Mahendra Kumar Sanwalka Vs ITO (ITAT Kolkata)
Kolkata ITAT Condones 59-Month Delay: Bona Fide Pursuit of Section 154 Rectification Is ‘Sufficient Cause’ for Delayed Appeal
Summary: The Kolkata Bench of the Income Tax Appellate Tribunal, in ITA No. 1846/KOL/2026 for Assessment Year 2020-21, partly allowed the assessee’s appeal for statistical purposes and restored the matter to the Addl/JCIT(A)-3, Ahmedabad for adjudication on merits. The assessee had filed the original return of income on 31.12.2020 declaring total income of ₹44,29,080/- and subsequently filed a revised return u/s 139(5) on 15.01.2021 claiming carry forward of loss of ₹39,23,825/-, comprising short-term capital loss of ₹3,81,248/- and long-term capital loss of ₹35,42,577/-. The CPC processed the return u/s 143(1) on 03.02.2021, disallowed the carry forward of loss on the ground that the return was filed beyond the due date of 10.01.2021, levied a fee of ₹10,000/- u/s 234F and computed a refund of ₹10,890/-, which was adjusted against outstanding demand u/s 220(2). The assessee subsequently filed an application u/s 154 on 04.05.2021 and awaited its disposal before filing the statutory appeal, resulting in a delay of more than 59 months. The Addl/JCIT(A) declined to condone the delay and also upheld the disallowance on merits. Before the Tribunal, the assessee contended that pursuing the rectification remedy constituted sufficient cause. The Tribunal held that since the assessee had filed a rectification application and was awaiting its disposal, the delay in filing the appeal against the intimation u/s 143(1) ought to have been condoned. The Tribunal therefore set aside the order of the Addl/JCIT(A) and restored the appeal for disposal of the grounds on merits by a speaking order, with a reasonable opportunity of hearing to the assessee and compliance with Rule 46A of the Income-tax Rules, 1962. The Tribunal expressly did not decide the substantive issues concerning carry forward of loss, the effect of the original and revised returns, the applicability of Notification No. 93/2020, the fee u/s 234F or the other grounds on merits.
List of Cases Discussed / Relied Upon
- Union of India & Anr Vs Jahangir Byramji Jeejeebhoy (D) Through His LR,2024 INSC 262 — relied upon by the Addl/JCIT(A) concerning the principles governing condonation of inordinate delay.
- M. Loganathan Vs Government of India represented by Commissioner of Income-tax,[2008] 302 ITR 139 — cited concerning diligence in prosecution of appellate proceedings.
- Nileshkumar Chhaganbhai Vasoya Vs ITO,ITA No. 64/Srt/2023 — cited concerning condonation of delay and the proposition that legal illiteracy is not an excuse.
- Ramlal and others Vs Rewa Coalfields Ltd,AIR 1962 SC 361 — cited concerning explanation of delay and discretionary jurisdiction in condonation matters.
- Tractors and Farm Equipments Ltd,(ITAT Chennai) 104 ITD 149 — cited concerning the requirement to consider the nature and extent of delay.
- Madhu Dadha Vs The Assistant Commissioner of Income Tax Officer,(Madras) 317 ITR 458 — cited concerning explanation of delay and sufficient cause.
- Sri Venkatesa Paper & Boards Ltd.,[2006] 98 ITD 200 — cited concerning diligence and negligence in applications for condonation of delay.
- T. Kishan,[2012] 23 taxmann.com 383 — cited concerning diligence and absence of negligence in seeking condonation.
- Prabhudas Kishoredas Tobacco Products P. Ltd. v. Deputy Commissioner of Income-tax,[1994] 48 ITD 543 (AHD.) — cited concerning reasonable diligence and explanation of the whole delay.
- Asi Bai v. Gomathi,AIR 1979 Mad. 115 at page 116 — cited concerning reasonable diligence in prosecution of an appeal.
- Sitaram Ramchandra v. M.N. Nagrashana,AIR 1960 SC 260 at pages 265-266 — cited concerning explanation of delay.
- Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi,AIR 1978 SC 537 — cited concerning explanation of delay in condonation proceedings.
