Appeal barred by limitation as reasons for condonation doesn’t come under reasonable cause

Viswabharati Mutually Aided Co-operative Credit Society Limited Vs ITO (ITAT Hyderabad)

ITAT Hyderabad held that there is delay of 3047 days in filing of an appeal and reasons stated for condonation are not proper and casual in nature and accordingly doesn’t come under reasonable cause. Hence, appeal dismissed as barred by limitation.

Facts- The assessee is a Mutually Aided Co-operative Society Limited engaged in providing credit facilities and accepting deposits from members only and it was registered as a Mutually Aided Co-operative Society under the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995. For A.Y. 2010-11, the assessee society filed a return of income declaring a loss of Rs.8,32,315/- on 24/09/2011 and a Revised return declaring a loss of Rs. 9,85,110/- on the same date, and the carry forward loss was Rs. 90,800/- (Unabsorbed Depreciation).

Initially, assessee Society was allotted a PAN No. AAGFV4998Q with the status “Partnership Firm”, later it came to know that as it is a Mutually Aided Co-operative Society, it requires to take Income Tax Number as an “Association of Persons”. Accordingly, a fresh application was made and PAN No. AAEAT8748F was allotted. As per the statements of facts, assessee filed return of income for A.Y. 2017-18 seeking set off carry forward losses for earlier years. However, the same was denied by the CPC vide order dt.05.12.2018. Thereafter, for A.Y. 2017-18, assessee filed rectification application on 12.01.2019 seeking the same relief of set off of carry forward losses of the earlier years from A.Ys. 2010-11, 2011-12 and 2013-14 to 2015-16, the same was also denied by the CPC.

Thereafter, the assessee had filed appeal before the ld.CIT(A) after a delay of 3047 days on 29.07.2019. As the appeal of the assessee was time barred for a period of 3047 days, the ld.CIT(A) / NFAC dismissed the appeal.

Conclusion- Held that the assessee’s reasons in the condonation petition do not come under reasonable cause. as prescribed under the Act, for condonation of delay and the explanation given by the assessee for delay is not proper and casual in nature. The reasons given by the assessee are devoid of any merit and not sustainable in the eyes of law. The law requires the assessee to be vigilant and careful in prosecuting its rights under the Act. Considering the totality of the facts and circumstances of the case and the conduct of the assessee, we do not find any reason to entertain the present appeal as the same is barred by limitation.

FULL TEXT OF THE ORDER OF ITAT HYDERABAD

The captioned appeals are filed by the assessee, feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for A.Ys. 2010-11, 2011-12 and 2013-14 to 2015-16.

2. The grounds raised by the assessee in ITA No.360/Hyd/2022 for A.Y. 2010-11 read as under :

“1. The order of the Ld. Commissioner of Income Tax (Appeals) / Income Tax Department / National Faceless Appeal Centre in not condoning the delay in filing the appeal of about 3047 clays is totally unsustainable in law.

2. The Ld. CIT(A), NFAC, Delhi failed to note that the appellant was prevented by a reasonable cause in not filing the appeal in time and further submits that the quantum of delay is not relevant for what has to be seen is the reasonable and sufficient cause and therefore erred in not condoning the delay in filing the appeal.

3. The Ld. CIT(A), NFAC, Delhi ought to have decided the appeal on merits without prejudice to the delay of 3047 days in filing the appeal.

4. The Ld. CIT(A) not having adjudicated on merits of the matter the Hon’ble Tribunal may kindly set-aside the appeal to the file of the Ld. CIT(A) for consideration of appeal on merits.

5. Without prejudice to the above grounds the Ld. CIT(A) failed to consider that being a co-operative mutually aided credit society the income is exempt on the principles of mutuality and also under Section 80P of the I. T. Act, 1961.

3. Similar grounds were raised by the assessee in other four appeals also i.e., ITA 361 to 364/Hyd/2022 for A.Ys. 2010­11, 2011-12 and 2013-14 to 2015-16, except the amounts involved in.

