Double Taxation Avoided – Reversal of Provision Not Taxable Again: ITAT Mumbai

Nobel Biocare India Pvt. Ltd Vs ACIT (ITAT Mumbai)

Double taxation avoided – Reversal of provision cannot be taxed again; Appellate authority can allow claim without revised return – ITAT Mumbai

In Nobel Biocare India Pvt. Ltd. vs ACIT (A.Ys. 2013-14 & 2020-21), the key dispute for A.Y. 2013-14 concerned taxation of income arising from reversal of provisions for obsolete inventory and sales returns. The assessee had reversed the provisions and offered the amount to tax, but the same provisions were later disallowed in A.Y. 2012-13, resulting in taxation twice.

The ITAT held that once the provision was disallowed and taxed in the earlier year, the reversal in the subsequent year cannot again be taxed, as there is no estoppel against law and tax can be collected only in accordance with Article 265 of the Constitution. The Tribunal also clarified that appellate authorities can entertain legitimate claims even without a revised return, following decisions like Pruthvi Brokers & Shareholders. Accordingly, CIT(A)’s order was set aside and AO was directed to allow withdrawal of income offered on reversal, preventing double taxation.

For A.Y. 2020-21, the ITAT noted that CIT(A) had dismissed the appeal solely on limitation without granting adequate opportunity. Considering principles of natural justice, the Tribunal restored the matter for proper adjudication of issues including bonus disallowance u/s 43B and related interest levies. The assessee’s appeals were allowed.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

These two appeals by the assessee are directed against two separate orders dated 20.08.2025 and 18.08.2025 , passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals), Panchkula [in short ‘the Ld. CIT(A)’] for assessment year 2013-14 and 2020-21 respectively.

2. Firstly, we take up the appeal of the assessee for assessment year 2013-14. The grounds raised by the assessee are reproduced as under:

Ground no. 1:

On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [‘CIT(A)’] erred in not adjudicating the claims raised by the Appellant during the appellate proceedings.

The Appellant, therefore, respectfully prays that the claims raised during the appellate proceedings be admitted and allowed in accordance with law.

2. Ground no. 2:

Without prejudice to the above ground, on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in dismissing the appeal by passing a non-speaking order instead of adjudicating the appeal on merits and failed to consider the additional claims made by the appellant.

The Appellant prays that the impugned order passed by the Ld. CIT(A) is bad in law, illegal and ought to be quashed.

3. Ground no. 3:

On the facts and in the circurnstances of the case and in law, the learned CIT(A) erred in not granting deduction of provision for obsolete and non-moving inventory of Rs. 1,05,44,507 which was already taxed in the preceding years.

The Appellant prays that the deduction of Rs. 1,05,44,507 be allowed in the current year.

4. Ground no. 4:

On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not granting deduction of provision for sales return of Rs. 39,00,000 which was already taxed in the preceding years.

The Appellant prays that the deduction amount of Rs. 39,00,000 be allowed in the current year.

2.1 The central issue for adjudication is whether an item of income, erroneously offered to tax by the assessee by way of reversal of provisions, can be taxed twice—first at the time of creation (by way of disallowance) and second at the time of reversal—thereby violating the mandate of Article 265 of the Constitution of India.

2.2 Briefly stated, the facts of the case are that the assessee was incorporated in December 2004 as a wholly owned subsidiary of Nobel Biocare Asia-Africa Holding AG (“NBH”) for undertaking wholesale trading of NBH’s dental products and solutions in India, as well as for providing marketing, pre-sale and after-sale support, and training to customers in India.

2.3 For the assessment year under consideration, the assessee filed its return of income on 29.11.2013 declaring a total income of ₹2,45,32,000/- under the normal provisions of the Income-tax Act, 1961 (“the Act”) and book profit of ₹1,31,81,815/- under section 115JB of the Act. The return was selected for scrutiny and assessment under section 143(3) of the Act was completed on 14.03.2016 without making any addition or adjustment to the returned income.

