Case Law Details
ITAT HYDERABAD
Smt. Banu Begum v. DCIT
IT Appeal No. 2075 (Hyd.) of 2011
[Assessment year 2008-09]
April 30, 2012
ORDER
Chandra Poojari, Accountant Member – This appeal filed by the assessee is directed against the order of the CIT(A)-I, Hyderabad dated 30.8.2010 for the assessment year 2008-09.
2. Effective grounds of the assessee in this appeal read as follows :
1. The order of the learned Commissioner of Income-tax(Appeals) is erroneous, unjust and contrary to the facts of the case.
2. The learned Commissioner of Income-tax(Appeals) erred in dismissing the appeal in limine without considering the grounds raised by the appellant on merits.
3. The learned Commissioner of Income-tax(Appeals) erred in holding that the appeal is not maintainable in view of the provisions of Sec. 249(4) of the I.T. Act.
4. The learned Commissioner of Income-tax(Appeals) ought to have provided further opportunity to make payment of tax on the admitted income before deciding the appeal.
3. At the outset, we note that this appeal is filed on 15.12.2011 and there is a delay of 412 days (incorrectly taken as 668 days by the Registry reckoning the delay from wrong date of filing of the appeal instead of taking the correct date of filing of the appeal as 15.12.2011) in filing of this appeal by the assessee before this Tribunal. The assessee has filed a petition seeking condonation of delay, which is also accompanied by a sworn affidavit. It is stated therein that the assessee is an old woman of 60 years of age, having least acquaintance with tax matters, for which she is dependent on professional advice of a Chartered Accountant. It is submitted that the said Chartered Accountant, who was served with the impugned order of the CIT(A) dated 30.8.2010 dismissing the appeal of the assessee in limine for non-payment of admitted tax on the returned income, did not even inform that fact, not to speak of guiding her as to the need for filing further appeal before the Tribunal. It was only when the State Bank of India, Karvan Branch issued a letter dated 17.11.2011 to the Assessing Officer in compliance to notice under S. 226(3) of the Act, the assessee collected back the relevant papers from the Chartered Accountant, and handed over the matter to a new advocate, upon whose advice, she paid the tax on the admitted income and preferred the present appeal before the Tribunal with the delay, reckoned from the date of the impugned order, of 412 days.
4. We have heard rival submissions and perused the material on record. In this case admittedly, there is a delay of 412 days in filing appeal before us. The Courts and the quasi-judicial bodies are empowered to condone the delay if a litigant satisfies the Court that there were sufficient reasons for availing the remedy after expiry of limitation. Such reasoning should be to the satisfaction of the Court. The Hon’ble Supreme Court as well as the Hon’ble High Courts have time and again held that expression “sufficient cause” for condonation of a delay should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fide is imputable to a party because the judiciary is expected 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. A litigant does not stand to benefit by resorting the delay or breaching any provision of a statute. The Hon’ble, Supreme Court in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 has observed that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. Thus, considering the hardship of the assessee, we are of the opinion that there exist sufficient reasons for not filing a valid effective appeal before the us. It is aptly said that facts should be viewed in a natural perspective having regard to the compulsion of circumstances of a case where it is possible to draw inferences from the facts and where there is no evidence of any dishonest or improper motive on the part of the assessee it would be just and equitable to draw such inference in such a manner that would lead to equity and justice. Too hyper technical or legalized approach should be avoided in looking at a provision which must be equitably interpreted and justly administered. In our opinion, the reasons advanced by the assessee in filing of the appeal belatedly as explained in the upper part of this order are found to be bona fide and the assessee having reasonable cause for not filing the appeal in time. Hence, taking into consideration the overall facts and circumstances of the case, we are of the opinion that the delay in filing this appeal deserves to be condoned and, accordingly the delay is condoned and the appeal is admitted to decide the issues on merit.
