Case Law Details
Matrix Sea Foods India Ltd Vs ACIT (ITAT Hyderabad)
ITAT Hyderabad held that reasons given in the condonation application for the delay are not sufficient for condonation of such huge delay of 930 days. Accordingly, appeal dismissed as barred by limitation.
Facts- The case of the assesse was selected for scrutiny through CASS and statutory notices u/s 143(2) and 142(1) of the I.T. Act were issued to the assessee to which the A.R of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. AO completed the assessment u/s 143(3) on 14.12.2017 determining the total income of the assessee at Rs.91,78,984/- wherein he made addition of Rs.22,52,673/- on a/c of gold scheme and Rs.34,52,901/- on a/c of disallowance of foreign & domestic tour expenses.
Since the assessee did not appear before the CIT(A), the CIT(A) dismissed the appeal filed by the assessee in the ex-parte order passed by him wherein he decided the issue on merit on the basis of material available on record. Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal.
Notably, the reasons explained in the condonation application and the subsequent affidavit is that the email data given in the PAN data was discontinued as the assessee could not pay the charges. The e-mail address given in Form No.35 is also not available since the service provider discontinued the service on a/c of nonpayment and the person whose email-id was given in Form 35 left the company due to some dispute, therefore, the notices sent by the CIT (A) were not received for which the assessee could not represent before the CIT (A). It is also his submission in the delay condonation application that only when the Accountant checked the I.T Portal, he found the order of the CIT (A) in the Website for which the appeal is being filed before the Tribunal with a delay of 930 days.
Conclusion- Hon’ble Bombay High Court in the case of Vama Apparels (India) (P) Ltd vs. ACIT held that where assessee filed appeal before High Court with a delay of 507 days and Sought condonation of delay stating that ex-employee of assessee who received order of Tribunal put it in his drawer and left company without informing anybody about such orders and it was only about a month before filing of instant appeal when his substitute new employee found papers from drawer, there was no sufficient explanation for delay.
Held that the reasons given in the condonation application for the delay are not sufficient for condonation of such huge delay of 930 days. We therefore, hold that the delay in filing of the appeal by 930 days by the assessee cannot be condoned. Accordingly, the appeal filed by the assessee is dismissed being barred by limitation.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order dated 2.12.2022 of the learned CIT (A)-4 Hyderabad, relating to A.Y.2015-16.
2. Facts of the case, in brief, are that assessee is a company engaged in the business of manufacturing and trading of aqua feed and filed its return of income for the A.Y 20 15-16 on 29.09.2015 declaring total income of Rs.34,84,410/- under the normal provisions and Rs.33,73,901/- u/s 115JB of the I.T. Act. The case was selected for scrutiny through CASS and statutory notices u/s 143(2) and 142(1) of the I.T. Act were issued to the assessee to which the A.R of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. The Assessing Officer completed the assessment u/s 143(3) on 14.12.2017 determining the total income of the assessee at Rs.91,78,984/- wherein he made addition of Rs.22,52,673/- on a/c of gold scheme and Rs.34,52,901/- on a/c of disallowance of foreign & domestic tour expenses. Since the assessee did not appear before the CIT (A), the CIT (A) dismissed the appeal filed by the assessee in the ex-parte order passed by him wherein he decided the issue on merit on the basis of material available on record.
3. Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
“1. The order of the learned Commissioner of Income Tax (Appeals) is against the law, weight of evidence and probabilities of case.
2. The learned Commissioner erred in confirming the order of the Assessing Officer wherein, total income is determined 2 Rs at Rs.91,78,984/- as against the income returned Rs.34,81,410/-.
3. The learned Commissioner erred in confirming the addition of Rs.22,34,673B/- incurred towards business promotion i.e. spent for distribution of gold coins to the dealers.
4. The learned Commissioner erred in confirming the addition of 34,52,901/- incurred towards business promotion i.e. spent for pleasure trips to abroad on dealers or to their nominees.
