Case Law Details
Madhya Pradesh Police Housing Corporation Ltd Vs ACIT (ITAT Indore)
The ITAT Indore considered an appeal against the order of the CIT(A)-NFAC dated 17.10.2023 arising from a penalty order passed under Section 271(1)(c) of the Income-tax Act, 1961 for AY 2013-14. The appeal was filed with a delay, and the assessee sought condonation, explaining that it had first pursued rectification under Section 154 before the CIT(A). The rectification applications for AYs 2008-09 and 2013-14 remained pending for about two years before the NFAC. After the rectification applications were disposed of on 16.01.2025, the assessee filed the appeal for AY 2008-09 immediately, while the appeal for AY 2013-14 was inadvertently omitted and was subsequently filed on 30.05.2025 after the omission came to notice. The assessee submitted that the delay was bona fide, unintentional and without mala fide intent.
The Tribunal observed that the Revenue could not rebut the explanation offered by the assessee. It found that the assessee had shown sufficient cause by pursuing an alternate remedy under Section 154 before approaching the Tribunal. Referring to Section 253(5) of the Act and the decisions of the Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others and Inder Singh Vs. The State of Madhya Pradesh, the Tribunal adopted a justice-oriented approach, condoned the delay, admitted the appeal and proceeded to decide it on merits.
On merits, the Tribunal noted that the CIT(A) had granted hearings on 27.07.2023, 19.09.2023 and 04.10.2023. The assessee filed a reply dated 17.10.2023, supported by an e-filing acknowledgement, but the CIT(A) passed an ex parte order on the same date without considering the reply.
The Tribunal further examined the operative portion of the CIT(A)’s order and found that the appeal had been decided as though it arose from an assessment order. The CIT(A) recorded findings that the Assessing Officer had rightly assessed the income and confirmed the additions made by the Assessing Officer. However, the appeal before the CIT(A) actually arose from a penalty order under Section 271(1)(c). The Tribunal held that this constituted a clear mismatch and erroneous adjudication. Even if attributable to inadvertence or oversight, the order did not satisfy the requirement of Section 250(6), which mandates that the appellate order must state the points for determination, the decision thereon and the reasons for the decision.
Considering the principles of natural justice and fair play, and observing that no prejudice would be caused to the Revenue, the Tribunal set aside the impugned order and remanded the matter to the CIT(A) for fresh adjudication after providing the assessee a proper opportunity of hearing. The CIT(A) was directed to pass a fresh order uninfluenced by the earlier order, while the assessee was directed to participate in the proceedings without seeking unnecessary adjournments. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by order of first-appeal dated 17.10.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 30.03.2018 passed by learned DCIT-Circle 2(1), Bhopal [“AO”] u/s 271(1)(c) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2013-14, the assessee has filed this appeal on the grounds mentioned in Appeal Memo (Form No. 36).
2. The registry has informed that the present appeal is filed on 21.01.2025 against impugned order dated 30.05.2025 after a delay of 517 days. Ld. AR for assessee submitted that the assessee has filed following condonation-application supported by an affidavit:
Fixed For: 10/03/2026
BEFORE THE HON’BLE ITAT, INDORE BENCH, INDORE
Appeal No. : ITA 493/IND/2025
Assessee : Madhya Pradesh Police Housing Corporation Limited
A.Y. : 2013-14
Regarding : Condonation – Request Reg.
APPLICATION FOR CONDONATION OF DELAY MAY IT PLEASE YOUR HONOURS
1. The order of the ld. CIT(A) is dated 17.10.2023. The appeal could have been filed up to 16.12.2023. However, the appeal has been filed on 30.05.2025 resulting in a delay of 531 days.
2. That, after receipt of the order of the ld. CIT(A), the appellant preferred an application u/s 154 of the Act. This application was preferred on 04.01.2025. The application is enclosed as Annexure A. But the ld. CIT(A) has rejected our application by passing order u/s 154 read with section 250 of the Act on 16.01.2025. The copy of the said order is enclosed herewith as Annexure B.
3. The rectification applications were pending for 2 years (A.Y. 2008-09 & 2013-14) before the Appellate Authority – NFAC, for restoration of illegal orders and the rectification orders were being awaited. The appellant therefore was advised not to file the appeals against the main orders. On 16.01.2025, both the rectification orders were passed. As and when the orders came to the knowledge of the appellant, they immediately consulted their counsel and filed the quantum appeal for A.Y. 2008-09. Inadvertently, the order for A.Y. 2013-14 was missed by the appellant. Subsequently, as the inadvertent error came to the knowledge of the appellant in May 2025, an appeal was filed for A.Y. 2013-14 without any delay on 30.05.2025. The delay hence happened.
4. The appellant respectfully submits that the delay was unintentional and inadvertent. The delay happened as the appellant was trying to get relief from the other forum, vide rectification application. There was no mala fide intention in filing the appeal belatedly. In the respectful submission of the present appellant, the delay is due to bona fide reasons, inadvertent and unintentional, and for no fault of the assessee. No person is benefitted by filing the appeal belatedly.
