Monitor Vincom Pvt. Ltd. Vs ITO (ITAT Kolkata)
In Monitor Vincom Pvt. Ltd. v. Income Tax Officer, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) dealt with two important issues: condonation of an extraordinary delay of 1,639 days in filing an appeal and the validity of an ex parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] without providing an effective opportunity of hearing. The Tribunal adopted a justice-oriented approach, condoned the delay, and restored the matter to the Assessing Officer (AO) for fresh adjudication after granting the assessee a reasonable opportunity to present its case.
The appeal related to Assessment Year 2008-09 and challenged the order of the CIT(A) dated 9 March 2017. At the outset, the Tribunal noted that the appeal had been filed with a delay of 1,639 days. The assessee sought condonation of the delay by explaining that the appellate order, though dated 9 March 2017, was actually served only on 18 December 2019, after the department initiated recovery proceedings. The delay was further attributed to the fact that the company had shifted its registered office from P-41, Princep Street, Kolkata to 132/1, M.G. Road, Kolkata in 2016, and the new address had already been updated in the company’s records. However, notices continued to be sent to the old address, resulting in non-service.
The assessee also explained that while filing Form No. 36, its tax consultant inadvertently mentioned 9 March 2017 as the date of communication instead of the actual date of service, 18 December 2019. It was further submitted that a substantial portion of the delay coincided with the COVID-19 pandemic, during which judicial and quasi-judicial proceedings were affected. Relying on the Supreme Court’s suo motu orders extending limitation during the pandemic, the assessee argued that the appeal filed on 2 November 2021 was within the extended limitation period. It was also emphasized that the delay was neither deliberate nor intended to gain any unfair advantage.
The Revenue opposed the condonation request, arguing that even after excluding the COVID-19 period in accordance with the Supreme Court’s directions, there remained a substantial delay that had not been satisfactorily explained. According to the Department, the appeal deserved to be dismissed as time-barred.
The Tribunal examined the Supreme Court’s orders extending limitation due to the COVID-19 pandemic, particularly the order dated 10 January 2022, which excluded the period from 15 March 2020 to 28 February 2022 for computing limitation in all judicial and quasi-judicial proceedings. It observed that no delay could be attributed to the assessee during this excluded period. The Tribunal further held that any delay arising from the mistake of the assessee’s counsel should not deprive the assessee of its statutory right to have the appeal decided on merits, particularly when the mistake was bona fide.
While considering the expression “sufficient cause” under Section 253(5) of the Income-tax Act, the Tribunal relied on the Supreme Court’s landmark decisions in Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy. It reiterated that the expression should receive a liberal interpretation to advance substantial justice. The Tribunal emphasized that procedural rules relating to limitation are intended to ensure timely litigation and not to defeat genuine claims. It noted that ordinarily a litigant derives no benefit from filing an appeal belatedly and that technical considerations should not override substantial justice where there is no evidence of mala fide intention or deliberate delay.
Applying these principles to the facts of the case, the Tribunal observed that although the appeal had been filed after a considerable delay, a significant portion of the period stood excluded under the Supreme Court’s COVID-19 orders. The remaining delay was satisfactorily explained by the incorrect recording of the communication date, change of address, and counsel’s inadvertent mistake. Importantly, the Tribunal found no indication that the assessee had adopted delay as a strategy to avoid tax litigation or derive any benefit. Consequently, it held that sufficient cause existed for condoning the delay and admitted the appeal for adjudication on merits.
On the merits, the assessee contended that the CIT(A) had dismissed the appeal ex parte without examining the issues involved. The assessee submitted that notices of hearing were never effectively served because they were issued to the old address despite the change having been duly recorded. It was also pointed out that the assessment order under Sections 147/143(3) read with Section 263 had itself been passed pursuant to revisionary directions issued by the Principal Commissioner under Section 263. According to the assessee, even those directions had not been properly implemented by the AO, and certain documents could not be produced due to lack of adequate opportunity. The assessee therefore requested that the matter be restored for fresh consideration after granting it a reasonable opportunity of being heard.
After considering the rival submissions, the Tribunal found merit in the assessee’s grievance. It observed that the CIT(A) had decided the appeal ex parte because notices had not been effectively served owing to the change in address. Since the assessee had not been afforded an effective opportunity to present its case, the principles of natural justice required that another opportunity be granted. Accordingly, instead of deciding the issues on merits, the Tribunal restored the matter to the file of the Assessing Officer with directions to decide the case afresh after providing the assessee a reasonable opportunity of hearing and considering all relevant evidence.
Accordingly, the ITAT condoned the delay of 1,639 days, set aside the ex parte appellate order, restored the matter to the Assessing Officer for fresh adjudication, and allowed the appeal for statistical purposes. The decision reinforces the principle that genuine litigants should not be denied substantive justice merely because of procedural lapses, particularly where delay is satisfactorily explained and an effective opportunity of hearing has not been provided.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
