Case Law Details
Udaya Ravi Arecanut Company Vs ITO (ITAT Bangalore)
Principle of Substantial Justice V/s Technical Consideration – Not Condoning Delay Would Amount to Legalising an Illegal Order
ITAT Bangalore in the case of Udaya Ravi Arecanut Company V/s ITO ruled that Govt. cannot retain even a single pie of citizen’s money as tax, when it is not authorised by any law.
CPC Bengaluru in Intimation u/s 143(1), disallowed TDS credit partially which was appearing in Form 26AS. Assessee had filed rectification application u/s 154 & was under honest & bona fide belief that outcome would resolve the issue & there was no need to file appeal for the mistakes apparent from the record.
Assessee filed an appeal before CIT(A) belatedly. CIT(A) without considering merits of the case dismissed the appeal on grounds that the same is filed beyond time limit permitted u/s 249.
Before Tribunal, assessee argued that gross receipts reflected in Form 26AS were higher than receipts declared in Return of Income as assessee was merely a commission agent selling goods on behalf of principal agriculturists. Further, TDS u/s 194Q was deducted by purchasers treating assessee firm as seller of goods whereas assessee being a commission agent sold goods on behalf of agriculturists declaring commission & interest income.
Dept. contended that delay was substantial & was solely due to negligence of assessee.
Tribunal held that CPC had accepted Income declared by passing intimation u/s 143(1) & the solitary issue was not granting TDS Credit reflected in Form 26AS. CPC had not given any reason for disallowance of TDS credit & JCIT(A) without considering the merits of case, had dismissed appeal on grounds that appeal was filed beyond time limit.
Tribunal upheld assessee’s contentions & noted that prima facie there was no need to file appeal for the mistakes apparent from record. When substantial justice & technical consideration are fielded against each other, the cause of substantial justice deserves to be preferred & justice cannot be denied merely because of non-deliberate delay.
Tribunal held that if delay was not condoned, it would amount to legalising an illegal, unconstitutional order & unjust enrichment on the part of State by withholding the tax.
Tribunal allowed appeal of assessee for statistical purposes, condoning the delay & remitting entire issue in dispute to JCIT(A) for fresh adjudication.
The Tribunal relied on the Supreme Court judgement while considering similar issue in the case of Collector, Land Acquisition Vs. Mst. Katiji which laid down following six principles-
(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 & 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 & pragmatic manner.
(4) When substantial justice & 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 & is expected to do so.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of assessee is directed against the order of ld. Addl/JCIT(A), Jodhpur dated 08.11.2024 vide DIN & Order No. ITBA/APL/S/250/2024-25/1070213328(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2022-23. The assessee has raised the following grounds of appeal:
adjudicated the grounds raised by the appellant in the interest of justice and equity, on the facts and circumstances of the case.
4. The learned Commissioner of Income-tax [Appeals] failed to appreciate that, the order of intimation passed by the learned assessing officer is not in accordance with law since the parameters as specified in the provisions of sectior143 [1] of the Act has not been complied with and consequently the order of intimation passed by the learned assessing officer is bad in law and requires to be cancelled, on the facts and circumstances of the case.
5. The learned Commissioner of Income-tax [Appeals] and the learned assessing officer were not justified in not granting proper and correct refund to the appellant instead has arrived at tax payable of Rs. 10,80,290/- as determined by the learned assessing officer in the order of intimation passed under section 143[1] of the Act, on the facts and circumstances of the case.
6. The learned Commissioner of Income-tax [Appeals] is not justified in confirming the action of the learned assessing officer who granted credit for prepaid taxes only to the extent of Rs. 1,74,401/- as against the actual credit for prepaid taxes amounting to Rs. 11,34,672/- which is reflected in Form 26AS of the Appellant, resulting in withholding the credit for prepaid taxes of Rs. 9,60,271/- which is not in accordance with law, on the facts and circumstances of the case.
7. The learned Commissioner of Income-tax [Appeals] and the learned assessing officer failed to appreciate that the adjustment towards the granting of credit for prepaid taxes are not covered under the provisions of section 143[1][a] of the Act and granting of prepaid taxes as reflected in Form 26AS is to be given to the appellant as per the provisions of section 199 of the Act and consequently the order of intimation passed under section 143[1] of the Act, in not granting full credit for taxes as per section 199 of the Act, requires to be cancelled, on the facts and circumstances of the case.