- Andal Sweet Stall & Tippo Dining Hall v. State of Tamil Nadu,[1981] 48 STC 551 — cited concerning events occurring after expiry of limitation and sufficient cause.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the assessee is against the order of the Addl/JCIT(A)-3 Ahmedabad [hereinafter referred to as Ld. ‘Addl/JCIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2020-21 dated 19.03.2026.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. For that the order of the Ld. JCIT (A) is arbitrary, illegal and bad in law.
2. For that on the facts and in the circumstances of the case, the Ld. JCIT (A) erred in dismissing the appeal both on the ground of non-condonation of delay as well as on merits, is arbitrary, contrary to facts on record, bad in law and is liable to be set aside.
3. For that the Ld. JCIT (A) erred in not condoning the delay in filing of the appeal, ignoring the fact that the appellant had bona fide pursued an alternate statutory remedy by filing a duly drawn application u/s 154 of the Act before the jurisdictional Assessing Officer (i.e. ITO, Ward 7(1), Kolkata) on 04.05.2021 well within the limitation prescribed therein and had thereafter awaited the disposal thereof, which constituted sufficient cause within the meaning of section 249(3) of the Act.
4. For that even otherwise, the Ld. JCIT(A) failed to appreciate that the intimation u/s 143(1) dated 03.02.2021 had itself resulted in a refund and not in any demand of tax or interest, no tax revenue was at stake on account of the delay, and accordingly no prejudice whatsoever could be said to have been caused to the Revenue by the period of delay in filing of the appeal.
5. For that the Ld. JCIT(A) erred in characterising the conduct of the Appellant as ‘casual’ and erred in invoking the ratio of Union of India v. Jahangir Byramji Jeejeebhoy without appreciating that the Appellant had at every stage acted with due diligence by promptly filing a section 154 application, that the cause for the delay was a continuing one arising from non-disposal of the said rectification application by the Department, and that the said decision is rendered on materially distinguishable facts.
6. For that the Ld. JCIT (A) erred in law as well as on facts in dismissing the appeal of the Appellant in a mechanical and summary manner without properly appreciating the submissions, documents, and judicial precedents placed on record. The impugned order is perverse, arbitrary, and contrary to the principles of law and natural justice.
7. For that the Ld. JCIT(A) erred in upholding the disallowance of carry forward of loss of Rs. 39,23,825/- in the intimation u/s 143(1) and failed to appreciate the fact that the original return of income for A.Y. 2020-21 was duly filed by the Appellant u/s 139(1) of the Act on 31.12.2020, which was well within the extended due date of 10.01.2021 prescribed by CBDT vide Notification No. 93/2020 dated 31.12.2020 issued u/s 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
8. For that the Ld. JCIT(A) erred in upholding the disallowance of carry forward of loss of Rs. 39,23,825/- by recording a perverse finding that the carry forward of loss was claimed only in the revised return, whereas the records clearly demonstrate, and the intimation u/s 143(1) itself reproduces in Schedule CFL under the column ‘As Provided by Taxpayer’, that the short-term capital loss of Rs. 3,81,248/- and the long-term capital loss of Rs. 35,42,577/- aggregating to Rs. 39,23,825/- were duly claimed for carry forward in the original return of income filed on 31.12.2020.
9. For that the Ld. JCIT(A) erred in failing to appreciate the settled legal position that a return filed u/s 139(5) of the Act revising an original return validly filed within the time prescribed u/s 139(1) cannot vitiate or extinguish the substantive right to carry forward of loss which had already accrued to the Appellant on filing of the original return, and that the timeliness of the revised return is wholly irrelevant for the purposes of section 80 read with section 139(3) of the Act.
10. For that the disallowance of carry forward of loss by the Centralised Processing Centre, Bengaluru while processing the return u/s 143(1) is wholly without jurisdiction, in as much as the question whether the loss is allowable for carry forward in the light of the original return being timely and the revised return being belated is a debatable question of law, and is not an ‘incorrect claim apparent from any information in the return’ within the meaning of section 143(1)(a) (ii) of the Act.