2.4 For the Assessment Year (AY) 2012 -13, the assessee created a provision for obsolete inventory (Rs. 1,05,44,507/ -) and sales returns (Rs. 39,00,000/ -) claimed to be made on a scientific basis.

2.5 In the subsequent year under consideration (AY 2013 -14), the assessee suo motu reversed those provisions and offered the same to tax, believing the prior year’s claim would be allowed. However, in the scrutiny assessment for AY 2012 -13, which were concluded on 16/03/2016 ( i.e. two days after squinty proceedings for year under consideration were competed) the Assessing Officer (AO) disallowed the deduction for those provisions, an action subsequently upheld by this Tribunal. Consequently, the same amounts were added to the total income in AY 2012 – 13.

2.6 In view of the above, the assessee preferred an appeal for the year under consideration and claimed that the income offered to tax on account of reversal of the aforesaid provisions ought to be reduced, as the same had already suffered tax in assessment year 2012-13. The Ld. CIT(A), however, rejected the claim on the ground that the assessee had not made such claim by filing a revised return and held that no relief could be granted in appellate proceedings. The relevant findings of the Ld. CIT(A) have been reproduced as under:

“6.1 On Grounds of Appeal 1 & 2:- I have have perused the assessment order, written submissions, relevant appellate records, and judicial precedents. The ITAT order cited by the appellant is for the year Assessment Year 2012-13 and not for the year for which appeal is filed. It is seen from the records that the amounts in question were suo moto offered to tax by the Appellant in its return of income for AY 2013-14, The AO has accepted the return as it is. There is no addition made by the AO regarding these amounts. The fact remains that no such deduction was claimed in the return of income, nor was it disallowed by the AO during assessment. The amounts were suo moto offered to tax by the Appellant and have been accepted by the AO. Further, the appellate authority cannot consider or allow fresh claims that were not made in the return of income or during the assessment proceedings, unless supported by a revised return. The Appellant has not filed a revised return in this case. In view of the above facts and legal position, the appeal filed by the Appellant is dismissed, as the Assessing Oficer has merely accepted the suo moto declaration made by the Appellant, and no disallowance or adjustment has been made in the assessment order which can be the subject matter of this appeal. Accordingly, the grounds of appeal stands d” ismissed.

3. The Ld. Counsel for the assessee submitted that the provisions for obsolete and non-moving inventory and sales return were originally claimed as deduction in assessment year 2012 -13, but were disallowed by the Assessing Officer and such disallowance has attained finality with the order of the Tribunal dated 03.09.2019. Since the assessee had already offered the reversal of those provisions to tax in assessment year 2013 -14 before the disallowance was made in assessment year 2012-13, the same has resulted in double taxation of the very same income.

3.1 It was contended that once the provisions have been disallowed and taxed in assessment year 2012 -13, the reversal thereof cannot again be subjected to tax in asseessm nt year 2013­14, as such double taxation is impermissible in law. It was further submitted that it is a settled position that the Assessing Officer is obliged to compute the correct taxable income in accordance with law and a mistake or omission on the part of the assessee in offering income cannot justify levy or collection of tax without authority of law, having regard to Article 265 of the Constitution of India.

3.2 Reliance was placed on the judgment of the Hon’ble Delhi High Court in CIT v. Bharat Aluminium Co. Ltd. (303 ITR 256) , as well as on the decision of the Hon’ble Jurisdictional High Court in CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (349 ITR 336) , wherein it has been held that an assessee is entitled to raise additional claims before appellate authorities even if such claims were not made in the return of income or by filing a revised return.

4. We have given our thoughtful consideration to the submissions of the parties and perused the relevant material on record but find merit in the contention advanced on behalf of the assessee. The undisputed facts reveal that the provisions for obsolete and no- n moving inventory and sales return were disallowed and taxed in assessment year 2012 -13 and such disallowance has been affirmed by the Tribunal. Consequently, the very same amounts cannot be subjected to tax once again in assessment year 2013 -14 merely because the assessee, prior to such disallowance, had reversed the provisions and offered the same to tax.