5. Further we make it clear that there is no hard and fast rule which can be laid down in the matter of condonation of delay and Courts should adopt a pragmatic approach and discretion on the facts of each case keeping in mind that in considering the expression ‘sufficient cause’ the principles of advancing substantial justice is of prime importance and the expression ‘sufficient cause’ should receive a liberal construction. A liberal view ought to be taken in terms of delay of few days. On careful consideration of the matter, we are satisfied with the reasons for the delay in filing of the present appeal. We accordingly condone the delay and proceed to dispose of the appeal on merits. The facts relating to the issue raised by the assessee are that the assessee file an appeal before the CIT(A) on 1st February, 2010. The assessee returned income for this assessment year was at Rs. 15,02,209 on which admitted tax has not been paid at the time of filing appeal before the CIT(A) in terms of provisions of section 249(4)(a) of the I.T. Act. Hence the appeal was dismissed by the CIT(A) in limine.
6. We have heard both the parties and perused the material on record. It is no doubt true that non-payment of admitted tax on the returned income is fatal to the validity of an appeal, in terms of the provisions of S.249(4)(a) of the Act. However, as held by the Tribunal in similar matters, as in ITA No.402/Hyd/2011 for the assessment year 2008-09 in the case of D.S. Karunakar Reddy v. Dy. CIT, it is a curable defect, and till such time admitted tax is paid the appeal remains defective and not valid, and when such defect is cured by payment of tax on the returned income by the assessee, the appeal becomes valid, and such valid appeal is deemed to have been filed. That being so, delay in the filing of the appeal has to be reckoned till the date the appeal is made valid by the assessee by making payment of admitted tax on returned income, and if there is reasonable cause for the delay in the payment of admitted tax, the delay may be condoned, and the appeal may be disposed off on merits. In the instant case, the assessee has admittedly paid the taxes on the returned income, only on 8.12.2011, before filing the present appeal before the Tribunal. The reason for the delayed payment of admitted tax on returned income is stated to be the absence of proper advice by the Chartered Accountant of the assessee.
7. It is an undisputed proposition of law that appeal is a continuation of the original proceedings and right of appeal is not an inherent right but it is a statutory right. It is open to the legislature to give or not to give a right of appeal against decisions made by authorities. The right of appeal wherever conferred by statute has to be exercised strictly in conformity with the statutory provisions, which create it. If the statute put any restrictions then, such right would be available along with such restrictions. It is also not disputed before us that assessee had made the payment of agreed tax during the pendency of these appeals. Before embarking upon the jurisdiction of the Tribunal whether these appeals can be restored back to the CIT(A) or not, it is salutary to take note of sub-sections (3) and (4) of section 249 and sub-section (1) of section 254 because these provisions have direct bearing on the controversy :
Section 249(3) : “The CIT(A) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.”
Section 249(4) : “No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,–
(a) Where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
(b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him :
Provided that, in a case filling under Clause (b) and on an application made by the appellant in this behalf, the CIT(A) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause.”
Section 254(1) : “The Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.”
8. For considering the powers of Tribunal contemplated in subsection (1) of section 254, it would be imperative for us to refer the judgment of the Hon’ble Supreme Court rendered in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232. wherein the Hon’ble Supreme Court had considered the ambit and scope of expression “pass such orders therein as it thinks fit”, used in section 33(4) of IT Act, 1922, which is analogous to section 254(1) in the Income-tax Act, 1961. At page 237, the Hon’ble Supreme Court made the following observation :
“The word ‘thereof, of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The words “pass such orders as the Tribunal thinks fit” include all the powers (except possibly the power of enhancement) which are conferred upon the AAC by Section 31 of the Act. Consequently, the Tribunal has authority under this section to direct the AAC or the ITO to hold a further enquiry and dispose of the case on the basis of such enquiry.”
