Case Law Details
Nimesh Kanubhai Topiwala Vs DCIT (ITAT Surat)
ITAT Surat held that the delay in filing appeal before ld CIT(A)/ NFAC is not deliberate or intentional or gross negligence on part of assessee and hence the same is condoned.
Facts- Central Processing Centre (CPC), Bangalore while processing the return of assessee made disallowance u/s. 40(a)(ia) of the Income Tax Act, 1961 @ 30% of professional fees and salary expenses, reported in audit report for want of deduction of tax at source (TDS). The assessee filed application u/s. 154 for rectification of such mistakes. The application of assessee was rejected vide order dated 20/11/2019. The said rejection order was not communicated to the assessee by way of SMS alert. The assessee has not seen their e-mail, thus the Karta of assessee was not aware about dismissal/rejection of application under Section 154 by the CPC. While filing return of income for subsequent assessment year, the assessee and his Chartered Accountant realized/came to know about rejection of application under Section 154 by the CPC on 20/05/2020.
The assessee immediately downloaded the order and filed appeal on 09/06/2020. The appeal of assessee was dismissed vide order dated 23/03/2023, without giving opportunity to explain the fact.
Conclusion- Held that the delay in filing appeal before ld CIT(A)/ NFAC is not deliberate or intentional or gross negligence on part of assessee, therefore, considering the principle that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred, therefore, delay in filing appeal before the ld. CIT(A) is condoned. And the order of ld CIT(A) is set aside.
Considering the fact that the ld. CIT(A) dismissed the appeal of assessee in limine on the ground of limitation and appeal of assessee was not adjudicated on merit. As the ld. CIT(A) has not adjudicated the appeal on merit, the grounds of appeal on merit are restored back to the file of ld. CIT(A) to adjudicate the same on merit in speaking order. The ld. AR of the assessee is also directed to furnish complete details, explanation, evidence and submission before the ld. CIT(A) to substantiate the grounds of appeal, including to take the plea of benefits of proviso to section 201.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 23/03/2023 for the Assessment Year (AY) 2018-19. The assessee has raised following grounds of appeal:
“1. On the facts and circumstances of the case, the learned Commissioner of Income tax (Appeals) has erred in making addition u/s 40(a) of Rs. 530490/-
2. On the facts and circumstances of the case, the learned Commissioner of Income tax (Appeals) has erred in not appreciating that deductee had paid tax thereon and there is no loss of revenue.
3. On the facts and circumstances of the case, the learned Commissioner of Income tax (Appeals) has erred in reducing refund of Rs. 170020/-.
4. Under facts and circumstances of the case, the learned Commissioner of Income tax (Appeals) has erred in not giving proper opportunity to the appellant and has erred in not considering facts on merits and in the interest of natural justice.
5. On the facts and circumstances of the case, the learned Commissioner of Income tax (Appeals) has erred in not granting condonation of delay and if there is any delay, the appellant had filed affidavit to that effect.
6. On the facts and circumstances of the case, the e mail on which notice of hearing was issued was not under the knowledge of appellant and the appellant came to know only when notice for outstanding demand was raised.
7. On the facts and circumstances of the case the order passed u/s 250 came to the knowledge of appellant only on 20.05.2020 and text message of appeal hearing was received by appellant and further erred in not appreciating that there was a corona virus from 15.03.2020 and the time thereafter was automatically extended by Hon’ble Supreme Court.
8. The appellant reserves right to add, alter, vary any or all grounds of appeal.”
2. Rival submissions of the parties heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that the appeal of assessee was dismissed by the ld. CIT(A) without giving any show cause notice to explain the cause of delay in filing appeal. The ld. AR of the assessee submits that the Central Processing Centre (CPC), Bangalore while processing the return of assessee made disallowance under Section 40(a)(ia) of the Income Tax Act, 1961 (in short, the Act) @ 30% of professional fees and salary expenses, reported in audit report for want of deduction of tax at source (TDS). The assessee filed application under section 154 for rectification of such mistakes. The application of assessee was rejected vide order dated 20/11/2019. The said rejection order was not communicated to the assessee by way of SMS alert. The assessee has not seen their e-mail, thus the Karta of assessee was not aware about dismissal/rejection of application under Section 154 by the CPC. While filing return of income for subsequent assessment year, the assessee and his Chartered Accountant realized/came to know about rejection of application under Section 154 by the CPC on 20/05/2020. The assessee immediately downloaded the order and filed appeal on 09/06/2020. Alongwith appeal, Karta of assessee filed his affidavit that the order of CPC under Section 154 dated 20/11/2019 came to his notice only on 20/05/2020. The affidavit was filed alongwith Form No. 35 and grounds of appeal before the ld. CIT(A). The case of assessee was migrated to NFAC in terms of notification dated 25/09/2020. The appeal of assessee was dismissed vide order dated 23/03/2023, without giving opportunity to explain the fact. The ld. CIT(A)/NFAC dismissed the appeal on mere going through the contents of affidavit. The ld. AR of the assessee submits that the delay in filing appeal before the ld. CIT(A) was neither intentional nor deliberate rather due to the fact that such order never came to the notice of assessee. The assessee has good case on merit and his likely to succeed, if one more opportunity to contest the case on merit is allowed to the assessee.