4.1 The reversal was made by the assessee in the normal course, before the disallowance was finally determined in assessment year 2012-13. Therefore, no adverse inference can be drawn against the assessee for having offered the amount to tax at that stage. To deny withdrawal of such reversal would result in taxing the same income twice, which is clearly impermissible under the scheme of the Act.

4.2 The Ld. CIT(A) dismissed the assessee’s claim on a narrow technical ground, holding that since the income was voluntarily offered in the return and no revised return was filed, the appellate authority lacked the jurisdiction to grant relief. The Ld. CIT(A) relied on the principle that an assessment which merely accepts a suo motu declaration does not constitute a “grievance” appealable under the Act.

4.3 The objection of the Ld. CIT(A) that the claim could not be entertained in the absence of a revised return is contrary to the settled legal position that appellate authorities are empowered to consider and allow legitimate claims to determine the correct taxable income, notwithstanding the absence of a revised return. While the AO’s power may be limited by the rule in Goetze (India) Ltd. v. CIT (2006) 284 ITR 323 (SC) , the powers of the Appellate Authorities are co-extensive with those of the AO and are not restricted by the absence of a revised return.

4.4 We draw strength from the decision of the Hon’ble Jurisdictional High Court in CIT v. Pruthvi Brokers & Shareholders (2012) 349 ITR 336 , which categorically held that appellate authorities have the jurisdiction to consider additional claims not made in the return if the facts are available on record.

4.5 It is well-settled that there is no estoppel against law and that tax can be levied and collected only in accordance with law. An erroneous inclusion of income by an assessee cannot confer jurisdiction upon the Revenue to collect tax which is otherwise not legally due. The state cannot benefit from an assessee’ s bonafide error. If a provision is disallowed at the time of its creation, its subsequent reversal cannot be treated as income again. To do so would result in taxing a fictional surplus. The Revenue’s argument that the assessee is “bound” by its original return ignores the fact that the primary duty of the AO is to determine the correct tax liability in accordance with the law, not to capitalize on an assessee’s mistake.

4.6 In view of the foregoing discussion, we set aside the order of the Ld. CIT(A) on this issue and direct the Assessing Officer to grant relief to the assessee by allowing withdrawal of the income offered on account of reversal of the provisions for obsolete and non-moving inventory and sales return.

4.7 Accordingly, we set aside the order of the Ld. CIT(A) on the issue in dispute and direct the Assessing Officer to allow the withdrawal of the reversal of such claim. The ground of appeal of the assessee are accordingly allowed.

5. Now we take up the appeal of the assessee in ITA No. 6881/Mum/2025 for assessment year 2020 – The grounds raised by the assessee are reproduced as under:

Ground no. 1:

On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [‘CIT(A)’] has erred in not condoning the delay in filing the appeal, without appreciating the existence of suficient and reasonable cause for such delay, while passing the order under section 250 of the Income-tax Act, 1961 (‘IT Act’).

The Appellant prays that the delay in filing the app eal may kindly be condoned.

2. Ground no. 2:

On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not providing an opportunity to be heard for the Appellant to explain the issue under consideration, thereby violating the principles of natural justice.

The Appellant prays that the order passed by the Ld, CIT (A) is in violation of principles of natural justice and thus, bad in law and ought to be quashed.

3. Ground no. 3:

Without prejudice to the foregoing grounds, on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in dismissing the appeal by passing a non-speaking order in violation of principle of natural justice instead of adjudicating the appeal on merits in accordance with law.

The Appellant prays that the impugned order passed by the Ld. CIT(A) is bad in law, illegal and ought to be quashed.

4. Ground no. 4:

On the facts and in the circumstances of the case and in law, the CIT(A) erred in afirming the addition of Rs. 1,53,70,532 under section 43B of the IT Act to the total income with respect to the bonus paid by the Appellant on or before due date prescribed for filing return of income for the year under consideration.

The Appellant, therefore, prays that the addition on account of disallowance of bonus expense under section 43B of the IT Act be deleted.

