the Hon’ble Gujarat High Court in the case of Vareli textile industry versus CIT reported in 154 Taxman 33 has held as under: It is equally well-settled that where a cause is consciously abandoned (as in the present case) the party seeking condonation has to show by cogent evidence sufficient cause in support of its claim of condonation. The onus is greater. One of the propositions of settled legal position is to ensure that a meritorious case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, at least prima facie, whether the assessee has or has not a case on merits.
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6.7 From the above, it is transpired that a meritorious case of the assessee should not be thrown away due to negligence or on account of technical lapses.
6.8 In the light of the above stated discussion, we proceed to evaluate whether the delay in the present case needs to be condoned in the given facts and circumstances. From the medical details filed by the assessee, we find that the assessee was having one or the other medical issues right from the financial years 2008-09 to 2019-20 which may not be of serious concern, but the ill-health of the assessee cannot be ruled out. Likewise, the assessee in the affidavit has also submitted that he was under a lot of financial stress and was declared as an insolvent. Furthermore, he was running away from the police and society. There was also a case against the assessee of cheque bouncing as evident from the details available on record. If we aggregate all these factors, the fact that the assessee was having a stressful life cannot be ruled out and assessee was not in sound mind to take correct decisions on legal proceedings.
6.9 Besides the above, we note that all the credits in the form of cheque and cash deposits in the bank account of the assessee has been added to the total income of the assessee. The AO has done so in the absence of any cooperation from the side of the assessee despite the assessee being afforded several opportunities. However, what we find is this that there is no discussion in the assessment order as far as withdrawn from the banks is concerned. Thus, it is transpired that all the credits appearing in the bank has been treated as income of the assessee though the assessee during the assessment proceedings vide letter dated 22 January 2014 has submitted details with the request to tax the income under the provisions of section 44AF of the Act. As such, the reply submitted by the assessee vide letter dated 22 January 2014 was rejected by the AO stating that the detailed furnished was incomplete but how was it incomplete, the order of the AO is silent. It is the settled law that only the credit sides of the bank do not
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represent the income. The Hon’ble HIGH COURT OF GUJARAT in the case of Principal Commissioner of Income-tax v. Shitalben Saurabh Vora reported in 133 taxmann.com 441 has held as under:
9.2 We further note that, the Revenue has not brought anything on record suggesting that the assessee had so much of the income as computed by the AO. As such the AO was under the obligation to bring on record to demonstrate that the assessee has made some investment or incurred some expenses out of such income. But there is no such information available with the Revenue. Indeed, the assessee has certainly has violated the provisions of law by not maintaining the books of account, furnishing income tax return, providing sufficient details but that does not lead to reach the conclusion that the amount deposited in the bank represents the undisclosed income of the assessee. As such, the deposits in the bank cannot be treated as income on standalone basis without considering the withdrawal. Thus in the absence of any information demonstrating that the withdrawal from the bank has been utilized by the assessee either in the form of some investment or the same has been incurred as an expense, the deposits cannot be treated as income in the given facts and circumstances. Thus, in our considered view in such a situation the only option available to compute the income on some reasonable estimate. 6.10 The above view of the Hon’ble Gujarat High Court was subsequently affirmed by the Hon’ble Supreme Court reported in 133 taxmann.com 442.
6.11 In view of the above we are of the opinion that it is the fit case where the delay has to be condoned irrespective of the duration/period of the delay. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 1607 number of days. We also note that there is no allegation from the Revenue that the appeal was not filed by the assessee within the time deliberately. Therefore, we are inclined to prefer substantial justice rather than technicality in deciding the issue. We also find that if we reject the application of the assessee for condoning the delay then it would amount to legalise injustice on technical ground whereas the Tribunal is capable of removing injustice and to do justice. Thus, we condone the delay of 1607 days in filing the appeal and proceed to hear the appeal on merit for the adjudication.
Now, we proceed to adjudicate the matter on merit:
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The only issue raised by assessee in this appeal is that learned CIT-A erred in confirming the order of the AO by sustaining the addition of ₹ 54,23,290.00 under section 69 of the Act.
At the outset, it was noticed that the order passed by the ld. CIT-A and the AO is ex-parte. Furthermore, there was also delay in filing the appeal before the ITAT which has been condoned in the preceding paragraph after giving detailed reasons. The same reasoning can also be applied for non-appearance of the assessee before the revenue authorities while restoring the issue to the file of the AO for fresh adjudication as per the provisions of law. It is also directed to the assessee to extend the full co-operation during the assessment proceedings. Hence, the ground of appeal filed by the assessee is allowed for the statistical purposes.
8.1 In the result, the appeal of the assessee is allowed for statistical purposes.
Coming ITA 193/AHD/2021 for AY 2011-12, an appeal by the asseesee.
The only issue raised by the assessee is that the landed CIT-A erred in confirming the penalty levied by the AO for Rs. 24,57,460 under the provisions of section 271(1)(c) of the Act.
The present appeal relating to the penalty preferred by the assessee was filed late by 1607 days. However, the delay in the quantum appeal for the identical number of days has already been condoned with detailed reasoning discussed in the preceding paragraph bearing number 6 of this order. Therefore, the same reasonings are also adopted for condoning the delay in filing the appeal by the assessee. Thus, we proceed to adjudicate the issue raised by the assessee on merit.
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At the outset, we note that the quantum addition against which the penalty under section 271(1)(c) of the Act was imposed by the revenue authorities, such quantum addition has already been set aside to the file of the AO in ITA No. 192/AHD/2021 vide paragraph number 8 of this order for fresh adjudication as per the provisions of law. Accordingly, the penalty levied in the case on hand is not sustainable and liable to be deleted. The AO is at the liberty to proceed with the penalty under section 271(1)(c) of the Act in pursuance to the outcome of the quantum matter discussed above and as per the provisions of law. However, the penalty imposed in the present case is not sustainable. Hence the ground of appeal of the assessee is allowed.
11.1 In the result, the appeal filed by the assessee is allowed.
In the combined result, the appeal filed by the assessee in ITA No. 192/AHD/ 2021 is allowed for the statistical purposes whereas the appeal filed by the assessee in ITA No. 193/AHD/2021 is allowed.
Order pronounced in the Court on 28/03/2024 at Ahmedabad.
Sd/- Sd/- (TR SENTHIL KUMAR) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 28/03/2024 Manish
