Case Law Details
Power Equipment Company Vs ADIT (ITAT Surat)
ITAT Surat held that the delay in filing the appeal before CIT(A) is not deliberate or intentional or due to gross negligence on the part of the assessee. Accordingly, delay of more than 2 years condoned and matter remanded back to CIT(A).
Facts- Assessee filed return on 27.01.2021, declaring total income of Rs.4,94,690/-. The ADIT, CPC processed the return and issued intimation u/s 143(1) of the Act on 03.11.2021. The CPC has computed the total income of Rs.8,40,570/- and raised demand of Rs.54,010/-. The assesse filed appeal before CIT(A) on 22.12.2023, which is delayed by 2 years and 19 days. In Form 35, the assessee stated that neither he nor his AR had any knowledge about the intimation order passed by the CPC on 31.12.2021. However, the appeal was rejected and delay was not condoned.
Conclusion- Held that the delay in filing the appeal before CIT(A), NFAC is not deliberate or intentional or due to gross negligence on the part of the assessee. Therefore, considering the principles 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 the appeal before CIT(A) is condoned and the order of CIT(A) is set aside. The matter is set aside to the file of CIT(A) to verify the claim and passed order on merit. For statistical purposes, the appeal of the assessee is allowed for statistical purpose.
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) by the Learned Addl./JCIT(A)-9, Delhi [in short, ‘the Addl. CIT/JCIT’], dated 12.06.2024 for assessment year (AY) 2020-2 1.
2. Grounds of appeal raised by the assessee are as under:
“1. Ld. Addl./JCIT has erred in law and on facts to reject appellant’s appeal by not condoning delay on the ground that the reason mentioned convincing and not sufficient cause for condonation of inordinate delay of two years and nineteen days. He has ignored the settled law that service of intimation through portal on computer system was not in knowledge of appellant or his A.R. has considered as sufficient cause by the judiciaries.
2. Addl./JCIT has erred in law and on facts to reject appellant’s appeal only on the ground of technicalities and totally ignored vital aspect of substantial justice.
3. Addl./JCIT has erred in law and on facts to upheld CPC’s addition of Rs.3,45,874/- which is customary bonus paid to the employees of the appellant company, every year, following prevailing trade practice. Ld. Addl./JCIT has also erred in law and on facts to in upholding such addition ignoring the law that it is against the spirit of the Section 36(1)(ii) of the Act.”
3. Facts of the case in brief are that assessee filed return on 27.01.2021, declaring total income of Rs.4,94,690/-. The ADIT, CPC processed the return and issued intimation u/s 143(1) of the Act on 03.11.2021. The CPC has computed the total income of Rs.8,40,570/- and raised demand of Rs.54,010/-. The assesse filed appeal before CIT(A) on 22.12.2023, which is delayed by 2 years and 19 days. In Form 35, the assessee stated that neither he nor his AR had any knowledge about the intimation order passed by the CPC on 31.12.2021. Since the demand was small, assessee paid the demand. Thereafter, Advocate of the assessee opined that addition made by CPC is incorrect and therefore, the assessee filed appeal before CIT(A) with a prayer to condone the delay. The delay was neither intentional or deliberate but was due to circumstances beyond its control. The CIT(A) considered the reasons given by the assessee in filing the appeal late. He observed that the reasons given are not plausible, convincing and specific. There is a distinction between delay and inordinate delay for want of bona fides or inaction or negligence. He has referred to various decisions and observed that sufficient cause does not include negligent manner in which the appellant acted and there was lack of bona fide on part of the assessee. He further stated that discretion to condone the delay has to be exercised judiciously based on facts and circumstances of each case. He held that the mistake is not bona fide and appellant failed to show sufficient cause to condone the delay. Accordingly, delay was not condoned and appeal was rejected.
4. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee has filed paper book and affidavit of Shri Krishnakant Kanwarbhan Setia, partner of the assessee-firm in support of the petition for condoning the delay in filing the appeal. The contention is more or less similar to the grounds mentioned in Form It was submitted that information about the intimation u/s 143(1) of the Act came to knowledge of the assessee when the jurisdictional AO informed that CPC has completed the processing at total income of Rs.8,40,570/- and raised demand of Rs.54,010/-. Since demand was small payment was made. Subsequently, the Advocate of the assessee stated that the addition by CPC is incorrect in view of provisions of section 36(1)(ii) of the Act. Appeal was filed, thereafter against the order of CPC. It was submitted that delay was neither intentional nor deliberate but due to circumstances beyond control of the assessee. It was also submitted that the assessee is not going to be benefitted by filing delayed appeal. It was also submitted that there was further delay due to technical problem in the computer system and the government portal. This could be seen from the appeal fee payment document, affidavit etc. It was further submitted that assessee has a strong case on merit against the addition of Rs.3,54,874/- towards Diwali bonus paid to the employees. Such payment is being made year after year but no disallowance was made earlier. The ld. AR relied on the decision in case of Senior Bhosale Estate (HUF) vs. ACIT, 419 ITR 732 (SC), Nimesh Kanubhai Topical (HUF) DCIT, ITA No.242/Srt/2023 and M.K. Hotels & Resorts Ltd. vs. ACIT, ITA No.57/Asr/2021. In view of these facts and precedents, ld. AR requested to condone delay in filing appeal before CIT(A).
5. On the other hand, the learned Senior Departmental Representative (ld. DR) for the revenue stated that the delay is not satisfactorily explained. The CIT(A) has also given four notices but assessee did not respond.
6. We have heard both the parties and perused the materials available on The CIT(A) has refused to condone the delay and dismissed the appeal in limine without discussing the appeal on merit. An assessee may appeal to the CIT(A) against any appealable order detailed in section 246A of the Act. As per sub-section (2) of section 249 of the Act, the appeal shall be presented within 30 days from the date of service of the notice of demand relating to the assessment or penalty. However, sub-section (3) of section 249 of the Act permits the CIT(A) to admit an appeal after expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting the appeal within prescribed time limit. The notion of condonation of delay encompasses the discretionary power of an appellate authority to extend the prescribed time limit for filing an appeal or an application. It pertains to the mechanism by which the said appellate authority may grant clemency for delay in submitting an appeal. The discretion to condone the delay has to be exercised judicially based upon the facts and circumstances of the case. It has been held in a number of cases that the authority exercising such power should be judicious and be not guided by technical rules alone. In the present case, we find that the return was processed u/s 143(1) by making certain additions and demand of Rs.54,000/- was raised. We find that before making the adjustment, no intimation was given to assessee of such adjustment either in writing or in electronic mode, as provided in the proviso to section 143(1) of the Act. Hence, there was violation of principles of natural justice and adherence to statutory procedure. Because demand was small, assessee has paid the demand. However, subsequently, the advocate advised that the addition is not proper and hence appeal was filed. The foremost plead of the ld. AR was that the intimation was not communicated to the assessee and he came to know subsequently on being informed by the AO. The partner of the appellant firm has filed affidavit about the facts which has already discussed earlier. On considering the submission of the assessee and the decisions relied upon by ld. AR, we are of the view that the delay in filing the appeal before CIT(A), NFAC is not deliberate or intentional or due to gross negligence on the part of the assessee. Therefore, considering the principles 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 the appeal before CIT(A) is condoned and the order of CIT(A) is set aside. The matter is set aside to the file of CIT(A) to verify the claim and passed order on merit. For statistical purposes, the appeal of the assessee is allowed for statistical purpose.
7. In the result, appeal of the assessee is allowed for statistical purpose.
Order is pronounced on 05/12/2024 in the open court.
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