9. Then again this expression fell for consideration before the Hon’ble Supreme Court in the case of CIT v. Assam Travels Shipping Service [1993] 199 ITR 1/67 Taxman 269. In this case, assessee filed the return late for asst. yrs. 1963-64 and 1964 65. Thus, violated Section 271(1)(a)(2) of the Act. The learned AO levied the penalty. However, while calculating the penalty, he worked out the amount at a very lower figure. He levied the penalty at Rs. 6,494 and Rs. 70,118 for asst. yrs. 1963-64 and 1964-65 respectively as against the amount of Rs. 65,700 and Rs. 93,564. The assessee challenged this levy of penalty before the CIT(A). The learned CIT(A) quashed the penalty on the ground that the AO levied the penalty contrary to the provisions of Section 271(1). The matter further travelled to the Tribunal. The Tribunal has also dismissed the appeal of the Department by confirming the order of the CIT(A) on the ground that Tribunal has no power to enhance the penalty. In such a situation, it can do nothing except affirming the order of the CIT(A). Ultimately, the matter went up before the Hon’ble Supreme Court. The Hon’ble. Supreme Court has observed as under while elaborating the scope of expression “pass such orders thereon as it thinks fit.” :
“The expression “as it thinks fit” is, wide enough to including the power of remand to the authority competent to make the requisite order in accordance with law in such a case even though the Tribunal itself could not have made the order enhancing the amount of penalty. The power of the AAC under Section 251(1)(b) includes the power even to enhance the penalty subject to the requirement of Subsection (2) of Section 251 of a reasonable opportunity of showing cause against such enhancement being given to the appellant assessed. This could have been done in the assessee’s appeal itself filed in the present case. The power of the Tribunal to make an order of remand in such a situation is well-settled in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC).”
10. On plain reading of Sub-section (3) of Section 249 shall reveal that if the assessee showed sufficient reasons for late filing of his appeals, then such delay can be condoned and controversy would be silenced on merit. Similarly, for the sake of explanation, if an assessee did not have sufficient funds for complying with the requirement of Section 249(4) and has not filed the appeal within the time provided under Section 249(2), subsequent to expiry of limitation, he made compliance of Section 249(4) and filed the appeal with a prayer of condonation of delay then it would be in discretion of the first appellate authority to see whether sufficient reasons for late filing of appeal exist or not. If the learned CIT(A) arrived at a conclusion that sufficient reasons exist then again the controversy would be decided on merit. Thus, on conjoint reading of Sub-sections (3) and (4), it is inferred that defect arises due to non-compliance of Section 249(4) is a curable one and in a given case if the Tribunal is satisfied that there exist sufficient reasons for curing such defects after expiry of limitation, it would be in the realm of Tribunal’s discretion to restore such matters to the file of the CIT(A) for deciding the controversy on merit because Sub-section (1) of Section 254 provides wide powers to the Tribunal for passing such orders thereon as it thinks fit in the interest of justice.
11. On perusal of record, we find that the assessee has discharged the huge tax liability on 8.12.2011 at Rs. 3,07,544 and as a proof the assessee filed a copy of challan from Central Bank of India, Gudimalkapuram Branch, Hyderabad. Thus, it would be totally unfair for not providing an opportunity to her for disputing the additions made by the AO on merit. The Hon’ble Full Bench of Delhi High Court in J.T. (India) Exports v. Union of India [2003] 262 ITR 269, while elaborating the principle of natural justice along with the legal justice, has observed as under :
“Natural justice is another name for commonsense justice. Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. Natural justice is the administration of justice in a commonsense liberal way. Justice is based substantially on natural ideals and human values. The administration of justice is to be freed from the narrow and restricted considerations which are usually associated with a formulated law involving linguistic technicalities and grammatical niceties. It is the substance of justice which has to determine its form.
12. The expression, ‘natural justice and legal justice’ do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law.
13. The adherence to principle of natural justice as recognized by all civilized states is of supreme importance when a quasi-judicial body embarks on determining disputes between the parties.
