Case Law Details
Milap Niranjanbhai Shah Vs ITO (ITAT Ahmedabad)
Introduction: The appeal filed by Milap Niranjanbhai Shah against the order of the Commissioner of Income Tax (Appeals)-5, Ahmedabad, dated 15.10.2019, for A.Y. 2011-12, raises concerns about the dismissal of the appeal due to a 1190-day delay attributed to medical reasons.
Detailed Analysis: The grounds of appeal highlight the legal contentions, emphasizing the medical grounds for the delayed filing and disputing the addition of Rs. 8,00,130/- towards short-term capital gains from share transactions and undisclosed sources.
The appellant argues that the Commissioner of Income Tax (Appeals) erred in dismissing the appeal without fully considering the medical circumstances causing the delay. The analysis also addresses the confirmation of the addition made by the Assessing Officer, citing evidence such as Form 16 and statements from the broker.
A crucial aspect is the appellant’s plea to set aside the matter for fresh adjudication, invoking precedents from ITAT Ahmedabad and ITAT Kolkata. The appellant further relies on legal principles, including the Supreme Court’s stance on condoning delays.
The case’s reopening is explored, revealing the reasons behind the reassessment, the subsequent notice under Section 148, and the additions made by the Assessing Officer. The appellant’s arguments contesting these additions are laid out in detail.
Conclusion: The Income Tax Appellate Tribunal (ITAT) at Ahmedabad, acknowledging the exceptional circumstances of the case, has partly allowed the appeal for statistical purposes. The decision involves a remand of the matter to the Commissioner of Income Tax (Appeals) for a thorough examination of the appeal’s merits, with an emphasis on natural justice principles.
This order, pronounced on 01/12/2023, brings attention to the complexities surrounding medical delays and the need for a balanced approach in tax-related appeals. The case serves as a reminder of the importance of considering individual circumstances in the pursuit of justice.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals)-5, (in short “Ld. CIT(A)”), Ahmedabad on 15.10.2019 for A.Y. 2011-12.
2. The grounds of appeal raised by the assessee are as under:
“1.1 The order passed u/s.250 on 15.10.2019 for A.Y.2011-12 by CIT(A)-5, Abad dismissing the appeal for late filing by 47 days and not taking into consideration the circumstances of medical grounds for delayed filing of appeal and upholding the addition of Rs.8,00,130/-towards short term capital gains from share transaction and receipt from undisclosed sources is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the circumstances of medical grounds provided for delayed filing of appeal.
2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the addition made by the AO towards short term capital gains from share transaction and receipt from undisclosed sources as this would render the additions made totally unjust and contrary when going into the prima facie evidences and scrutinizing the documents/details ie Form 16 as provided by the Employer and further the capital gain and Loss statement provided by the broker which was all made available to the CIT(A).
2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the addition towards short term capital gains from share transaction and receipt from undisclosed sources without going into the merits and facts of the case and evidences produced before good honor.
3.1 The Ld.CIT(A) dismissed the appeal on the grounds of non-appearance of the appellant and further also erred on not considering the circumstances on medical grounds surrounded which was beyond the control of the appellant and upheld the order of the AO.
4.1 Without prejudice to above and in alternative, the impugned addition of Rs.8,00,130/- is highly excessive and contrary when going into the prima facie evidences and scrutinizing the documents/details ie Form 16 as provided by the Employer and further the capital gain and Loss statement provided by the broker.
4.2 Without prejudice to above and in alternative, it would against the natural justice and principal of law as to recovery of taxes on the additions made not sustainable in law emphasizing ESTIMATED As 1% of turnover in share transactions 14124784/-ie Rs 141247/- as Short term capital gain by the AO whereas the fact is that the appellant has incurred overall loss which is further substantiated by the statement of Capital gain and Loss report.
……………… Treating Income of Rs 658884 as undisclosed receipts as reflected in 26AS which was an error on the part of the employer while uploading TDS return which was later on rectified and revised by the employer whereas the fact is the appellant derived income from salary that to of Rs 326952 further TDS being deducted by the employer and deposited to the Revenue account, the same is substantiated by Form 16 as provided by the Employer.