5. The appellant craves leave to add to, 5 Rs amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary”.
4. There is a delay of 930 days in filing of this appeal by the assessee for which the assessee has filed a condonation petition explaining the reasons for such delay which reads as under:
“The assessee obtained a paid email box from Grey Logic Technologies Pvt Ltd, for the purpose of communication, the email ID given in the pan data is as satyanarayana@matrixagri.com which is discontinued as the assessee could not pay the charges for the services. In form No.35 the email address was given as venkat6000in@gmail.com. The service provider discontinued the service on account of non payment and the person whose email id was given in Form No.35 also left the company on account of disputes on account of remuneration. Therefore, notices sent by the Appellate Commissioner by email were not received, therefore, the assessee has not present represented before Appellate Commissioner. Recently the Accountant of the company checked up the IT Portal and found the order of the Appellate Commissioner in the income tax website. Therefore, the appeal is being filed with a delay of 921 days before the Hon ‘ble ITAT. The Hon ‘ble Bench is requested to condone the delay as the delay is on account of is unavoidable circumstances mentioned above and also there is no contumacious conduct on the part of assessee in filing the appeal with 921 days. Therefore, it is prayed to condone the delay to adjudicate the issues on merits”.
5. The learned Counsel for the assessee drew the attention of the Bench to the affidavit filed by the assessee which reads as under:
“I Vempuluru Akhila d/o, V Shiva Prasad, aged about 26 years Authorized Signatory of the Appellant company R/o Plot no – 44, Vasantha Valley, Phase -1, Near Ramalayam hitefields. Kondapur, Serlingampally, KV Ran gareddy, HITEC City, Hyderabad, Telangana O008 do hereby state on oath as under:
The notices u/s 250 of the IT Act were sent by the office of the CIT(A)-4 Hyderabad, by mail using the mail id taxes@raco.in, where as in the form no 35 the assessee provided the mail as venkat6000inagmail.com and also opted not to receive the communication by email. However the notices were sent to mail id taxes@raco.in. On account of this reason the communication of notices u/s 250 and order u/s 250 of the IT Act were not communicated to the assessee, therefore there is a delay of filing of appeal by 930 days. Considering the fact mentioned above the delay may kindly be condoned.
Place: Hyderabad
Date: 22-02-2023”
6. The learned Counsel for the assessee referring to the condonation application drew the attention of the Bench to Form 35 and submitted that in Column “Whether notices/ communication may be sent on e-mail” the assessee has mentioned “No”. He accordingly submitted that since the order of the learned CIT (A) was not received by the assessee, therefore, there was a delay in filing of this appeal and therefore, the delay should be condoned and the appeal should be admitted for adjudication.
7. Relying on various decisions the learned Counsel for the assessee submitted that when substantial justice and technical considerations are pitted against each other, the cause of justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. He accordingly submitted that the delay should be condoned and the appeal be admitted for adjudication on merit.
8. The learned DR, on the other hand, referred to the reply given by the CIT (A) regarding the non-service of appeal order to the assessee and drew the attention of the Bench to the same which reads as under:
9. He submitted that the AR of the assessee had appeared before the CIT (A) and sought adjournment vide letter dated 22.06.2019. He further appeared on 05.07.2019. The order was passed by the CIT (A) on 16.7.2019 and was sent to the address given by the assessee by speed post which was returned unserved by the postal authorities with the remarks “addressee left”. The assessee has not taken any steps to intimate the change of address, if any. Even the learned Counsel for the assessee who appeared before the CIT (A) was seeking adjournment from time to time and never bothered to follow the matter. Therefore, the arguments advanced by the learned Counsel for the assessee that the delay should be condoned cannot be accepted. He also relied on the following decisions:
1. Majji Sannemma&Sanyasirao Vs. Reddy Sridevi & Others in Civil Appeal No. 7696 of 2021 dated 16th 2021 (S.C)
2. Ajmeer Sherrif & Co. vs. Income Tax Officer reported in 375 ITR 15 (Mad.)
3. Esha Bhattacharjee vs. Management Committee of Raghunathpur Nafar in Civil Appeal Nos. 8183 & 8184 of 2013 dated 13.9.2013 (S.C)