14. From the judgment of Hon’ble Delhi High Court, it is clear that whenever legal justice fails to achieve the solemn purpose of securing justice then natural justice is called in aid of legal justice. From the details submitted by the assessee in the paper book as extracted by us, it reveals that the assessee kept on making the payment of tax along with interest in instalments. Had the assessee was having sufficient fund with him, then no prudent businessman would allow to swell the liability of interest in such a way. For example, the total tax required to be paid by the assessee in asst. yr. 1991-92 on the agreed return along with interest was Rs. 17,30,273. Against it, by the end of December, 1997, assessee has paid Rs. 26,09,843. Thus, it clearly indicates that assessee was not having sufficient funds at the relevant time for compliance of Section 249(4) which rendered the appeals of the assessee as defective one. In the interest of justice, the Court was of the opinion that these appeals deserve to be allowed by setting aside the impugned order of the CIT(A) and restoring the same before the learned first appellate authority for adjudication on merit. For the above view, the Bench drew support from the decision of Hon’ble Orissa High Court given in the case of CIT v. Kalipada Ghose [1987] 167 ITR 173/[1986] 29 Taxman 197. Though the issue before the Hon’ble High Court was on a little different footing, but an inference can be drawn from the judgment that in such cases the right course would be restoring the appeal before the CIT(A). Before the Hon’ble Orissa High Court, the issue relates to asst. yrs. 1974-75 and 1975-76. The learned AO determined the income of assessee at Rs. 17,500 and Rs. 30,000. Against this order, the appeals were filed before the first appellate authority on 29th Oct., 1975. By then Section 249 has been amended by incorporating Sub-section (4) w.e.f. 1st Oct., 1975. The learned first appellate authority dismissed the appeal of the assessee in limine on the ground that assessee failed to pay the agreed tax at the time of filing of the appeal. During the pendency of appeal before the Tribunal, the assessee paid agreed tax on 15th June, 1976, The Tribunal set aside the order of the learned CIT(A) and restored the matter back to the file of first appellate authority. The Revenue has challenged the order of the Tribunal on the ground that decision given by the first appellate authority was not one under Section 250 of the Act and, therefore, no appeal would lie to the Tribunal and the Tribunal has no jurisdiction under Section 253 for setting aside the order of first appellate authority and directing the first appellate authority to decide the issue afresh on merit. The Hon’ble High Court rejected the contention of the Revenue and upheld the order of the Tribunal. While doing so, the Hon’ble High Court at p. 176 observed as under:
“On the aforesaid analysis, it has to be held that the order of the AAC dismissing the appeals for non-compliance with Section 249(4) of the Act came within the ambit of Section 250 of the Act and was appealable before the Tribunal under Section 253 of the Act. The Tribunal, therefore, committed no illegality in entertaining the appeals and in condoning the delay on being satisfied, on the facts and circumstances of the case, that there was sufficient cause for the assessee’s failure to comply with Section 249(4) of the Act and in remitting the cases to the first appellate forum for disposal on merits. Accordingly, the question referred is answered in the affirmative.”
15. Thus, we fortify our view by the above decision of the Hon’ble High Court.
16. The next issue for our adjudication is whether sufficient reasons exist for curing defect after expiry of limitation provided under Section 249(2) of the Act. Since, we have held in the upper part of the order that appeal filed in violation of Section 249(4) would be termed as a defective one and the moment defect is cured then those can be disposed of on merit subject to limitation. The Courts and the quasi-judicial bodies are empowered to condone the delay if a litigant satisfies the Court that there were sufficient reasons for availing the remedy after expiry of limitation. Such reasoning should be to the satisfaction of the Court. The expression “sufficient cause or reason”, as provided in Sub-section (3) of Section 249 of the Act, is used in identical position in a number of statutes and the Hon’ble Supreme Court as well as the Hon’ble High Courts have time and again held that the expression “sufficient cause” for condonation of a delay should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona-fide is imputable to a party because the judiciary is expected 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. A litigant does not stand to benefit by resorting the delay or breaching any provision of a statute. The Hon’ble, Supreme Court in Mst. Katiji (supra) has observed that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. Thus, considering the hardship of the assessee, we are of the opinion that there exist sufficient reasons for not filing a valid effective appeal before the CIT(A). It is aptly said that facts should be viewed in a natural perspective having regard to the compulsion of circumstances of a case where it is possible to draw inferences from the facts and where there is no evidence of any dishonest or improper motive on the part of the assessee it would be just and equitable to draw such inference in such a -manner that would lead to equity and justice. Too hyper technical or legalized approach should be avoided in looking at a provision which must be equitably interpreted and justly administered.
17. Now that the assessee has paid the admitted taxes on the returned income, we set aside the impugned order of the CIT(A), and restore the matter to the file of the CIT(A) to adjudicate the appeal before him on merits. He shall give reasonable opportunity of hearing to the assessee, and decide the appeal afresh in accordance with law.
18. In the result, assessee’s appeal is allowed.
A good and reasoned judgement with focus on common sense and natural justice. Let us hope at least henceforth issues like delay and condonation of delay do not become the subject matter of litigation, stealing away the precious time of the appellate machinery and process.
R Balasubramanian.