4. Before us, at the outset, both the parties submitted that the issues raised in all the appeals were identical. In view of the aforesaid submissions, we, for the sake of convenience proceed to dispose of all the captioned appeals by a consolidated order but however refer to the facts in ITA No.360/Hyd/2022 for A.Y. 2010-11.

5. The brief facts of the case are that the assessee is a Mutually Aided Co-operative Society Limited engaged in providing credit facilities and accepting deposits from members only and it was registered as a Mutually Aided Co-operative Society under the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995. For the Assessment year 2010-11, the assessee society filed a return of income declaring a loss of Rs.8,32,315/- on 24/09/2011 and a Revised return declaring a loss of Rs. 9,85,110/- on the same date, and the carry forward loss was Rs. 90,800/- (Unabsorbed Depreciation).

5.1. Initially, assessee Society was allotted a PAN No. AAGFV4998Q with the status “Partnership Firm”, later it came to know that as it is a Mutually Aided Co-operative Society, it requires to take Income Tax Number as an “Association of Persons”. Accordingly, a fresh application was made and PAN No. AAEAT8748F was allotted. As per the statements of facts, assessee filed return of income for Assessment Year 2017-18 seeking set off carry forward losses for earlier years. However, the same was denied by the CPC vide order dt.05.12.2018. Thereafter, for A.Y. 2017-18, assessee filed rectification application on 12.01.2019 seeking the same relief of set off of carry forward losses of the earlier years from A.Ys. 2010-11, 2011-12 and 2013-14 to 2015-16, the same was also denied by the CPC. Thereafter, the assessee had filed appeal before the ld.CIT(A) after a delay of 3047 days on 29.07.2019. As the appeal of the assessee was time barred for a period of 3047 days, the ld.CIT(A) / NFAC dismissed the appeal of assessee in limine by observing as under :

“4. Hearing Notices & Submissions:

4.1 A hearing notice dated 26/02/2021 issued to the appellant requiring the appellant to furnish written submissions on or before 15/03/2021, however, there was no response from appellant. Another notices dated 30/09/2021, 16/11/2021, 11/01/2022 & 03/06/2022 issued to the appellant requiring it to furnish the submissions as per annexure on or before 08/10/2021, 23/11/2021, 18/01/2022 & 13/06/2022 respectively. In compliance of notices of hearing issued, the appellant made its response on 11/10/2021, 22/11/2021 & 22/01/2022 respectively. Hence, the appeal is decided on the basis of material available on record.

5. Adjudication: –

5.1 The appeal is dismissed in limine as it is not just and proper at this stage to raise the issue after a gap of more than eight years. It is for general welfare that a period be put on litigation. Further, it is a general principle of law that law is made to protect only diligent and vigilant people. Equity aids the vigilant and not the indolent. Law will not protect people who are not careful about their rights. (Vigilantibus non domientibusjur A subventiunt). Moreover, there should be certainty in law and matters cannot be kept in suspense indefinably. It is, therefore, provided that Courts of Law cannot be approached beyond fixed period. In civil matters, the limit is provided in Limitation Act, 1963.

5.2 The ‘Law of Limitation’ prescribes the time-limit for different suits within, which an aggrieved person can approach the court for redress or justice. The suit, if filed after the expiry of time-limit, is struck by the law of limitation. It’s basically meant to protect the long and established user and to indirectly punish persons who go into a long slumber over their rights.

5.5 The appellant has offered medical issues as reason for delay in filing of appeal. However medical issues cannot explain this delay running in years. It may also be not out of place to mention that, reasons proffered, if any, must have a sufficient cause with proper explanation.

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5.6 I find that delay of 3047 days is an inordinate delay. A pragmatic approach can be espoused when delay is short. While interpreting ‘sufficient cause’ vs advancing cause of ‘substantial justice’, period of delay cannot be ignored out of hand. Such a long delay will also cause grave prejudice to revenue. State as a party to this litigation need to be given equal treatment.

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6. In view of the aforesaid discussion, I believe in the present case, cause of substantial justice would not be served by condoning inordinate delay of 3047 days. Therefore, appeal stand dismissed in limine in view of provision of section 249(3) of Income tax Act, 1961 read with Faceless Appeal Scheme 2020 Paragraph 5(1)(ii).”