4. JB Advani & Co. (P) Ltd vs. R.D. Shah, CIT (1969) 72 ITR 395 (S. C) dated 22.8.1968.
5. Vama Apparels (India) Private Ltd vs. ACIT (2019) 102 com 395 (Bombay)
10. We have heard the rival arguments made by both sides and perused the material on the issue of condonation of delay. We have also considered the various decisions cited before us. We find the assessee in the instant case filed the appeal before the Tribunal with a delay of 930 days. The reasons explained in the condonation application and the subsequent affidavit is that the email data given in the PAN data was discontinued as the assessee could not pay the charges. The e-mail address given in Form No.3 5 is also not available since the service provider discontinued the service on a/c of nonpayment and the person whose email-id was given in Form 35 left the company due to some dispute, therefore, the notices sent by the CIT (A) were not received for which the assessee could not represent before the CIT (A). It is also his submission in the delay condonation application that only when the Accountant checked the I.T Portal, he found the order of the CIT (A) in the Website for which the appeal is being filed before the Tribunal with a delay of 930 days.
10. We do not find any merit in the above arguments of the learned Counsel for the assessee for condonation of delay. As confirmed by the CIT (A), the order dated 16.7.2019 was sent by speed post to the address given by the assessee which was returned unserved on 10.8.20 19 with remark “addressee left”. It is also an admitted fact that the AR of the assessee appeared before the CIT (A) and sought adjournment vide letter dated 22.1.2019 and the case was adjourned to 11.2.2019. Further, the notice was received by the AR of the assessee personally on 24.6.20 19 and the AR of the assessee thereafter sought adjournment vide letter dated 5.7.2019. Under these circumstances when the AR of the assessee was appearing before the CIT (A), it cannot be said that the assessee was not aware of the fate of the appeal and came to know only after a gap of 930 days that too from the Website of the CIT (A).
11. The Hon’ble Supreme Court in the case of Easha Bhattacharjee vs. Managing Committee of Raghunathpur (Supra) vide order dated 13.9.2013 in Civil Appeal 8183-8184 of 2013 on the issue of condonation of delay has observed as under:
“10. In this context, we may refer with profit to the authority in Oriental Aroma Chemical Industries Limited v. Gujarat Industrial Development Corporation and another[13], where a two-Judge Bench of this Court has observed that the law of limitation is founded on public policy. The legislature does not prescribe limitation with the object of destroying the rights of the parties but to ensure that they do not resort to dilatory tactics and seek remedy without delay. The idea is that every legal remedy must be kept alive for a period fixed by the legislature. To put it differently, the law of limitation prescribes a period within which legal remedy can be availed for redress of the legal injury. At the same time, the courts are bestowed with the power to condone the delay, if sufficient cause is shown for not availing the remedy within the stipulated time. Thereafter, the learned Judges proceeded to state that this Court has justifiably advocated adoption of liberal approach in condoning the delay of short duration and a stricter approach where the delay is inordinate.
11. In Improvement Trust, Ludhiana v. Ujagar Singh and others[14], it has been held that while considering an application for condonation of delay no straitjacket formula is prescribed to come to the conclusion if sufficient and good grounds have been made out or not. It has been further stated therein that each case has to be weighed from its facts and the circumstances in which the party acts and behaves.
12. A reference to the principle stated in Balwant Singh (dead) v. Jagdish Singh and others[15] would be quite fruitful. In the said case the Court referred to the pronouncements in Union of India v. Ram Charan[16], P.K. Ramachandran v. State of Kerala[17] and Katari Suryanarayana v. Koppisetti Subba Rao[18] and stated thus:-
25. We may state that even if the term “sufficient cause” has to receive liberal construction, it must squarely fall within the concept of reasonable time and proper conduct of the party concerned. The purpose of introducing liberal construction normally is to introduce the concept of “reasonableness” as it is understood in its general connotation.