5. Ground no. 5:

Without prejudice to Ground 4, on the facts and in the circumstances of the case and in law, the Appellant humbly submits that in case the above claim is not allowed as deduction under section 43B in the captioned AY, the Appellant be allowed the claim of the payment of bonus in the subsequent year i.e., AY 2021 -2022.

The Appellant, therefore, prays that the aforesaid addition be deleted, and if not deduction of such amount be provided in the subsequent year i.e., AY 2021 -22.

6. Ground no. 6:

On the facts and in the circumstances of the case and in law, the CIT(A) has erred in afirming the levy of interest of INR 11,34,124 under section 234A of the IT Act although the return of income was filed within the due date.

The Appellant prays that the aforesaid interest under section 234A of the IT Act ought to be deleted.

7. Ground no. 7:

On the facts and in the circumstances of the case and in law, the CIT(A) has erred in affirming the levy of interest of INR 44,68,708 under section 234B of the IT Act.

The Appellant prays that the aforesaid interest under section 234B of the IT Act is consequential and ought to be deleted.

8. Ground no. 8:

On the facts and in the circumstances of the case and in law, the CIT(A) has erred in affirming the levy of interest of INR 14,31,832 under section 234C of the IT Act.

The Appellant prays that the aforesaid interest under section 234C of the IT Act ought to be deleted.

9. Ground no. 9:

On the facts and in the circumstances of the case and in law, the CIT(A) has erred in affirming the levy of fee of INR 10,000 under section 234F of the IT Act although the return of income was filed within the due date by the Appellant.

The Appellant prays that the aforesaid fee under section 234F of the IT Act ought to be deleted.

5.1 We note that the Ld. CIT(A) disallowed the appeal of the assessee rejecting the application for condonation of the delay. The Ld. CIT(A) refused to condone the delay, invoking the maxim “Vigilantibus non dormientibus jura subveniunt” (Law assists the vigilant, not those who sleep over their rights). The Ld. CIT(A) observed that the assessee remained “passive and inactive” for nearly 1,000 days following the Intimation under Section 143(1) issued on 20.12.2021. Relying on various precedents, the Ld. CIT(A) concluded that “sufficient cause” was absent and that the law of limitation must be applied with its full rigour to prevent “perpetual uncertainty.” The relevant finding of the Ld. CIT(A) is reproduced as under:

5.3 The Appellant has argued that it was under a “bonafide belief” that the issue could be adjudicated by the Hon’ble DRP. However, the law is well-settled that ignorance or mistaken interpretation of law does not constitute sufficient cause for condonation of delay.

5.4 The Appellant has tried to portray that it was diligent and had no mala fide intention. However, the chronology of events shows otherwise:

• • Intimation under section 143(1) was issued on 20 December 2021;
  • Statutory appeal period expired on 19 January 2022;
  • The Appellant did not file appeal before the CIT(A) within time, nor did it seek condonation promptly thereafter;
  • Instead, it waited until July 2024 (almost 1,000 days later) after the final order to approach the CIT(A).

5.5 Perusal of the above submission and facts of the case clearly shows the inaction and passiveness of the appellant in discharging the statutory responsibility. This fact shows the inaction and casual attitude of the appellant towards filing of appeal as the appeal was filed on 11-10-2024, after a lapse of 996 days. This shows that it is clearly a lapse on the part of the appellant and cannot be considered as bonafide and reasonable cause for delay of 996 days in filing the appeal. It is settled law that delay of each day is to be explained by the appellant. In view of these facts, it is clear that the appellant has failed to explain that it was having sufficient cause for not filing the appeal in time. The Appellant has relied o n Collector, Land Acquisition Anantnag v. Katiji (167 ITR 471). While the Hon’ble Supreme Court has held that liberal interpretation should be given in condonation matters, it has also clarified in numerous other judgments (e.g., P.K. Ramachandran v. State of Kerala, (1997) 7 SCC 556) that law of limitation must be applied with all its rigour when no suficient cause is shown. Liberal approach does not mean condoning inordinate delays without justifiable cause.

