Pure Home & Living Private Limited Vs ACIT (ITAT Delhi)
In this appeal, Assessee challenged the disallowance of ₹1,24,23,882 made u/s 14A r.w. Rule 8D despite earning no exempt income during AY 2017-18. After condoning the 99-day delay-holding that pre-occupation of the General Manager with ITR deadlines constituted reasonable cause-Tribunal examined the merits.
Tribunal noted that Assessee had earned no exempt income, & in its own earlier year (DLF Brands Ltd., ITA 4151/Del/2017), the same issue had already been decided in Assessee’s favour. Tribunal also relied on binding precedents of Delhi High Court (PCIT Vs IL&FS Energy Development Co Ltd, Cheminvest Ltd) & Gujarat High Court (Corrtech Energy Pvt Ltd), which consistently held that s.14A cannot be invoked in the absence of exempt income.
Since CIT(A) upheld the disallowance without addressing this settled legal position & without granting the requested personal hearing, Tribunal held that the disallowance was unsustainable. Subject to AO verifying that no exempt income was earned, the addition was deleted. The appeal of Assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the Assessee against the order of the Ld. Addl./JCIT (Appeals), Bhubaneswar dated 30.10.2024 for the AY 2017-18 in sustaining the disallowance made by the Assessing Officer u/s 14A read with Rule 8D of the I.T. Rules, 1962. The assessee raised the following grounds of appeal: –
1. “That the impugned order dated 30.10.2024 passed u/s 250 of the Income Tax Act, 1961 is bad in law, contrary on facts and therefore requires to be quashed.
2.1 That on facts and in the circumstances of the case, the Ld. CIT(A) erred in law in upholding the disallowance of Rs.1,24,23,882/- u/s 14A read with Rule 8D of the Income Tax Rules, 1962 even though the appellant has not earned any exempt income during the year under consideration.
2.2 That in the absence of earning of income, the applicability of section 14A gets ousted at the threshold and as such the confirmation of disallowance by CIT(A) is contrary to law and not sustainable.
2.3 That the order passed by CIT(A) is in total disregard to past history and decision of Hon’ble ITAT in assessee’s own case in preceding years wherein the disallowance u/s 14A was deleted on identical ground.
2.4 That in any case, in absence of recording of proper satisfaction in terms of section 14A(2), the disallowance made by the AO and confirmed by the CIT(A) is illegal and bad in law.
3. That on facts and in the circumstances of the case, the Ld.CIT(A) erred in law in passing the order dated 30.10.2024 without giving the personal hearing despite specific request and as such the impugned order is in gross contravention of principal of natural justice.”
2. Ld. Counsel for the assessee, at the outset, stated that the appeal filed by the assessee is delayed by 99 days and an application for condonation of delay in filing appeal along with affidavit of Shri Narender Singh, General Manager of the Assessee was filed requesting for condonation of delay. Referring to the petition for condonation of delay and the affidavit it is stated that the appeal could not be filed before the Tribunal within the stipulated time due to inadvertent omission on the part of Shri Narender Singh who is the General Manager Accounts who was interested with the responsibility of filing appeal before the Tribunal after coordinating with the tax consultant. Ld. Counsel stated that Shri Narender Singh was preoccupied with ITR filing activity in the month of October to December, 2024 due to approaching time limit as a result of which there was inadvertent failure in coordinating with the consultant for drafting and filing of the appeal before the Tribunal. Therefore, it is submitted that the delay in filing of appeal is on account of bona fide accounts being omission on part of the employees and there is no case of any deliberate default. Reliance was placed on the following decisions and submitted that when the technicalities are pitted against cause of justice should be preferred:
a. “Collector, Land Acquisition Anantnag and another v. MST. Katji and others reported in 1987(28) E.L.T. 185(SC)
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 second’s delay? The doctrine must be applied in a rational common sense 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 do so.
b. Bhag Singh and others v. Major Daljit Singh and others reported in 1987(32) E.L.T. 258(SC)
The law is now well settled by several decisions which have been cited before us and as well as of this Court that the Court while considering an application under Section 5 of the Limitation Act will consider the facts and circumstances not for taking too strict and pedantic stand which will cause injustice but to consider it from the point of taking a view which will advance the cause of justice.
c. Office of the Chief Post Master General v. Living Media India Ltd. [2012] 348 ITR 007 (SC)
Though in a matter of condonation of delay when there was no gross negligence or deliberate inaction or lack of bona fide, a liberal concession had to be adopted to advance substantial justice.”
3. Heard rival submissions and perused the application for condonation of delay along with affidavit of the General Manager Accounts of the Assessee and on going through the same, we are of the view that the assessee was prevented with reasonable cause in not filing the appeal within the due date specified. Thus, the delay of 99 days in filing then appeal before the Tribunal he is hereby condoned and the appeal is admitted.