11. For that the issue raised by the Appellant clearly constituted a mistake apparent from record warranting rectification u/s 154 of the Act, since the date of filing of the original return on 31.12.2020, the date of filing of the revised return on 15.01.2021, the extended due date of 10.01.2021 as per CBDT Notification No. 93/2020 and the Schedule CFL of the return claiming carry forward of loss were all readily available from the records before the Assessing Officer / CPC.
12. For that the levy of fee of Rs. 10,000/- u/s 234F of the Act in the intimation u/s 143(1) is bad in law, since the original return of income having been filed on 31.12.2020 was filed within the extended due date of 10.01.2021 prescribed by CBDT vide Notification No. 93/2020, and accordingly there was no occasion to treat the return as belated for the purpose of attracting fee u/s 234F of the Act.
13. For that apparently, the disallowances is made merely based on surmises and conjectures merely disbelieving the evidences adduced by the assessee and without bringing any adverse material on records.
14. For that on the facts and in the circumstances of the case the order passed by the Ld. CIT (A) is not maintainable.
15. For that the appellant craves leave to add, alter or withdraw any ground/s of appeal on or before hearing of the appeal.”
3. Brief facts of the case are that the assessee had filed the return of income for AY 2020-21 on 31.12.2020 declaring total income at ₹44,29,080/-, and subsequently filed a revised return of income u/s 139(5) of the Act on 15.01.2021 claiming carry forward of loss amounting to ₹39,23,825/-, which comprised short-term capital loss of ₹3,81,248/- and long-term capital loss of ₹35,42,577/-. The Assessing Officer/CPC Bengaluru (hereinafter referred to as Ld. ‘AO’) processed the return of income and issued an intimation u/s 143(1) of the Act dated 03.02.2021 determining the total income at ₹44,29,080/- wherein the Ld. AO disallowed the carry forward of loss of ₹39,23,825/- on the ground that the return of income was filed beyond the due date of 10.01.2021, levied a fee of ₹10,000/- u/s 234F of the Act, and computed a refund of ₹10,890/-, which was adjusted against the outstanding demand u/s 220(2) of the Act. Aggrieved with the intimation issued, the assessee filed an appeal before the Ld. Addl/JCIT(A), who observed that the appeal was filed with an inordinate delay of more than 59 months without sufficient cause supported by documentary evidence, and further observed on merits that the claim of carry forward of loss was made in a belated revised return of income. Accordingly, the Ld. Addl/JCIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee vide his findings as under:
7. Decision
7.1 I have gone through the facts of the case, material available on record, the Grounds of Appeal and submissions made by the Appellant. It is seen that 05 Grounds of Appeal filed by the appellant which relate to the solitary issue of denial of carry forward business loss of Rs.39,23,825/- while passing the intimation order U/s 143(1) of the Act by the AO CPC.
7.1.1 The appellant had had filed the original return of income u/s 139(1) of the Act for A.Y. 2020-21 on 31.12.2020, within due date. Thereafter, a revised return of income u/s 139(5) of the Act was filed on 15.01.2021 (after due date for filing ITR for A.Y. 2020-21), claiming business loss Rs.39,23,825/- to carry forward in subsequent Assessment Year.
7.1.2 It is seen that the appellant claimed carry forward of business loss only when filing his revised return of income for A.Y. 2020-21, which was filed after due date. The appellant was required to file his revised ROI within due date to claim carry forward of business loss in subsequent years. Hence, the appellant’s plea is not tenable on merits.
7.2 I have gone through the reasons for condonation of delay in filing the said appeal. The decision on such condonation is based on material on record, provisions of the Act and legal views as per the decision of various Courts from time to time.
7.3 The appeal has been filed with a delay for more than 59 months. Section 249(3) of the Income-tax Act, 1961 deals with the condonation of delay in filing of appeal by the appellant. As per the provisions of section 249(3) of the Income-tax Act, 1961, –
“Joint Commissioner (Appeals) or the Commissioner (Appeals) may admit an appeal after expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period”.
Thus, it is clear that as per the provisions of section 249(3) of the IT Act, 1961, the appellant should have sufficient cause for not filing the appeal in time and CIT Appeals need to be satisfied regarding the cause being sufficient.