5.6 There is legal maxim– “Vigilantibus non dormientibus Jura subveniunt” meaning that law assists those who are vigilant with their rights and not those who sleep thereupon. It is trite law that filing of an appeal or an application under any Act is a right provided by the concerned statute. This right carries certain obligations including adhering to the time limit prescribed in the statute for filing of such an appeal or application. Sometimes the relevant statute carves out exceptions by granting the competent authority/forum a power to entertain an appeal or application beyond the prescribed period on suficient cause. It is in the hue of such an express authorization that the concerned authority/forum can exercise its discretion and condone the delay, if satisfied with the reasonableness of the cause in late presentation. In the context of Income-tax Act, 1961, although section 249(2) of the Act requires the filing of an appeal before the CIT(A)/JCIT(A) within 30 days, sub-section (3) empowers the CIT(A)/JCIT(A) to admit an appeal after the expiry of the said period if he is satisfied that the appellant had sufficient cause for not presenting the appeal within the period. As discussed in the preceding para, the present appellant has not been able to show any reasonable cause for filing the appeal late. From the facts of the case, it is clear that the statutory right to appeal which was vested with the appellant was not exercised within the stipulated time u/s.249(2). Thus, this clearly is a case of laches and is directly the result of deliberate inaction on the part of the appellant. Therefore, the law cannot come to its rescue by condoning the delay for such inaction on the part of the appellant.

5.7 Reliance is also placed on the judgement of the Hon’ble Mumbai ITAT in the case of Aditya Sapru Vs ACIT [TS-881-ITAT-2025(Mum)] dated 24-06-2025 vide which appeal of the appellant has been dismissed on account of delay in filing of appeal and held that: –

“We consider it appropriate to adjudicate on the delay rather than merits of the case at the outset considering the enormity of the delay. We need to examine the issue in the light of facts and the circumstances of the case and also in view of the in terms of section 5 of the Limitation Act, whereby discretion is vested in the Court/Appellate Authority to admit an appeal or an application, after the expiry of the prescribed period of limitation, if the appellant shows ‘suficient cause ‘ for not preferring the application within the prescribed time. The expression ‘suficient cause’ commonly appears in the provisions of order 22 Rule 9 (2), CPC and Section 5 of the Limitation Act. The Court while allowing such application has to draw a distinction between delay and inordinate delay for want of bona fides of an inaction or negligence which would deprive a party of the protection of Section

5. “Sufficient cause” is a condition precedent for exercise of discretion by the Court for condoning the delay. Courts have time and again held that when mandatory provision is not complied with and that delay is not properly, satisfactorily and convincingly explained, the Court cannot condone the delay on sympathetic grounds alone. The law of Limitation is enshrined in the legal maxim “”Interest Reipublicae Ut Sit Finis Litium” (It is for the general welfare that a period be put to litigation).

5.1 To understand the scope of the term “suficient cause” in matters of delay, reliance is placed on the decision of Hon’ble Supreme Court in the case of Basawaraj and Ors vs The Special Land Acquisition Officer, AIR 2014 SC 746 wherein the Hon’ble Supreme Court held that the suficient cause does not include the negligent manner in which the applicant had acted or/ and there was a want of bona fide, on his/her part. If a party does not act diligently or remains inactive, it cannot qualify as sufficient ground allowing the court to exercise discretion in favour of such a party. Condonation of delay is not an automatic right but requires the person requesting it to provide a valid explanation for each day of delay and demonstrate a reasonable cause. “Suficient Cause” cannot be liberally interpreted, if negligence, inaction or lack of bona fides is attributed to the party. In the case of Anshul Agarwal vs New Okhla Industrial Development Authority (2011) 14 SCC 578, the hon’ble Apex Court held that the reason provided for the delay must be something beyond the individual’s control that prevented them from approaching the Court. THE TAX

5.2 It is well established in law that the period of limitation has to be construed somewhat strictly as it has the effect of vesting for one and taking away right from the other. To condone the delay in a mechanical or a routine manner may amount to jeopardizing the legislative intent behind Section 5 of the Act. Where the parties chose to sleep over their rights for prolonged periods without any just cause, can hardly claim equity in justice particularly faced with the statutory provisions of Section 5. In construing enactments which provide period of limitation for institution of proceedings, the purpose is to intimate people that after lapse of certain time from a certain event, a proceeding will not be entertained where a strict grammatical construction is normally the safe guide.

