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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Sanjay Arora & Shri Manomohan Das
O R D E R
Per Sanjay Arora, AM
This is an Appeal by the Assessee agitating the part-allowance of it’s appeal contesting it’s assessment under section 143(3) of the Income Tax Act, 1961 (‘the Act’) dated 31.12.2019 for Assessment Year (AY) 2017-18, by the Commissioner of Income Tax (Appeals), NFAC, Delhi [CIT(A)] vide its order dated 26.10.2021.
At the outset, it was observed that the instant appeal, filed on 09.11.2022, is delayed by 317 days. The same is accompanied by a condonation petition, the contents of which are verified as true and correct per a sworn affidavit dated 05.10.2023 by Smt. Smt. V.A. Kavitha, the competent person, also verifying the appeal memo before the Tribunal (in Form 36) for and on behalf of the assessee-bank. It is averred therein that the earlier Secretary, Shri A.S. Anil Kumar, who retired on 30.11.2021, did not apprise her, the present incumbent, in the matter, who was thus
ITANo. 954/Coch/ 2022 & SA No. 34/Coch/2023 Neerikode Service Co-operative Bank Ltd. vs. ITO unaware of the pending proceedings, and caused the filing of the instant appeal immediately on coming to know of it.
We shall consider the said petition first inasmuch as only on the delay being condoned that the appeal would stand to be admitted and, accordingly, heard. In this regard, it is further observed that there was no representation before the first appellate authority, who issued as many as four notices of hearing over a period of 9 months. A remand report was called for by him from the assessing authority and the appeal disposed of on merits. Further, even before the Assessing Officer (AO), i.e., in the assessment proceedings, notices u/s. 142(1) of the Act, served, both, per email and physically, remained unresponded. As explained by Shri Jose, the learned counsel for the assessee, the assessee was unaware of the faceless proceedings before the first appellate authority. The hearing notices sent on e-mail were accordingly omitted to be seen. The impugned order itself was downloaded from the Revenue’s(ITBA) portal only on the Revenue pressing it for recovery of demand through telephonic calls.
In our considered view, it is a clear case of laches. Once the assessee, ably assisted by professionals, has given it’s e-mail ID in Form 35, the memo of appeal before the first appellate authority, it becomes duty-bound to check it’s inbox for any communications or, in any case, official communications. The appeal memo bears a specific question as to if the notices/communications could be sent on the e-mail address, to which the assessee has assented, providing email id. In fact, there is provision for a secondary such address as well, and which, where provided – which is generally of the professional assisting the appellant, the communications are also marked to the said address. The plea is in fact specious considering that the assessee had approached the Hon’ble High Court who, vide it’s order dated 07/4/2021 (received, as stated in the impugned order, on 19/7/2021) directed the first appellate authority to decide the appeal within 3 months of the receipt of copy thereof.
ITANo. 954/Coch/ 2022 & SA No. 34/Coch/2023 Neerikode Service Co-operative Bank Ltd. vs. ITO 5.1 It is this lackadaisical attitude in not checking it’s e-mail ID for months together that has led to, firstly, non-representation before the first appellate authority and, then, the delayed filing of the appeal before the Tribunal, the second appellate authority under the Act. This attitude is further borne out by the averments by the incumbent Secretary, i.e., that her predecessor had not apprised her of the pending matters. We have little doubt on that; he, as it appears, being oblivious of the same, displaying a couldn’t care less attitude, but, even so, could it be regarded as a valid explanation? Finding fault with it’s concerned employees, or charging them of being incompetent, positioning one against another, is of no consequence inasmuch as they act only for and on behalf of the assesssee, so that it is akin to explaining the delay w.r.t. an admitted default by it, and for no reason, much less sufficient. One cannot possibly take advantage of it’s own inaction or wrong to the prejudice of the other side(B.M. Malani v. CIT[2008] 306 ITR 196, 207 (SC)).Why, considering the directions by the Hon’ble High Court, which were only at it’s instance, the said non- cooperation assumes the nature of contempt, as indeed, disruption of the due process of law.It is this disregard of it’s obligations that we seek to emphasize.The identity of the incumbent is irrelevant – which is something between the appellant and it’s employees. As such, it is of no consequence as to who the incumbent was over the period of delay; he acting only for and on behalf of the assessee-bank. What alone is relevant is if he displayed a sense of responsibility, acting with due care and despatch. The two ingredients necessary for condoning the delay, which could only be the result of a positive, affirmative action, i.e., (a) proof of absence of negligence, and (b) proof of satisfactory level of diligence, are found completely missing in the instant case.