26. The law of limitation is a substantive law and has definite consequences on the right and obligation of a party to arise. These principles should be adhered to and applied appropriately depending on the facts and circumstances of a given case. Once a valuable right has accrued in favour of one party as a result of the failure of the other party to explain the delay by showing sufficient cause and its own conduct, it will be unreasonable to take away that right on the mere asking of the applicant, particularly when the delay is directly a result of negligence, default or inaction of that party. Justice must be done to both parties equally. Then alone the ends of justice can be achieved. If a party has been thoroughly negligent in implementing its rights and remedies, it will be equally unfair to deprive the other party of a valuable right that has accrued to it in law as a result of his acting vigilantly.”
13. Recently in Maniben Devraj Shah v. Municipal Corporation of Brihan Mumbai[19], the learned Judges referred to the pronouncement in Vedabai v. Shantaram Baburao Patil[20] wherein it has been opined that a distinction must be made between a case where the delay is inordinate and a case where the delay is of few days and whereas in the former case the consideration of prejudice to the other side will be a relevant factor, in the latter case no such consideration arises. Thereafter, the two-Judge Bench ruled thus: –
“23. What needs to be emphasized is that even though a liberal and justice-oriented approach is required to be adopted in the exercise of power under Section 5 of the Limitation Act and other similar statutes, the courts can neither become oblivious of the fact that the successful litigant has acquired certain rights on the basis of the judgment under challenge and a lot of time is consumed at various stages of litigation apart from the cost.
24. What colour the expression “sufficient cause” would get in the factual matrix of a given case would largely depend on bona fide nature of the explanation. If the court finds that there has been no negligence on the part of the applicant and the cause shown for the delay does not lack bona fides, then it may condone the delay. If, on the other hand, the explanation given by the applicant is found to be concocted or he is thoroughly negligent in prosecuting his cause, then it would be a legitimate exercise of discretion not to condone the delay.” Eventually, the Bench upon perusal of the application for condonation of delay and the affidavit on record came to hold that certain necessary facts were conspicuously silent and, accordingly, reversed the decision of the High Court which had condoned the delay of more than seven years.
14. In B. Madhuri Goud v. B. Damodar Reddy[21], the Court referring to earlier decisions reversed the decision of the learned single Judge who had condoned delay of 1236 days as the explanation given in the application for condonation of delay was absolutely fanciful.
15. From the aforesaid authorities the principles that can broadly be culled out are:
i) There should be a liberal, pragmatic, justice-oriented, non- pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice.
ii) The terms “sufficient cause” should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact- situation.
iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis.
iv) No presumption can be attached to deliberate causation of delay but, gross negligence on the part of the counsel or litigant is to be taken note
v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact.
vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice.
vii) The concept of liberal approach has to encapsule the conception of reasonableness and it cannot be allowed a totally unfettered free play.
viii) There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal
ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach.
x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such a litigation.
xi) It is to be borne in mind that no one gets away with fraud, misrepresentation or interpolation by taking recourse to the technicalities of law of limitation.
xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception.
xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude.
16. To the aforesaid principles we may add some more guidelines taking note of the present-day scenario. They are: –
a) An application for condonation of delay should be drafted with careful concern and not in a half hazard manner harbouring the notion that the courts are required to condone delay on the bedrock of the principle that adjudication of a lis on merits is seminal to justice dispensation system.
b) An application for condonation of delay should not be dealt with in a routine manner on the base of individual philosophy which is basically
c) Though no precise formula can be laid down regard being had to the concept of judicial discretion, yet a conscious effort for achieving consistency and collegiality of the adjudicatory system should be made as that is the ultimate institutional motto.
d) The increasing tendency to perceive delay as a non- serious matter and, hence, lackadaisical propensity can be exhibited in a non-challant manner requires to be curbed, of course, within legal parameters.
12. We find the Hon’ble Madras High Court while dismissing the appeal filed by the assessee on a/c of delay in the case of Ajmeer Sherrif & Co.(Supra) has observed as under:
“10. We find that the appellant in the present case has been lackadaisical in their approach and in a nonchalant manner they have tried to seek condonation of delay. The Supreme Court in the decision referred supra has deprecated the practice of showing leniency in unwarranted fact situation. The parameters laid down by the Supreme Court as to when the delay should not be condoned get squarely attracted to the facts of the present case and. therefore, we find no reason to condone the delay. The Tribunal was correct in dismissing the appeal on that score.”