5.3 The hon’ble Apex Court in the case of N. Balakrishnan V. M. Krishnamurthy, AIR 1998 SC 3222 held as under:

“11. Rules of limitation are meant to see that parties do not resort dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During eflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for laundering the remedy may lead to unending uncertainty and consequential anarchy. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.

5.4 In the case of State of West Bengal vs. Administrator, Howrah Municipality, AIR 1972 SC 749, the Hon’ble Supreme Court held that: –

.parties must act bonafidely, expeditiously and with due care. A casual or a negligent litigant who has acted with utter irresponsible attitude, cannot claim the condonation of delay in law when the right has accrued to the other side. The expression “suficient cause” will always have relevancy to reasonableness. The actions which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant. It is neither expected nor can it be a normal conduct of a public servant or a litigant that they would keep the files unmoved, unprocessed for months together on their tables.

5.5 The Hon’ble Delhi High Court in its decision in the case Surinder Kumar Boveja Vs. CWT 287 ITR 52 has categorically held that delays cannot be routinely excused. In this decision, the Hon’ble High Court has further held as under:

“Where the delay is prolonged and the assessee is not able to show that the delay had occurred in spite of exercise of due attention and diligence, the assessee cannot complain, if the delay is not condoned.”

5.6 In the decision rendered in the case of Rankak and Ors. V Rewa Coalfields Ltd. reported at AIR 1962 SC 361, the hon’ble Apex Court has held that the party has to show reason for delay on the last day of the limitation period and for each day thereafter. It was further held that condonation is not a matter of right and that the Courts have to exercise discretionary jurisdiction.

5.7 The issue of condonation of delay had come up before Hon’ble Orissa High Court in the case of Brijbandhu Nanda (44 ITR 688). The delay was not condoned by the Tribunal and on further appeal, the Hon’ble High Court had held that there is no justification for the delay as under:

“Even assuming that the questions referred are questions of law, I am of opinion that there was no error on the part of the Tribunal in not condoning the delay in Its discretion. In fact, as appears from the assessee’s own petition for condonation of delay in I.T.A. Nos. 85, 86 and 87 of 1954 -55 dated May 5, 1955, the assessee does not appear to have explained why he waited for 56 days after he received the order on February 5, 1954, as aforesaid. It further appears from a letter dated April 9, 1954, from the Assistant Registrar of the Appellate Tribunal, Bombay, that the appeals were received by him on April 7, 1954, that is to say, one day beyond the period of limitation. In view of sub -rule (2) of rule 7, which provides that a memorandum of appeal, sent by post, shall be deemed to have been presented to the Registrar or to the officer authorised by the Registrar, on the day on which it is received in the office of the Tribunal at Bombay, it is clear that the appeals were received by the Registrar out of time. We have discussed the general mandatory aspect of the provisions of the Act and the rules thereunder in our decision in Govinda Chowdhury V. Commissioner of Income-tax referred to above. Thus, even the delay of one day was not condoned by the Hon’ble Orissa High Court.

