Shaadmaan Corp Vs ITO (ITAT Bangalore)
Partner’s Illness Explains 143-Day Delay: Bangalore ITAT Restores Assessment for Fresh Hearing
Summary: A 143-day delay in filing an appeal before the Tribunal need not end the dispute where the assessee establishes sufficient cause. In Shaadmaan Corp, the Bangalore Bench accepted the firm’s explanation that a partner’s serious health problems had affected his ability to attend to its financial and administrative affairs. It condoned the delay and sent the assessment back to the Assessing Officer for a fresh decision after giving the firm an opportunity to produce its records.
The assessment and the delayed appeal
Shaadmaan Corp challenged the order of the Commissioner (Appeals) dated 10 June 2024 for assessment year 2018–19. Its grounds disputed the assessment and alleged that its submissions had not been properly considered. The firm also raised a discrepancy between commission income shown in its profit and loss account and gross receipts appearing in Form 26AS. According to the assessee, its commission figures were based on the actual commission received on sales and purchases and could be seen from its GST returns.
The firm further claimed that it had furnished financial statements, Form 26AS and a franchise agreement during assessment. It alleged difficulties in accessing notices through the income-tax portal and complained that it had not received a proper opportunity to present its case. These were grounds raised by the assessee; the Tribunal did not determine their correctness at this stage.
Before any of those issues could be considered, however, the firm had to overcome the 143-day delay in approaching the Tribunal. It filed a condonation application dated 21 January 2025. The authorised representative explained that, over the preceding two years, a partner had suffered serious health issues and had been advised strict bed rest. According to the application, this affected his ability to manage daily responsibilities, including compliance with tax notices and the filing of the appeal.
The Revenue opposed condonation, arguing that the explanation consisted of general assertions without adequate evidence. The Tribunal nevertheless found the explanation sufficient and stated that it was satisfied there was no mala fide intention behind the late filing.
Tribunal favours a hearing on merits
The Bench considered its power under section 253(5) to admit an appeal after the prescribed period where sufficient cause is shown. It relied on the Supreme Court’s decision in Collector, Land Acquisition v. Mst. Katiji, 167 ITR 471, which calls for a practical approach to delay and recognises the risk that refusing condonation may prevent a potentially meritorious matter from being heard at all.
The Tribunal emphasised that the length of a delay must be assessed alongside its cause. Once it accepted the partner’s illness as a reasonable explanation, it did not regard 143 days as a bar to admitting the appeal. It also referred to decisions in which much longer delays had been condoned on their own facts. Those comparisons supported its approach to limitation; they did not mean that every delay of 143 days must automatically be excused.
Having condoned the delay, the Tribunal turned to how the underlying dispute should be handled. Both sides accepted that the assessee had not properly presented its case before the lower authorities. The firm again attributed this difficulty to the partner’s health and requested another opportunity to substantiate its claims before the Assessing Officer.
The Bench agreed. It restored all issues in dispute to the Assessing Officer for a fresh decision in accordance with law, after giving the firm a reasonable opportunity of being heard. It directed Shaadmaan Corp to produce the documents, records, accounts and other information needed to support its claims. It also warned that further default would not attract leniency.
What the order leaves open
The appeal was partly allowed for statistical purposes. That expression describes the procedural result: the delayed appeal was admitted and the matter was remanded. It does not mean that the Tribunal accepted the firm’s commission reconciliation, resolved the Form 26AS difference, or held that the assessment was incorrect.
Those questions now return to the Assessing Officer. The firm must put forward the material on which it relies, and the Assessing Officer must examine it and decide the issues afresh after hearing the assessee.
Author’s comment
This decision illustrates that sufficient cause, rather than the number of days alone, drives a condonation request. The Tribunal accepted the explanation concerning the partner’s illness and preferred to have the tax dispute tested on its merits. Its reasoning is tied to that explanation and the circumstances recorded in this case; a bare reference to illness will not necessarily produce the same result in another appeal.
The remand also places a clear responsibility on the assessee. The firm has obtained another opportunity to reconcile its commission income and support its return, but the Tribunal expressly cautioned against another failure to comply. Its immediate success is the chance to be heard, while the substantive tax outcome remains to be decided.
Cases Discussed
- Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) (Supreme Court) — Relied upon for the six principles governing condonation of delay, including preference for substantial justice over technical considerations and a rational, commonsense and pragmatic approach to “sufficient cause”.
- People Education & Economic Development Society v. ITO, 100 ITD 87 (TM) (Chennai) — Relied upon for preferring substantial justice over technical considerations in cases of non-deliberate delay; the Tribunal also noted that a delay exceeding 600 days had been condoned in that case.
- CIT v. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) (Madras High Court) — Relied upon on the relevance of reasonable cause rather than merely the length of delay; the Tribunal noted that nearly 21 years’ delay had been condoned in that case.