7.3.1 In the present case, the appeal has been filed with a substantial and inordinate delay for more than 59 months. The appellant has not cited any reasons supported by documentary evidences that the appellant was prevented by sufficient cause within the meaning of section 249(3) of the Income-tax Act, 1961 for in ordinate delay for more than 59 months in filing of appeal.
7.3.2 In the recent land mark judgment of Hon’ble Supreme Court in the case of Union of India vs Jahangir Byramji Jeejeebhoy (D) CIVIL APPEAL NO. OF 2024 arising out of S.L.P. (Civil) No. 21096 of 2019), while dismissing the writ petition, following observations were made by Hon’ble Supreme Court: –
“24. In the aforesaid circumstances, we made it very clear that we are not going to look into the merits of the matter as long as we are not convinced that sufficient cause has been made out for condonation of such a long and inordinate delay.
25. It hardly matters whether a litigant is a private party or a State or Union of India when it comes to condoning the gross delay of more than 12 years. If the litigant chooses to approach the court long after the lapse of the time prescribed under the relevant provisions of the law, then he cannot turn around and say that no prejudice would be caused to either side by the delay being condoned.
.
.
26. The length of the delay is a relevant matter which the court must take into consideration while considering whether the delay should be condoned or not. From the tenor of the approach of the appellants, it appears that they want to fix their own period of limitation for instituting the proceedings for which law, has prescribed a period of limitation. Once it is held that a party has lost his right to have the matter considered on merits because of his own inaction for a long, it cannot be presumed to be non-deliberate delay and in such circumstances of the case, he cannot be heard to plead that the substantial justice deserves to be preferred as against the technical considerations. While considering the plea for condonation of delay, the court must not start with the merits of the main matter. The court owes a duty to first ascertain the bona fides of the explanation offered by the party seeking condonation. It is only if the sufficient cause assigned by the litigant and the opposition of the other side is equally balanced that the court may bring into aid the merits of the matter for the purpose of condoning the delay.
27. We are of the view that the question of limitation is not merely a technical consideration. The rules of limitation are based on the principles of sound public policy and principles of equity. We should not keep the ‘Sword of Damocles’ hanging over the head of the respondent for indefinite period of time to be determined at the whims and fancies of the appellants.”
In view of the above, it was emphasized by Hon’ble Supreme Court that limitation periods are based on public policy and equity, and reasonable diligence and a credible explanation for delays must be demonstrated by appellants to avoid forfeiting their legal rights.
7.3.3 In the case of Baroda Rayon Corporation Ltd (Gujarat 87 STC 266), Baldeo Lai Roy Vs State of Bihar (Patna 11 STC 104) and M Loganathan Vs CIT (Madras 302 ITR 139) it has been held that appellate authority needs to look into the fact that whether the appellant has acted with reasonable diligence in the prosecuting of appeal.
7.3.4 In the case of Nileshkumar Chhaganbhai Vasoya Vs ITO, (ITA No. 64/Srt/2023) the Income Tax Appellate Tribunal (ITAT) Surat addressed the issue of condoning the delay in filing an appeal. The appellant was seeking relief for a delay of 244 days due to being a common man unfamiliar with tax proceedings. However, the ITAT held that the legal illiteracy of a common man cannot be an excuse and refused to condone the delay. The ruling underscores the importance of adhering to legal timelines and the responsibility of individuals to seek appropriate advice when engaging in legal proceedings. It also underlines the principle that ignorance or illiteracy of the law is not an excuse.
7.3.5 In the case of Ramlal and others Vs Rewa Coalfields Ltd (AIR 1962 SC 361), Tractors and Farm Equipments Ltd (ITAT Chennai 104 ITD 149) and Madhu Dadha (Madras 317 ITR 458) it has been held that party has to show reason for delay on the last date of limitation period and thereafter for each day. Further, condonation of delay is not a matter of right. Court has to exercise the discretionary Jurisdiction.
7.3.6 In the case of Sri Venkatesa Paper & Boards Ltd. [2006] 98 ITD 200, Hon’ble ITAT Chennai held that in granting indulgence and condoning delay, appellate authority must be satisfied that there had been diligence on part of appellant and it was not guilty of negligence. It is further held that sufficient cause within contemplation of provisions of section 249(3) must be a cause which is beyond control of party invoking aid of provisions. In the case of T. Kishan [2012] 23 taxmann.com 383, Hon’ble ITAT Hyderabad has held that in granting indulgence and condoning delay in filing appeal, it must be proved beyond shadow of doubt that assessee was diligent and was not guilty of negligence whatsoever.