5.8 Moreover, in cases where the assessee has not come up clean and the reasons given are not based on facts, the delay cannot be condoned merely because of sympathy. It was so decided in the case of Mewa Ram (Deceased by L. Rs) &Ors. v. State of Haryana, AIR 1987 SC 45. The Hon’ble Supreme Court have time and again held that when mandatory provision is not complied with and that delay is not properly satisfactorily and convincingly explained, the court cannot condone the delay on sympathetic grounds alone. In the case of Jagdish Lal and Others V.s State of Haryana (1996) 6 SCC 267 wherein it was observed by the Hon’ble court that the appellant kept on sleeping for the period and suddenly decided to file the appeal. Again, Hon’ble High Court of Rajasthan & Others, in the case of M/s. Binami Cement Limited Vs. State of Rajasthan & Others, (S.B. (sales Tax) Revision Petition No.556/2011) decided that delay in filing the appeal cannot be condoned for the reason that appellant failed to explain the specifically the delay for the particular period. It has been held that the courts, including the Supreme Court, no doubt have recommended liberal approach in considering applications for condonation of delay, yet the concepts such as liberal approach, justice- oriented approach and substantial justice cannot be employed to jettison the substantial law of limitation especially when on facts the authority before which application under section 5 of Limitation Act is filed, finds no justification for the delay.

5.9 It has been held by the Courts that while considering the application under section 5 of the Limitation Act, the courts do not enjoy unlimited and unbridled discretionary powers and the discretion has to be exercised within reasonable bounds. It has been further held that the discretion under section 5 of the Limitation Act has to be systematically exercised duly informed by reasons and that whims or fancies, prejudices or predilections cannot and should not form the basis of exercising the discretionary powers to condone delay. In the case of Oriental Aroma Chemical Industries Limited Vs. Gujarat Industrial Development Corporation [(2010) 5 SCC 4 591, the Hon’ble Supreme Court has held that even while a liberal approach is desirable in condoning the delay of short duration, stricter approach is required to be applied in cases of inordinate delay.

6. Thus, it is a settled law that the assessee must show that he was diligent in taking proper steps and the delay was caused notwithstanding his due diligence. It is for him to explain the reason for the delay and it is not the function of authorities to find the cause for delay. The Appellate Authority has to examine whether the sufficient cause has been shown by the appellant for condoning the delay and whether such cause is acceptable or not. Even though substantial justice should not be defeated by technicalities but that does not mean that any plea without any possible or acceptable basis and even without hearing, resemblance or rationality has to be accepted and delay has to be accepted and condoned which shall be against the very spirit of law. The time prescribed for filing the appeal will become meaningless in such an event.

6.1 Perusal of the facts shows that the assessee in the present case appears to be negligent and has not taken appropriate steps to peruse the remedy till 819 days and thus did not take necessary action in filing the appeal within the prescribed time. Our aforesaid view is that in absence of a suficient/reasonable cause leading to the delay in filing of an appeal, the same does not merit to be condoned.

6.2 Further from the facts emanating from the case, it is coming out clearly that the overall approach of the assessee, through out has been of prolonging, stretching the matter just to keep the appeal proceedings pending. Thus, on these given facts, we are of the considered view that the delay in filing of the appeal cannot be condoned in absence of any justifiable reason. Though it is well accepted that no appellant derives any benefit by filing a delayed appeal, however the same should not be used as a tool, or an excuse to avoid and prolong and thus delay further consequent proceedings from the Department. Accordingly, in this case, the assessee has not been able to explain the reason for delay for the entire period and has merely taken a general plea based on general reasons.

6.3 The delay is undoubtedly substantial although the assessee has claimed that it was mainly on account of wrong advise of his CA who did not give correct advice at the relevant point of time. As a result, the assessee who was banking upon the CA remained unaware of filing of appeal. The assessee has also submitted an afidavit of the concerned CA who was also presented before us during appeal. Though we do not find any reasons to conclude that the delay was malafide, the fact remains that the assessee being an individual taxpayer should have been more conscious of his statutory obligations knowing fully well the implication thereof. It is further noticed from the assessment order that the assessee himself attended assessment proceedings. Therefore, certain element of negligence is palpable on his part and putting all the blame on the tax consultant would not absolve him of his own responsibility in this regard. In the case under consideration, it is nowhere evident that whether the assessee made any effort or attempt to contact his counsel engaged in the tax proceedings after passing of impugned order appeal order passed by the Id.CIT(A).

