Chhattisgarh HC Condones 161-Day Delay, Restores ITAT Appeal on Merits

Jagdish Prasad Singhania Vs ACIT (TDS) (Chhattisgarh High Court)

The Chhattisgarh High Court heard an appeal under Section 260 of the Income Tax Act challenging the ITAT’s order refusing to condone a 161-day delay in filing an appeal against a penalty under Section 271C. The substantial question of law framed was whether the ITAT was justified in dismissing the appeal by holding that no sufficient cause had been shown for the delay.

The Assessing Officer, by assessment order dated 29.12.2016, made an addition of Rs. 14,11,167 under Section 69(C) and disallowed Rs. 50,000 towards wages and Rs. 15,000 towards office expenses. The matter was referred to the Additional Commissioner of Income Tax (TDS), Raipur, who, by order dated 30.06.2019, held that the assessee had failed to deduct TDS on interest paid or credited and imposed a penalty of Rs. 7,70,000 under Section 271C. The Commissioner of Income Tax (Appeals) dismissed the assessee’s appeal on 29.07.2022. The assessee thereafter filed an appeal before the ITAT with a delay of 161 days, which the ITAT refused to condone by order dated 02.11.2023, resulting in dismissal of the appeal as time-barred.

Before the High Court, the assessee relied upon the Supreme Court’s decision in Vidya Shankar Jaiswal v. The Income-Tax Officer, Ward-2, Ambikapur and an order of the High Court dated 04.02.2025 in Pradeep Kumar Khandelwal v. The Income Tax Officer-1(1), Raipur. The assessee explained the delay by stating that his wife had undergone major surgery, he himself was unwell during the relevant period, and filed an affidavit along with medical documents. The Revenue supported the ITAT’s order.

The High Court noted that the Supreme Court, in Vidya Shankar Jaiswal, had observed that a justice-oriented and liberal approach ought to be adopted while considering delay. It also noted that the Revenue had not filed any counter-affidavit disputing the reasons furnished by the assessee. Holding that the explanation for the delay remained uncontroverted, the Court condoned the 161-day delay, answered the substantial question of law in favour of the assessee, and remitted the matter to the ITAT for disposal on merits in accordance with law. The appeal was allowed to that extent, with parties left to bear their own costs.

Cases Discussed

• Vidya Shankar Jaiswal v. The Income-Tax Officer, Ward-2, Ambikapur (SC), Special Leave Petition (Civil) Nos.26310-26311/2024, decided on 31.1.2025.
• Pradeep Kumar Khandelwal v. The Income Tax Officer-1(1), Raipur (Chhattisgarh High Court), Tax Case No.166 of 2024, Order dated 4.2.2025.

FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT

1. The present appeal preferred by the Appellant/ Assessee under Section 260 of the Income Tax Act, 1956 (the Act) was admitted for hearing by this Court on 21.2.2025 by formulating the following substantial question of law:-

“Whether the ITAT is justified in dismissing the appeal preferred by the Appellant/Assessee on the point that no sufficient cause has been shown for delay of 161 days in filing the appeal before ITAT, Raipur by recording a finding which is perverse to the record”

2. The Assessing Officer (A.O.) passed Assessment Order dated 29.12.2016 by adding amount of Rs.14,11,167/- under Section 69(C) of the Act and also Rs.50,000/- and Rs.15,000/- disallowing wages expenses and office expenses (total Rs.4,76,167/-), assigning the reason that addition of Rs.14,11,167/-is an unexplained income and therefore a penalty proceeding needs to be initiated separately under Section 271(1)(C) of the Act for concealment of income and referred the matter to Additional Commissioner of Income-Tax (TDS), Raipur [ACIT (TDS)]. The ACIT (TDS) vide its Order dated 30.6.2019 held that the assessee has failed to deduct TDS on the amount of interest paid/credited and therefore imposed a penalty of Rs.7,70,000/- under Section 271C of the Act against the assessee. Assailing the said penalty order passed by ACIT (TDS), the assessee preferred an appeal before Commissioner of Income-Tax (Appeals) [CIT(A)] who affirmed the penalty order passed by ACIT (TDS) and dismissed the appeal of the assessee vide its Order dated 29.7.2022. Against the orders passed by the CIT(A) and ACIT (TDS), the assessee filed an appeal before the Income Tax Appellate Tribunal [ITAT], but with a delay of 161 days. The ITAT, after hearing the appeal on the issue of delay, by its Order dated 2.11.2023 rejected the application for condonation of delay, thereby dismissing the appeal of the assessee on the ground of it being barred by limitation on account of 161 days’ delay. It is this order of the ITAT against which the present appeal has been preferred by the assessee.

3. Dr. Shiv Kumar Shrivastava, learned Counsel appearing for Appellant/Assessee, submits that the Supreme Court in the matter of Vidya Shankar Jaiswal v. The Income-Tax Officer, Ward-2, Ambikapur¹ has condoned the delay of 166 days in filing the appeal and therefore the impugned Order passed by the ITAT is also liable to be set-aside and the delay of 161 occurred in filing of the appeal be condoned. In this regard, learned Counsel has also relied upon the Order dated 4.2.2025 of this Court passed in Tax Case No.166 of 2024².

4. Ajay Kumrani, learned Counsel appearing for the Respondent-Department, however supports the impugned Order and prays for dismissal of the appeal.

5. We have heard learned Counsel(s) for parties, considered their rival submissions and also perused the record with utmost care and circumspection.

6. Admittedly, there is a delay of 161 days in filing the appeal before the ITAT and for which the Appellant/ Assessee has assigned the reason, supported with his affidavit dated 6.3.2023 and also certain medical documents (uncertified), that the wife of the assessee had undergone a major surgery and the assessee himself was not well during the relevant period of time and therefore delay of 161 occurred in filing the appeal be condoned, which the ITAT by the impugned Order rejected, holding that no justifiable reason has been assigned by the assessee for the inordinate delay of 161 days involved in filing the appeal and accordingly the appeal was also dismissed being barred by limitation.

7. The Supreme Court vide its Order dated 31.1.2025 passed in the matter of Vidya Shankar Jaiswal (supra) while setting aside the order of this Court rejecting the appeal on the ground of delay of 166 days therein, has held that the High Court ought to have adopted justice oriented and liberal approach by condoning the delay.

8. In view of above and also for the reason shown by the Appellant/Assessee for the delay, coupled with the fact the Respondent/Revenue did not file any counter-affidavit controverting the reason assigned by the assessee and as such the reason assigned by the assessee for delay in filing the appeal remained uncontroverted, the delay of 161 days occurred in filing the appeal before ITAT deserves to be and is hereby condoned and the substantial question of law is answered accordingly.

9. The matter is remitted back to the ITAT for deciding the appeal on merits, in accordance with law, at the earliest.

10. The present appeal stands allowed to the extent indicated herein-above, leaving the parties to bear their own costs.

Notes:

¹ Special Leave Petition (Civil) Nos.26310-26311/2024, decided on 31.1.2025.

² Pradeep Kumar Khandelwal v. The Income Tax Officer-1(1), Raipur.