7.3.7 In the case of Prabhudas Kishoredas Tobacco Products P.Ltd. v. Deputy Commissioner of Income-tax, [1994] 48 ITD 543 (AHD.), it has been held that it is a settled law that in order to get the delay condoned or excused in pursuing the remedies available to the appellant under the direct tax laws, the appellant has to’ explain the delay to the satisfaction of the Tribunal. In deciding what is sufficient cause for delay in filing the appeal, the true guide is whether the appellant has acted with reasonable diligence in prosecution of his appeal (Asi Bai v. Gomathi AIR 1979 Mad. 115 at page 116). As laid down by the Supreme Court in the case of Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361, 364, in the case of Sitaram Ramchandra v. M.N. Nagrashana AIR 1960 SC 260, 265, 266 and in the case of Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi AIR 1978 SC 537, the appellant has to show sufficient cause for not filing the appeal on the last date of the limitation and must explain the delay made thereafter day by day till the actual date of the filing of the appeal. In other words, the whole of the delay must be explained. The Madras High Court in the case of Andal Sweet Stall & Tippo Dining Hall v. State of Tamil Nadu [1981] 48 STC 551 have laid down that a judgment or pronouncement by a court long after the period of limitation cannot be taken advantage for filing of appeal with a petition to excuse the delay in filing the appeal. It is true that the parties are entitled to wait until the last date of the limitation for filing of the appeal, but when it allows the limitation to expire and come forward with an explanation enumerating reasonable causes for not filing the appeal within the time prescribed under the statute, then the causes so shown must establish that because of some event or circumstances arising before limitation expired, she/it was not able to file the appeal within the stipulated time mandated in law. Any event, cause or circumstance arising after the expiry of the limitation period cannot constitute a sufficient cause. There may be events or circumstances subsequent to the expiry of the limitation period which may further delay in filing of the appeal, but the limitation has been allowed to expire when the appeal being filed must be traced to a cause arising within the period of limitation.
7.4 Thus, on these given facts and legal view, I am of the considered view that the delay in filing of the appeal cannot be condoned in absence of sufficient cause supported by evidences. Simply attributing the cause of the delay in filing of appeal just due to waiting / hoping for auto rectification by the Department, that too for more than 59 months (almost 05 years), shows a casual approach on the part of the appellant with regards to his statutory obligations. Though it is well accepted that no appellant derives any benefit by filing a delayed appeal, however the same should not be used as a tool, or an excuse to avoid and prolong and thus delay further consequent proceedings from the Department. In the present case, the appellant has failed to cite any reasons supported by documentary evidences that the appellant was prevented by sufficient cause within the meaning of section 249(3) of the Income-tax Act, 1961 for inordinate delay for more than 59 months in filing of appeal.
8. Accordingly, the condonation application being bereft of any ‘sufficient cause’ is hereby rejected and the appeal is Dismissed in above terms.”
4. Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.
5. Rival contentions were heard and the submissions made have been examined. The Ld. AR requested that the delay ought to have been condoned and the appeal should have been decided on merits and requested for restoration of appeal before the Ld. CIT(A). The Ld. DR relied upon the order of the Ld. Addl./Joint CIT(A) and requested that the same may be upheld.
6. We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. Addl/JCIT(A). The assessee had filed a rectification application and was awaiting its disposal, therefore, the delay in filing the appeal against the intimation u/s 143(1) of the Act ought to have been condoned. After examining the facts of the case and the law, we are of the view that the assessee had a sufficient cause for the delay in filing the appeal before the Ld. CIT(A) which ought to have been condoned and the appeal should have been decided on merits. Therefore, we deem it appropriate to set aside the order of the Ld. Addl/JCIT(A) and restore the appeal to him for disposal of the grounds of appeal taken by the assessee on merit by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission he wants to make in support of his grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed and an opportunity of being heard may be provided to the Ld. AO, if required. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.
7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 25th August, 2026.