6.4 Even in respect of the claim of deduction u/s 54 of the Act, it appears from the record that the stand of the assessee attitude is dilatory and inconsistent which is evident from the fact that the assessee made only part compliance before the AO. Before the Id. CIT(A), the assessee made a fresh claim of deduction even in respect of construction cost incurred before the date of sale of the impugned property. Before us, the assessee took a fresh ground claiming that it he is eligible even for the purchase of a new property in Bangalore, a claim which was hitherto not raised before the lower authorities. Seen in the light of these above stated facts and legal position emerging from the catena of judgement of hon’ble Apex court(supra), we conclude there was no ‘sufficient cause’for this unreasonable admitted delay of 819 days in filing appeal before the Bench which cannot be condoned. Accordingly, the condonation application being bereft of any ‘sufficient cause’ is hereby rejected.

7. In the result, the appeal is dismissed on account of delay.

Since the appeal stands dismissed, there is need to adjudicate on the merits therein”.

5.8 In view of the above discussion and legal position, the delay of 996 days in filing of appeal in this case is not condoned as I am satisfied that there was no “suficient cause” as per section 249(3) of the Income Tax Act, 1961 for the appellant’s failure to file the appeal within the prescribed period of limitation u/s 249(2) of the Income Tax Act, 1961 r.w.s. 5 of Limitation Act and hence the appeal instituted belatedly is hereby not admitted and accordingly dismissed in limin” e.

6. The Appellant contends that the delay was neither deliberate nor mala fide. The assessee was under a bona fide belief that the disallowance of bonus under Section 43B—originally adjusted by the CPC under Section 143(1)—would be addressed during the concurrent scrutiny assessment proceedings. When the Assessing Officer and the Ld. DRP subsequently failed to adjudicate upon this specific grievance, the assessee was compelled to seek an alternative remedy by filing a belated appeal against the Section 143(1) intimation.

7. We have heard rival submissions of the parties on the issue in dispute. The only limited controversy is whether there was a sufficient cause for delay in filing the appeal by the assessee before the Ld. CIT(A).

7.1 We are of opinion that while the law of limitation is a statute of repose, the expression “sufficient cause” under Section 249(3) must be interpreted with a degree of flexibility to ensure that technicalities do not override the cause of justice. As held by the Hon’ble Supreme Court in Collector, Land Acquisition v. Katiji (1987) 167 ITR 471 , the power to condone delay is conferred to enable Courts to do substantial justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred.

7.2 In the present case, the assessee’s inaction was not born of “casualness” but of a misplaced reliance on the ongoing scrutiny proceedings. The attempt to resolve the grievance before the DRP indicates that the assessee was indeed pursuing a remedy, albeit in the wrong forum or under a mistaken procedural understanding. In tax matters, where an assessee is actively contesting a disallowance in a parallel proceeding, such conduct cannot be termed “deliberate inaction.”

7.3 We find that the assessee has a strong prima facie case on merits, involving the verification of bonus payments under Section 43B made before the statutory due date. It is a settled principle that the State should not unjustly enrich itself by tax collection through procedural lapses if the tax is otherwise not due.

7.4 The decisions relied upon by the Ld. CIT(A) (such as Aditya Sapru and Basawaraj) pertain to cases where the delay was coupled with mala fides or an absolute lack of explanation. Here, the explanation—reliance on the DRP/Scrutiny process—provides a rational nexus to the human conduct of a litigant seeking redressal.

7.5 Considering the totality of the circumstances, we are of the view that the assessee did not stand to gain by delaying the appeal. The delay was a result of procedural misguidance rather than a lack of diligence. To deny a hearing on merits in a case involving a clear statutory deduction would be a miscarriage of justice.

7.6 Accordingly, in the interest of substantial justice, we condone the delay of 996 days and restore the appeal to the file of the Ld. CIT(A) for adjudication on merits.

7.7 The ground No. 1 of the appeal of the assessee is accordingly allowed. Since we have already restored the matter, the other grounds raised by the assessee are rendered academic.

8. In the result, the appeal for assessment year 2013 -14 is allowed whereas appeal for assessment year 2020 -21 is allowed for statistical purposes.

Order pronounced in the open Court on 09/02/2026.