- M/s JKD Capital & Finlease Ltd. Vs. ITO, Ward-4(2), I.T.A. No. 2723/Del/2012, AY 2005-06 (ITAT Delhi) — Cited by the assessee in its grounds of appeal in support of its grievance that additions were made without granting proper opportunity of being heard and without considering its submissions; the Tribunal did not separately examine or apply this precedent while disposing of the appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, BANGALORE BENCH
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 10.06.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1065511797(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19.
2. The assessee has raised the following grounds of appeal:-
| Grounds of Appeal | Tax effect relating to each ground of appeal (see note below) | |
|---|---|---|
| 1 | The impugned order passed by the learned CIT is disproportionate and is liable to interfered with the order passed u/s 250 read with 143 (3) of the act by the CIT without appreciating the facts of the case is not justified in facts and circumstances of the case. The assessing officer (A.O) determined in income tax payable of Rs. 1,09,11,398/- for the total income for Rs.1,07,01,630/-. The assessee is instituting this appeal for the redressal of the various grievances voiced in the grounds of appeal and precise facts relevant for the appreciation of the grievances are: | Rs. 0 |
| 2 | ASSESSMENT PROCEEDINGS: Notice u/s. 142(1) of the Act, dated December 12, 2019, February 06, 2020 and July 15, 2020, it is submitted that the learned A.O. required books of accounts and documentation for submission for scrutiny in terms of the aforesaid notice. The appellant firm filed a response by furnishing the nature of business and details of sales and purchases with respect to commission income along with copy of Financial statement, 26AS and franchising agreement. The assessment order were not served to the appellant and does not appear in the income tax portal too, At the outset, it is submitted that based on the principle of natural justice the opportunity of being heard is not provided to the appellant u/s 127 (2) of IT Act 1961. | Rs. 0 |
| 3 | The case was selected for complete scrutiny The appellant is submitted that he was not given proper opportunity of being heard, the A.O proceeded to make the additions without considering the submissions made by the appellant. The appellant is relied on the case of M/s JKD capital & Finlease Ltd VS. ITO ward- 4(2) I.T.A No. 2723/ Del/2012 AY 2005-06 at Income tax appellate Tribunal Delhi Branch for the above said matter. Further, we would like to bring to your kind notice that the aforesaid show cause notice was not apparent in the IT portal due to glitches in the website. Copy of the screenshot is placed for your perusal. | Rs. 0 |
| 4 | Discrepancies with respect to commission income reflecting in profit and loss account VS. gross receipts appearing in 26AS. Commission income reflecting in profit and loss account is drawn based on actual commission received on sales and purchases which is apparent from Goods and service tax returns filed monthly. | Rs. 1169611 |
| 5 | Gross value of services not reflecting in profit & loss account Sec 28(1) of the IT Act 1961, the profit and gains of any business or profession which was carried on by the assessee at any time during the previous year would be chargeable to income tax under the head profits and gains of business and profession. The appellant submits that the Learned Assessing Officer (A.O.) has made an addition of ₹52,53,508 as undisclosed sales of services under the head “business income.” This amount corresponds to the gross value of services as per the ITS details and CBEC Service Tax records for the relevant Assessment Year (AY). However, the appellant had already accounted for this amount as commission income, which is duly reflected in the audited Profit and Loss Account and Form 26AS. Moreover, this income was already subjected to service tax during the relevant period. | Rs. 5253508 |
| 6 | The appellant derives revenue solely from trading in readymade garments, textiles, made-ups, hosiery, and commission on sales and purchases through a franchising model. The appellant does not provide any additional services, contrary to the assumption made in the assessment order. The computation by the Learned A.O. shows that the commission income was not appropriately considered, and the addition was made based on the alleged provision of additional services. Without prejudice, it is submitted that the Learned A.O. has taxed both the appellant’s commission income and the amounts reflected in the ITS Transactions under CBEC Service Tax for AY 2018-19, resulting in double taxation. The appellant respectfully submits that the Learned A.O. should have allowed the benefit of telescoping by offsetting the assessed income with the alleged additional services. Therefore, taxing both accounts is unjustified. | Rs. 0 |
| 7 | Time deposits considered as unexplained investment; We draw attention to Section 69 of the Income Tax Act, 1961, which states that if an assessee makes investments not recorded in the books of accounts and fails to explain their nature and source satisfactorily, the value of such investments may be deemed as income for the financial year. In response to notices under Section 142(1) dated December 12, 2019, February 6, 2020, and July 15, 2020, the appellant submitted audited financial statements. These statements declared time deposits with Canara Bank amounting to ?16,43,216, which were duly charged to income and reflected in the Profit and Loss Account for AY 2018-19. The Balance Sheet and Profit and Loss Account, abstracted from the books of accounts, were audited under the tax audit provisions, providing strong evidence of proper record-keeping. Copies of these audited documents were placed on record. | Rs. 3639575 |