5. In the interest of justice the delay so caused may kindly be condoned by this Hon’ble Court.
6. The appellant respectfully prays for condonation of delay in filing the appeal in the interest of justice.
Bhopal
Date:
Applicant
3. The assessee is a body of Madhya Pradesh Police. The reasoning given by assessee in above application for occurrence of delay was discussed with reference to the supporting placed by assessee on record. The Ld. DR for revenue, though dutifully opposed against condonation of delay and also filed a compilation of case laws in favour of revenue, yet could not rebut the explanation given by assessee. We have considered assessee’s explanation in Para 2 & 3 of above application and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause”. Basically, the assessee was pursuing an alternate remedy against the impugned order by seeking rectification u/s 154 before the Ld. CIT(A), and ultimately, after not getting any relief, filed the present appeal before the ITAT. Although a part of the delay is attributable to the assessee, the same is only for a relatively small period. Further, the present matter pertains to levy of penalty and not determination of tax liability. Penalty is not a source of revenue for the Government; rather, the object of penalty provisions is to ensure compliance with the statutory provisions and to discourage defaults. Therefore, where a litigant demonstrates a bona fide pursuit of remedies and sufficient cause for delay, a justice-oriented approach deserves to be adopted.
We find that section 253(5) of the Act prescribes thus:
“(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was a sufficient cause for not presenting it within that period”.
Further, long back the Hon’ble Supreme Court has settled in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever “substantial justice” and “technical considerations” are opposed to each other, the cause of “substantial justice” must be preferred by adopting a justice-oriented approach.
In a recent judgement in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339, the Hon’ble Supreme Court has condoned delay of 1,537 days while holding so:
“14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”
Thus, taking into account the facts of case, the controversy involved, the reasoning advanced by assessee, the provision of section 253(5) and the decisions of Hon’ble Supreme Court, we take a judicious view, condone delay, admit present appeal and proceed to adjudicate the same.
4. On merit, Ld. AR for assessee drew us to Para 4 of impugned order to demonstrate that the Ld. CIT(A) granted three hearings on 27.07.2023, 19.09.2023 & 04.10.2023. The assessee filed a reply dated 17.10.2023 (copy of e-filing acknowledgement downloaded from departmental website is placed before bench). However, the Ld. CIT(A) passed ex-parte order on very same date i.e. 17.10.2023 without considering assessee’s reply.
5. That apart, the operative para of impugned order passed by Ld. CIT(A) reads as under:
“5.5 The facts of the case as noted above are that the appellant has not pursued the appeal despite being granted opportunities as elaborated above. No details, documents or submissions have been provided to come to any conclusion other than those arrived at by the assessing officer in the assessment order. During the appellate proceedings the appellant was given opportunities to put forth his case, but he did not upload any response despite service of notice(s). Considering all the facts and the circumstances of the case no interference with the assessment order of the AO is called for. The appellate proceedings cannot be allowed to be held hostage by dilatory tactics on the part of the appellant and a complete disdain for statutory notices. Therefore, I find no infirmity in the assessment order passed by the assessing officer u/s 271 of the Income Tax Act, 1961.
6. In the view of the above, since the appellant failed to make any submissions in support of grounds of appeal, this gives rise to an undisputable conclusion that the assessee has got nothing more to say in this regard. I have gone through the record before me and based on the record I have decided to adjudicate the issue on the merits of the case. In the instant case the AO has rightly assessed the income. Since the appellant failed to substantiate appellant’s claim and additions made by the Assessing Officer is hereby confirmed. Therefore, ground No’s. 1 to 3 of the appeal are hereby dismissed.
7. In the result, the appeal is dismissed.”
6. On a careful reading of the aforesaid operative portion, we find that the Ld. CIT(A) has adjudicated the matter as if the appeal pertained to the assessment-order and has upheld the action of the AO in assessing the income, whereas the present appeal admittedly arises out of a penalty-order passed by the AO u/s 271(1)(c) of the Act. Thus, there is a clear mismatch and erroneous adjudication in the impugned order. Even if the same has occurred on account of inadvertence or oversight, the order nevertheless falls short of the mandate of section 250(6) of the Act, which requires that: “The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”.
7. Therefore, considering above aspects; having regard to the principle of natural justice and fair play; and also bearing in mind that no prejudice would be caused to revenue if the present matter is restored at the level of CIT(A), we remand this matter back to the file of CIT(A) for adjudication afresh. The Ld. CIT(A) shall give necessary opportunity of hearing to assessee and pass an appropriate order uninfluenced by his earlier order. The assessee is also directed to remain vigilant and ensure participation in the hearings as may be fixed by Ld. CIT(A) and do not seek unnecessary adjournments failing which the Ld. CIT(A) shall be at liberty to pass appropriate order in accordance with law. Ordered accordingly.
8. Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 21/05/2026
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