7. Before us, ld.AR submitted that the learned lower authorities have decided the issue without considering the explanation offered by the Director of the assessee, who failed to appear due to ill-health being chronic diabetic and heart patient and due to frequent visits to hospital and not on account of any lapse by the officers of assessee society. In support of his contention, ld. AR filed a paper book containing all his medical bills and health reports containing 300 pages.

7.1. Ld.AR further submitted that as the Director of the assessee has reasonable cause for the delay in filing the appeal before the ld.CIT(A), matter may kindly be remitted back to the authorities below for afresh adjudication. In support of his case, Ld. AR filed the following decisions :

• Vijay Vishin Meghani Vs. DCIT – 398 ITR 250 of Bombay High Court.
• Royal Airways Lts Vs. Addl.CIT – 98 ITD 259 – Delhi High Court.
• All India Primary Teachers Federation Vs. DIT (Exemptions), 93 TTJ 155 – Delhi High Court.
• Angela J. Kazi Vs. ITO – 10 SOT 139 of Mumbai Tribunal.
• Rameshwari Devi and another Vs. Sansar Chand and others – AIR 1986 Himachal Pradesh.
• Nosegay Public School Management Committee Vs. CIT – 58 SOT 185 of Jodhpur Bench.
• Sartorious Mechatronics India (P) Ltd. Vs. ACIT of ITAT, Bangalore Bench.

8. Per contra, the ld.DR has raised objection for remanding the matter back to the file of lower authorities. In this connection, ld. DR relied on the following decisions :

• Majji Sannemma @ Sanyasi Rao Vs. Reddy Sridevi & Others – Civil Appeal No.7696 of 2021 of Hon’ble Supreme Court.
• Esha Bhattacharjee Vs. Managing Committee of Raghunanthapur Nafar Academy and others – Civil
• B. Advani & Co. (P) Ltd. Vs. R.D. Shah, CIT reported in (1969) 72 ITR 395 (SC).
• Vama Apparels (India) Pvt Ltd. Vs. ACIT – reported in (1019) 102 com 398 (Bombay).
• Shankar Appayya Govarkar Vs. Nurudappa Basappa Maili and others reported in (1998) II (1998) ACC 575 – Hon’ble Karnataka High Court.

8.1 Ld. DR filed a Chart showing the delay in filing the appeal, assessment year wise, which is to the following effect :

9. We have heard the rival submissions and perused the material on record. We have also carefully considered the reasons given by the assessee for the delay in filing of the appeal. In the reasons given by the assessee, it is mentioned that the Director of the assessee was not keeping the good health since 2011 and was indisposed for the purposes of filing the appeal.

10. It is noticed that we are dealing with the assessment years A.Ys. 2010-11, 2011-12 and 2013-14 to 2015-16. From the perusal of the medical records submitted by the assessee, it is clear that the assessee was under some medical treatment. However, the medical treatment of the director of assessee society, only related to eye, cough, cardiovascular etc. For such diseases, it cannot be said that the assessee society was prevented from filing the statutory appeal before the ld.CIT(A). No evidence had been filled out showing that the director of the assessee was hospitalized for more than 6-7 years. Moreover the assessee had been regularly filing the return of income within the statutory periods, without any failure and assessee being the society can always authorized some other official of the society either president, secretary or joint secretary to file the appeal before the ld.CIT(A). In the light of above facts, the reasons submitted by the Director of the assessee company and sequence of events, we are of the considered view that the reasons given by the assessee in the condonation petition are not bona fide. Therefore, we are of the considered view that there is no merit in the reasons given by the assessee in the petition for condonation of delay filled before the ld.CIT(A) and he has rightly dismissed the petition filed by the assessee.

11. Be that as it may, coming back to the legal position evolved by the decision of various High Courts, including the Hon’ble Supreme Court in number of cases, where it has been time and again, held that when merits and technicalities pitted against each other, then merit alone deserves to be prevailed because, if you throw out a meritorious case out of judicial scrutiny on the grounds of technicalities, then you may deprive the right of the petitioner in pursuing their case. At the same time, various Courts have held that rules of limitation are not meant to destroy the rights of parties, they are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly, within the time bound prescribed under the Act.