8. The learned Commissioner of Income-tax [Appeals] is not justified in appreciating that the learned assessing officer fell in error in not giving the entire credit for prepaid taxes which is duly reflected in Form 26AS and as per the provisions of section 199 of the Act the appellant is entitled to claim the credit for Tax Deducted, on the facts and circumstances of the case.
9. Without prejudice, the learned Commissioner of Income-tax [Appeals] and the learned assessing officer failed to appreciate that the appellant is only a commission agent and receives only a small percentage of commission on the sale to the purchasers and the said commission received by the appellant is shown in the profit and loss account, however the purchasers has deducted TDS on the entire sale consideration paid by them which in fact includes the commission of the appellant and also the consideration to be paid by the appellant to its principal and consequently there is no difference in the income offered by the appellant and the credit for prepaid taxes claimed by the appellant, which was not properly appreciated by the learned Commissioner of income-tax [Appeals] and the learned assessing officer, on the facts and circumstances of the case.
10. Without prejudice, to the right to seek waiver as per the parity of reasoning of the decision of the Hon’ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234A, 234 B and 234C of the Income Tax Act on the facts and circumstances of the case. The appellant contends that the levy of interest under section 234A, 234B and 234C of the Act is also bad in law as the period, rate, quantum and method of calculation adopted by the learned assessing officer on which interest is levied are not discernible and are wrong on the facts of the case.
11. The appellant craves leave to add, alter, amend, substitute or delete any or all of the grounds of appeal urged above.
12. For the above and other grounds to be urged during the course of hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.
2. Brief facts of the case are that the assessee firm filed its Return of income for the Asst. year 2022-23 on 26.9.2022 by declaring total income of Rs.35,59,589/- and the tax payable thereon amounting to Rs.11,05,295/- were covered by way of total TDS/TCS amounting to Rs.11,34,672/- and accordingly the assessee claimed refund of Rs.29,380/- along with Interest U/s 244A thereon. Thereafter, while passing the intimation u/s 143(1) of the Act on 17.2.2023, the ld. Deputy Director of Income Tax, CPC, Bengaluru although accepted the total income of Rs.35,59,590/- as declared by the assessee in its return of Income but reduced the TDS to Rs.1,58,111/- from Rs.11, 18,382/- of total TDS as claimed in the return and thereby raised the total demand of Rs.10,80,290/- by disallowing total TDS credit of Rs.9,60,271/-
3. Aggrieved by the aforesaid Intimation passed u/s 143(1) of the Act dated 17/02/2023, the assessee preferred an appeal before the CIT(A)/NFAC belatedly along with the petition for condoning the delay in filing appeal.
4. The ld. Addl/JCIT(A) dismissed the appeal of the assessee in limine by holding that the assessee’s appeal is not maintainable as the same is filed beyond the time limit permitted u/s 249 of the Act for filing of appeal and there is no sufficient cause for delay in filing of appeal, which can be condoned and accordingly dismissed the appeal u/s 250 r.w.s. 251 of the Act without considering the merits of the appeal.
5. Again, being aggrieved by the Order of the ld. Addl/JCIT(A), the assessee has filed the present appeal before this Tribunal. The assessee has also filed two paper books comprised of 47 pages.
6. Before us, the ld. A.R. for the assessee vehemently submitted that the ld. Addl/JCIT(A) grossly erred in not condoning the delay in filing the appeal before him as there was sufficient cause in filing the appeal belatedly. The ld. AR of the assessee further submitted that since the income declared in the return was accepted by the CPC & the demand was raised by not allowing the TDS credit which was also reflecting in Form 26AS & accordingly the assessee sought for rectification of mistake as per the provision contained in section 154 of the Act. The assessee was under an honest & bonafide belief that the outcome of the rectification would address the discrepancies & prima facie there is no need to file appeal for the mistakes which were apparent on the face of the record which resulted in delay filing of appeal. On merits the ld. AR of the assessee submitted that the Gross receipts reflected in Form 26AS on which TDS credit was claimed in the Return of Income are higher than the total receipts declared in the Return as the assessee is a commission agent selling goods on behalf of agriculturists. Further, the AR of the assessee submitted that the purchasers have made TDS U/s 194Q by treating the assessee firm as seller of goods whereas the assessee being an commission agent sold the goods on behalf of principal agriculturists and the assessee firm has declared entire commission & Interest as income in its Return of Income. Lastly ld. AR requested to remit back the file to the ld. Addl/JCIT(A) for fresh consideration as the ld. Addl/JCIT(A) has not adjudicated the case on merits by condoning the delay.