5.2 The plea by Shri Jose that Shri Anil Kumar, being a promotee, was not aware of the legal formalities is in our view misplaced. The first appeal has been filed in time, i.e., when he was in-charge, disproving the assessee’s claim in this regard, even Page 3
ITANo. 954/Coch/ 2022 & SA No. 34/Coch/2023 Neerikode Service Co-operative Bank Ltd. vs. ITO otherwise invalid. His ignorance of, or not being conversant with, the procedure under the Act, is understandable, but that is precisely why professionals are engaged, as indeed has the assessee, representing it at the assessment and the first appellate stages. Why, the assessee had approached the Hon’ble High Court, which again would only be on his advice. The assessee is to pursue the matter with the professional concerned. The due regard shown at the time of filing the appeal, ought to have continued; it being trite law that an appeal has to be preferred, and not merely filed. The matter should have been carried forward in the subsequent proceedings. But for the telephonic calls from the Department, seeking payment of the outstanding demand, delay may have been even more. In fact, even here, the affidavit dated 04.11.2022 does not mention the date of the receipt of telephone calls.
5.3 The condition of ‘sufficient cause’ in terms of s. 5 of the Limitation Act, 1963, is clearly not satisfied in the facts of the case. Case law in the matter is legion. Being a part of well-settled law, we do not consider it necessary to burden this order further by reference thereto. Suffice to cite here the recent decision in Pr. CIT v. National Fertilizers Ltd. [2023] 458 ITR 20 (Del), explaining with reference to a plethora of judicial pronouncements that the concept of liberal interpretation and substantial justice cannot be overstretched to render the law of limitation otiose. While examining an explanation for ‘sufficient cause’ the court must bear in mind that a substantive right inures to the other side on the expiration of the limitation period by the order under appeal becoming final and binding between the parties. The concepts of liberal approach and reasonableness in the exercise of discretion in condonation of delay has also been duly explained by the Hon’ble Court w.r.t. judicial precedents, toward which we extract therefrom, as under: ‘5.6 The concepts of liberal approach and reasonableness in the exercise of discretion by the courts in condoning the delay were again considered by the hon’ble Supreme Court toward in the case of Balwant Singh (Decd.) vs. Jagdish Singh [2010] 8 SCC 685, holding thus: Page 4 ITANo. 954/Coch/ 2022 & SA No. 34/Coch/2023 Neerikode Service Co-operative Bank Ltd. vs. ITO "25. We may state that even if the term 'sufficient cause' has to receive liberal construction, it must squarely fall within the concept of reasonable time and proper conduct of the party concerned. The purpose of introducing liberal construction is normally to introduce the concept of 'reasonableness' as it is understood in its general connotation.
The law of limitation is a substantive law and has definite con sequences on the rights and obligations of party to arise. These principles should be adhered to and applied appropriately depending upon the facts and circumstances of a given case. Once a valuable right has accrued in favour of one party as a result of failure of the other party to explain the delay by showing sufficient cause and its own conduct, it will be unreasonable to take away that right on the mere asking of the applicant, particularly when the delay is directly a result of negligence, default or inaction of that party. Justice must be done to both parties equally. Then alone the ends of justice can be achieved. If a party has been thoroughly negligent in implementing its rights and remedies, it will be equally unfair to deprive the other party of a valuable right that has accrued to it in law as a result of his acting vigilantly. . . .
The expression 'sufficient cause' implies the presence of legal and adequate reasons. The word 'sufficient' means adequate enough, as much as may be necessary to answer the purpose intended. It embraces no more than that which provides a plentitude which, when done, suffices to accomplish the purpose intended in the light of existing circumstances and when viewed from the reasonable standard of practical and cautious men. . . . 36. . . . The party shows that besides acting bona fide, it had taken all possible steps within its power and control and had approached the court without any unnecessary delay. The test is whether or not a cause is sufficient to see whether it would have been avoided by the party by the exercise of due care and attention." (emphasis is ours) 5.7 In the case of Union of India v. C. L. Jain Woolen Mills Pvt. Ltd. [2006] 131 DLT 360, one of the arguments of the applicant, Union of India, seeking condonation of delay in filing the appeal was that the power to condone delay has been conferred to do substantial justice and the court should adopt a liberal approach and the delay resulting from official procedures should normally be condoned. This court rejected the argument, placing reliance on the judgment in the case of P. K. Ramachandran (supra) and observed that although the provisions under section 5 of the Limitation Act have to receive liberal construction, but the court cannot ignore the fact that where an appeal gets barred by time, a definite right accrues to the opposite party and such right should not be taken away in a routine manner without disclosure of good and a sufficient cause for con donation of delay.”(pgs. 25-26) 5.4 The cause of delay, quintessentially a matter of fact, and its condonation, is, thus, a matter of judicial discretion to be exercised in consonance with the facts of the case, balancing the need for substantial justice with that for regard to the law Page 5
ITANo. 954/Coch/ 2022 & SA No. 34/Coch/2023 Neerikode Service Co-operative Bank Ltd. vs. ITO prescribing procedure, inasmuchas the law cannot be open-ended, with the law on limitation itself providing an inbuilt check in the form of ‘sufficient cause’, explained as ‘acting bona fide and exercise of due care and attention to avoid the delay’, which therefore is to be satisfied. And which we find as not in the facts and circumstances of the instant case. We, accordingly, decline to admit the instant appeal.