13. We find the Hon’ble Supreme Court in the case of Majji Sannemma & Sanyasirao Vs. Reddy Sridevi & Others in Civil Appeal No.7696 of 2021 dated 16th 2021 while reversing the order of the Hon’ble A.P High Court at Amaravati at Para 6.1 and 6.2 of the order has observed as under:
“6. At the outset, it is noted that by the impugned order the High Court has condoned a huge delay of 1011 days in preferring the Second Appeal by respondent Nos. 1 and 2 herein – original defendants – appellants before the High Court. While condoning the delay, the High Court has observed as under: “In these circumstances, when there are certain questions, which require a debate in the second appeal, it is not necessary that this matter be rejected at this stage, without inviting a decision on merits. lf the delay is condoned though enormous, what happens at best is to give an opportunity to the parties to canvass their respective case. Since this question being of procedure, the attempt of the court should be to encourage a healthy discussion on merits than rejecting at threshold.
Viewed from such perspective, accepting the reasons assigned by the petitioner, the delay in presenting this second appeal should be condoned.
Apparently, there is no wilful negligence on the part of the petitioners nor this attempt suffers from want of due diligence. It appears being a bonafide attempt on the part of the petitioners to canvass their claim particularly when the trial court had accepted their plea, which was subjected to reversal by the appellate court. However, the petitioners should compensate the respondent by means of costs for this delay. The contention of the respondent that valuable rights are accrued to her on account of inaction of the petitioners in failing to prefer the Second Appeal within time, cannot be a significant factor in the backdrop of the circumstances found in this case.
In the result, this petition is allowed condoning the delay of 1011 days in filing the second appeal subject to payment of costs of Rs.2, 000/ (Rupees Two thousand only) to the learned counsel for the respondent on or before 05.10.2021.” Thus from the aforesaid, it can be seen that the High Court has not observed that any sufficient cause explaining the huge delay of 1011 days has been made out.
6.1 The High Court has observed that if the delay is condoned no prejudice will be caused to the appellant as the appeal would be heard on merits. The High Court has also observed that there is no wilful negligence on the part of the respondents herein nor it suffers from want of due diligence. However, from the averments in the application for condonation of delay, we are of the opinion that it was a case of a gross negligence and/or want of due diligence on the part of the respondents herein – appellants before the High Court in filing such a belated appeal.
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.
14. Finally at Para 8 of the order has observed as under:
“8. Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand and considering the averments in the application for condonation of delay, we are of the opinion that as such no explanation much less a sufficient or a satisfactory explanation had been offered by respondent Nos.1 and 2 herein – appellants before the High Court for condonation of huge delay of 1011 days in preferring the Second Appeal. The High Court is not at all justified in exercising its discretion to condone such a huge delay. The High Court has not exercised the discretion judiciously. The reasoning given by the High Court while condoning huge delay of 1011 days is not germane. Therefore, the High Court has erred in condoning the huge delay of 1011 days in preferring the appeal by respondent Nos.1 and 2 herein – original defendants. Impugned order passed by the High Court is unsustainable both, on law as well as on facts”.
15. We find the Hon’ble Bombay High Court in the case of Vama Apparels (India) (P) Ltd vs. ACIT reported in (2019) 261 Taxmann 496 (Bombay) dated 11.01.2019 has held that where assessee filed appeal before High Court with a delay of 507 days and Sought condonation of delay stating that ex-employee of assessee who received order of Tribunal put it in his drawer and left company without informing anybody about such orders and it was only about a month before filing of instant appeal when his substitute new employee found papers from drawer, there was no sufficient explanation for delay.
16. Respectfully following the above decisions cited (Supra) we are of the considered opinion that the reasons given in the condonation application for the delay are not sufficient for condonation of such huge delay of 930 days. We therefore, hold that the delay in filing of the appeal by 930 days by the assessee cannot be condoned. Accordingly, the appeal filed by the assessee is dismissed being barred by limitation.
17. In the result, appeal filed by the assessee is dismissed.
Order pronounced in the Open Court at the time of hearing itself on 23rd February, 2023.
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