3. On merit, the ld. AR of the assessee submits that the expenses of salary and professional fees, 30% was disallowed by the CPC. The recipient of salary and professional fee y have included such professional fees and salary in their taxable income and has paid taxes thereon. Thus, the assessee is eligible for benefit of Proviso to Section 201 of the Act and the assessee fulfilled all four conditions that the recipient has furnished return of income within due date, the recipient has taken into account such sum for computing income in such return of income and has paid due tax on the income declared by him in such return of income and furnished a certificate to this effect in prescribed format. The ld. AR of the assessee submits that all four conditions are fulfilled and the assessee has given complete details of the recipients, their return of income, with computation and Form 26AS as per Rule 31ACB of Chartered Accountant. Thus, the assessee is entitled for such deduction of professional and salary expenses. To support his submission on the condonation of delay, the ld. AR of the assessee relied upon the following decisions:
(1) Arumugan Lakshmanan Vs ACIT (2021) 178 TR (A) 525 (Chen-Trib)
(2) Sanskruti Enterprise Vs DCIT (2022) 186 TR(A) 792 (Surat-Trib)
(3) TEjas Karshanbhai Dari Vs ITO (2022) 187 TR(A) 788 (Ahd.-Trib)
(4) Thakur Infra Projects (P) Ltd. Vs DCIT (2022) 185 TR(A) 425 (Mum-Trib)
(5) Jasper Auto Service (P) Ltd. Vs DCIT (2022) 186 TR(A) 211 (Hyd-Trib).
4. On the other hand, the learned Senior Departmental Representative (Sr. DR) for the revenue submits that all the submissions raised by the ld. AR of the assessee was considered by the ld. CIT(A). The assessee is taking lame excuse that no SMS alert was received or that the assessee was not aware about passing of rectification order by CPC on 20/11/2019. The affidavit of assessee does not disclose such fact. The ld. Sr.DR for the revenue relied on the decision of Hon’ble Apex Court in Civil Appeal No.7696 of 2021 in the case of Majji Sannemma @ Sanyasirao Vs Reddy Sridevi & Ors.
5. I have considered the submissions of both the parties and perused the record carefully. There is no dispute that the CPC dismissed the application under Section 154 of the Act on 20/11/2019. The ld. AR of the assessee vehemently argued that the assessee was not at all aware about passing of such order and that the assessee and his Chartered Accountant came to know only on 20/05/2020 and from the date of knowledge, the appeal is filed within time. I find that the present appeal is filed on 09/06/2022. Though the assessee was required to file appeal within 30 days i.e. on or before 20/06/2020 provided the order is served or communicated to the assessee. The foremost plea of ld. AR of the assessee is that the order was not communicated to the assessee and the assessee was not aware and came to know only on 20/05/2020 and from the date of communication, the assessee has filed appeal before the ld. CIT(A) within time. I find that alongwith appeal, the Karta of assessee has filed his affidavit inter alia stating that the order came to his notice on 20/05/2020 and appeal was filed on 09/06/2020. I find that some part of delay, till filing of appeal on 09/06/2020 is covered by the decision of Hon’ble Apex Court in Suo Moto Writ Petition No. 03/2020 wherein time period of taking recourse of law before the various courts/forums was excluded from 15/03/2020 till 28/02/2022. By excluding such period, there was only delay of about 85 days tentatively. On considering the submission of assessee and facts of the case, I am of the view that the delay in filing appeal before ld CIT(A)/ NFAC is not deliberate or intentional or gross negligence on part of assessee, therefore, considering the principle that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred, therefore, delay in filing appeal before the ld. CIT(A) is condoned. And the order of ld CIT(A) is set aside. So far as objection of ld. Sr.DR for the revenue and reliance on decision of Hon’ble Apex Court in Civil Appeal No.7696 of 2021 in the case of Majji Sannemma @ Sanyasirao Vs Reddy Sridevi & Ors. with utmost regard to the said decision, I find that facts of the present appeal are at variance. With utmost regard the ratio of the said decision, I find that in that case, the High Court has not observed that there was any sufficient cause explaining the huge delay of 1011 days was made out. However, in the present appeal there is delay of about 85 days and the assessee has shown sufficient cause, that they were not aware of passing order under section 154, which is reasonable one. Now adverting to the merit of the case.
6. Considering the fact that the ld. CIT(A) dismissed the appeal of assessee in limine on the ground of limitation and appeal of assessee was not adjudicated on merit. As the ld. CIT(A) has not adjudicated the appeal on merit, the grounds of appeal on merit are restored back to the file of ld. CIT(A) to adjudicate the same on merit in speaking order. The ld. AR of the assessee is also directed to furnish complete details, explanation, evidence and submission before the ld. CIT(A) to substantiate the grounds of appeal, including to take the plea of benefits of proviso to section 201. With this direction, the grounds of appeal raised by assessee are allowed for statistical purposes.
7. In the result, this appeal of assessee is allowed for statistical purposes only.
Order announced in open court on 5th June, 2023.
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