| 8 | Despite this, the Assessing Officer (A.O.) concluded that the appellant had made investments solely based on ITS financial transaction details. No material evidence supported the claim that these time deposits with Canara Bank were unexplained investments. The A.O. disregarded the fact that these deposits were already recorded in the audited financial statements. The A.O. wrongly charged the entire time deposit amount of ? 36,39,575 as unexplained investments, which is unjustified. The appellant had only two time deposits with Canara Bank during AY 2018-19, totaling ?16,43,216, and these were disclosed. In view of the above, it is humbly requested that this appeal be allowed in the interest of substantial justice. | Rs. 0 |
| Total Tax Effect | Rs. 1,00,62,694 | |
3. At the outset, the ld. A.R. of the assessee submitted that there is a delay of 143 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee also drew our attention on an application for condonation of delay dated 21.1.2025 stating the reasons for the delay, which is reproduced below for ease of reference and record:
To
The Income Tax Appellate Tribunal
Bangalore, Karnataka
Subject Application for Condonation of Delay in filing the Appeal before The Income Tax Appellate Tribunal (Reason: Severe Health Issue)
Assessee name – Shaadmaan Corp PAN- ABUFS8477N
Your Honour,
Regarding the aforementioned subject, the assessee, Shaadmaan Corp, was required to file appeal against the CIT’s order dated 10th June 2024 to the Income Tax Appellate Tribunal within 60 days set forth in the Income Tax Act, 1961.
As per the prescribed timeline for filing the appeal, the last date for submission was 9th August, 2024. The assessee was unable to file the appeal within prescribed time limit because of the health issues.
Further, Over the past two years, the assessee has been facing severe health issues that have significantly impacted his ability to manage his daily activities. The doctor has prescribed strict bed rest during this period, which has hindered his ability to engage in necessary financial and administrative responsibilities, including responding to the notice.
It is hereby expressed with utmost humility that the aforementioned delay was not a result of any deliberate action on the assessee’s part, but rather a consequence of circumstances that were outside the assessee’s control.
We humbly request the Hon’ble Tribunal to kindly grant us the indulgence of condoning the delay in filing the appeal and allow us to proceed with the same. We assure the Tribunal of our unwavering cooperation and compliance with any directives that may be issued by it. We would be sincerely grateful if our request is considered, and the delay in filing the appeal is condoned.
Yours faithfully,
For Roshan Mansoor & Co.
Chartered Accountants
Roshan T Mansoor
M.No. 222923
Date: 21st January, 2025
4. On going through the above application for condonation, we find that the partner of the assessee firm could not file the appeal within the prescribed period for the reason that over the past two years, the partner has been facing severe health issues that have significantly impacted his ability to manage his daily activities. The doctor has prescribed strict bed rest during this period, which has hindered his ability to engage in necessary financial and administrative responsibilities, including responding to the notices. Hence, the ld. A.R. for the assessee submitted that the delay is unintentional and no benefit can be attributed to the assessee firm in filing the appeal belatedly. He thus prayed to condone the delay and requested to consider the issues raised by the assessee on merits.
5. On the contrary, the ld. D.R. vehemently objected for granting the condonation of delay as the cause for the delay are merely a general aversion without any evidence and accordingly requested to dismiss the appeal in limine.
6. We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly and the assessee has demonstrated sufficient cause in filing the appeal belatedly before us. It is to be noted that u/s 253(5) of the Act the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeals within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing these appeals within the prescribed time. We have gone through the reasons explained by the assessee in which the assessee submitted that over the past two years, the partner of the assessee has been facing severe health issues that have significantly impacted his ability to manage his daily activities. The doctor has prescribed strict bed rest during this period, which has hindered his ability to engage in necessary financial and administrative responsibilities, including responding to the notice.
6.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(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 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, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the 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 nondeliberate 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 the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.
6.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
6.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 143 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 143 days has to be condoned and accordingly we condone the delay and admit the appeal for adjudication.
7. Now having condoned the delay, before us both the parties fairly conceded that the assessee could not represent its case before both the authorities below. Before us, the ld. A.R. of the assessee vehemently submitted that due to the health issue of the partner, the assessee firm could not represent its case before both the authorities below properly and accordingly prayed that one more opportunity may be granted before the AO to substantiate its claim. This being so, in the interest of justice, equity and fair play and as requested by ld. A.R. of the assessee, we deem it fit and proper to remit the entire issues in dispute to the file of AO to decide afresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce all the necessary documents/records/information/accounts to substantiate its claim. We make it clear that in case of further default, the assessee firm shall not be entitled for any leniency. It is ordered accordingly.
8. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 24th Sept, 2026