7. Per contra, ld. DR submitted that the ld. Addl/JCIT(A) rightly dismissed the assessee’s appeal in limine without condoning the delay in filing the appeal as the delay was substantial without being the sufficient cause for Delay. The delay was only due to the negligence of the assessee firm.
8. We have heard the rival submissions & perused the materials available on record. It is undisputed fact that the Income declared by the assessee in its return of Income is accepted by the CPC while passing the Intimation u/s 143(1) of the Act. The solitary issue in the present case is non-granting of TDS Credit amounting to Rs. 9,60,271/- while passing intimation u/s 143(1) of the Act. On going through the internal page No.13 of the Intimation passed u/s 143(1) of the Act dated 17/02/2023, we find that the mismatch between the Tax credits claimed and allowed as reported by the CPC is NIL. Therefore, there is no variation in the Total TDS reflected as per 26AS & as claimed by the assessee. Further the CPC, Bengaluru while passing the intimation u/s 143(1) of the Act has also not given any reason for the disallowance of TDS credit. On going through the Form 26AS (Placed at page 4-16 of PB), we also take note of the fact that the TDS have been deducted u/s 194A i.e. on Interest on security deposits, U/s 194H i.e. on Commission or brokerage & u/s 194Q i.e. on payment of certain sum for purchase of goods. Therefore, we find force in the argument of the ld. AR of the assessee that the assessee is a commission agent selling goods on behalf of agriculturists & accounted for the commission in its books of Account. The purchasers have made TDS U/s 194Q by treating the assessee firm as seller of goods whereas the assessee being an commission agent sold the goods on behalf of principal agriculturists and the assessee firm has declared entire commission & Interest as income in its Return of Income. We are of the considered opinion that without considering all these merits of the appeal the ld. Addl/JCIT(A) dismiss the appeal as the same is filed beyond the time limit permitted u/s 249 of the Act.
8.1 We have also gone through the reasons explained by the assessee for filing the appeal belatedly before the ld. ADDL/JCIT(A). The main reason as stated by the assessee in filing the appeal belatedly before the ld. ADDL/JCIT(A) is that since the income declared in the return was accepted by the CPC & the demand was raised by not allowing the TDS credit only which was also reflecting in Form 26AS & accordingly the assessee sought for rectification of mistake as per the provision contained in section 154 of the Act. The assessee was under an honest & bonafide belief that the outcome of the rectification would address the discrepancies & prima facie there is no need to file appeal for the mistakes which were apparent on the face of the record which resulted in delay filing of appeal. It is not the case that the assessee has not cited any reasonable cause for filing appeal belatedly. The ld. ADDL/JCIT(A) on the ground that the reasons stated by the appellant not found tenable as the appellant has failed to demonstrate sufficient cause or any other hardship for delay, has not condoned the delay in filing appeal. On going through the facts of the case, we find force in the assessee’s contention that on an honest & bonafide belief that that the outcome of the rectification would address the discrepancies & prima facie there is no need to file appeal for the mistakes which were apparent on the face of the record which resulted in delay filing of appeal. In our opinion, it cannot be said that assessee is very callous in its approach in filing the appeal belatedly before the ld. ADDL/JCIT(A). Being so, 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 non-deliberate delay.
8.2 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.
8.3 Thus we are of the opinion that If the delay is not condoned, it would amount to legalising 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 authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of in filing the appeal before ld. Addl/JCIT(A) has to be condoned.
8.4 In view of the above, we are condoning the delay in filing the appeal before the ld. Addl./JCIT(A) belatedly and accordingly remit the entire issues in dispute to the file of ld. Addl./JCIT(A) with the above observations. The ld. Addl./JCIT(A) will decide the issue afresh in accordance with law after giving a fair opportunity of hearing to the assessee. It is ordered accordingly.
9. In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 21st Mar, 2025
Author Bio