12. Further, in a case, where, for the reasons beyond the control of the petitioner, the appeal could not be filed, then the Courts are well equipped with power to condone the delay, if the petitioner explains the delay in filing of the appeal with a reasonable cause. However, there is no law or mandate in the Act, to condone the delay in each and every case. But, it depends upon all facts of each case and the reasons given by the parties for condonation of delay. Therefore, one has to go by the facts of its own case and the reasons given by the petitioner for condonation of delay.

13. In these set of appeals, on perusal of reasons given by the assessee for delay in filing of the appeal before the ld.CIT(A), we find that although it appears that the assessee is not deriving any benefit by not filing the appeal within the due date prescribed under the Act before the ld.CIT(A), but, from contents of petition filed by the assessee before the lower authority, we could easily make out a case that the assessee has made an afterthought to file the appeal before the ld.CIT(A). The assessee society is not governed by an individual rather it has many members in its governing body and therefore, the alleged illness of the one of the directors of assessee society will not prevent the other office bearers of the assessee to file the appeal before the ld.CIT(A) against the order passed by the Assessing Officer. Therefore, in our considered view, for these vague reasons, such huge delay of 3047 days in filing of the appeal before the lower authority, cannot be condoned.

14. Further, the assessee’s reasons in the condonation petition do not come under .reasonable cause. as prescribed under the Act, for condonation of delay and the explanation given by the assessee for delay is not proper and casual in nature. The reasons given by the assessee are devoid of any merit and not sustainable in the eyes of law. The law requires the assessee to be vigilant and careful in prosecuting its rights under the Act. Considering the totality of the facts and circumstances of the case and the conduct of the assessee, we do not find any reason to entertain the present appeal as the same is barred by limitation.

15. We also draw strength from the decision of Hon’ble Supreme Court in the case of Majji Sannemma @ Sanyasirao Vs. Reddy Sridevi and others (Civil Appeal No.7696 of 2021 dt.16.12.2021 relied upon by the ld.DR, wherein the Hon’ble Supreme Court dismissed the condonation petition. The facts of this case are identical to the facts of the present case. The Hon’ble Supreme Court at Para 6.2 had reproduced the facts of the case to the following effect :

“6.2 We have gone through the averments in the application for the condonation of delay. There is no sufficient explanation for the period from 15.03.2017 till the Second Appeal was preferred in the year 2021. In the application seeking condonation of delay it was stated that she is aged 45 years and was looking after the entire litigation and that she was suffering from health issues and she had fallen sick from 01.01.2017 to 15.03.2017 and she was advised to take bed rest for the said period. However, there is no explanation for the period after 15.03.2017. Thus, the period of delay from 15.03.2017 till the Second Appeal was filed in the year 2021 has not at all been explained. Therefore, the High Court has not exercised the discretion judiciously.”

In our view, the facts of the present appeal are identical rather situated in a worse footing than that of the case of Majji Sannemma @ Sanyasirao (supra). Hence, the ld.CIT(A) was right in dismissing the condonation application and the appeal of the assessee. We do not find any reasons to interfere with the finding of ld.CIT(A) and accordingly, the appeal of assessee is dismissed. We have not discussed the other decisions cited by the ld.DR, mentioned hereinabove as the decision in the case of Majji Sannemma @ Sanyasirao (supra) was latest in time. Further, the decisions referred by the ld.AR were all prior to the decision in the case of Majji Sannemma @ Sanyasirao (supra) and are distinguishable on facts.

16. In the result, the appeal of assessee in ITA No.360/Hyd/2022 is dismissed.

17. As far as the other four appeals are concerned, in view of the submission of both the parties that the issues raised in A.Y. 2010-11 are identical to the other assessment years, we for the reasons stated hereinabove while deciding the appeal in ITA 360/Hyd/2022 and for similar reasons, dismiss the remaining four appeals also.

18. To sum up, all the appeals of assessee are dismissed. A copy of the same may be placed in respective case files.

Order pronounced in the Open Court on 13th February, 2023.