4.3 Without prejudice to above and in alternative, the appellant begs your honor to set aside the matter for fresh adjudication and/or for statistical purpose. The case appellant has a good case on merit and is likely to succeed in case the appellant is given an opportunity to contest the appeal on merits.
The appellant place reliance on the following orders passed:
………………… ITAT [Ahmedabad] dated 13.02.2020 in the case for Shri Tariqrashid M Munshi v/s ITO ward 5(2)(4) Ahmedabad vide number ITA No 641/AHD/2018. [The appeal filed by the appellant was allowed for statistical purpose]
……………. ITAT [KOLKATA] dated 20.07.2018 in the case for Swarup Kumar Saha v/s ITO ward 50(2) Kolkata vide number ITA No 366/Kol/2018. [The appeal filed by the appellant was allowed for statistical purpose]
The Hon’ble Supreme Court in the case of Mst. Kattiji & Othrs. has held as under:-
“The Legislature has conferred power to condone delay by enacting section 5 of the Limitation Act, 196, in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression “sufficient cause” in section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner, which subserves the ends of justice – that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principle. “Every day’s delay must be explained” does not imply a pedantic approach. The doctrine must be applied in a rational, common sense and pragmatic manner.
The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even handed manner. There is no warrant for according a step motherly treatment when the State is the applicant praying for condonation of delay.
“When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, the other side cannot claim to have vested right in injustice being done because non-deliberate delay. There is no presumption that delay is occasioned deliberately or on account of culpable negligence or on a malafide. The litigation does not stand to benefit by resorting to delay, in fact he is on serious risk.
…………….. The Hon’ble Supreme Court in B. Madhuri Goud v. B. Damodar Reddy (2012) 12 SCC 693, by referring various to earlier decisions IT A No. 674 & 675 Mum 2018-M/s Shree Vijay Laxmi Trading Corporation of Superior Courts and held the following principal must be kept in mind while considering the application for condonation of delay;
(i) There should be a liberal, pragmatic, justice oriented, non-pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice.
(ii) The terms “sufficient cause” should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact-situation.
(iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis,
(iv) No presumption can be attached to deliberate cause of delay but, gross negligence on the part of the counsel or litigant is to be taken note of.
(v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact.
(vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice.
(vii) The concept of liberal approach has to encapsulate the conception of reasonableness and it cannot be allowed a totally unfettered free play.
(viii) There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation.
(ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach.
(x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such litigation.
(xi) It is to be borne in mind that no one gets away with fraud, is representation or interpolation by taking recourse to the technicalities of law of limitation.
(xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception.
(xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude.”
No Doubt courts adopt liberal view while condoning delay on the principal that technicalities when pitted against the case of justice, the latter should prevail.
It is, therefore, prayed and humbly begged that addition of Rs.8,00,1307-upheld by the CIT(A) may kindly be set aside for fresh adjudication and/or statistical purpose in the interest of justice and fair play.”
4. The case was reopened for scrutiny for the reason that the assessee had contract of Rs. 10,00,000/- or more Commodities Exchange and not filed the return as per information available with the Revenue. The Assessing Officer observed that there is a escapement of income and therefore, notice under Section 148 was issued on 27.03.2018. The assessee did not file any return of income and also not appeared before the Assessing Officer, therefore, the Assessing Officer made addition of Rs. 1,41,247/- as short term capital gain from share transaction as well as addition of Rs. 6,58,884/- on account of receipt from undisclosed sources.
5. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee.
6. The Ld. A.R. submitted that due to the medical exigencies with the assessee the assessee could not follow up the matter and there is a delay of approximately 1211 days including the Corona period from the date of CIT (Appeals) order. The Ld. A.R. further submitted that the CIT(A) has dismissed the assessee’s appeal on the ground of delay, therefore, that period also the assessee was not medically fit to pursue the matter and coordinate with the representative of the assessee. The Ld. A.R. submitted affidavit of the assessee as well as the details on merit.
7. The Ld. D.R. relied upon the assessment order and the order of the CIT(A) and oppose the condonation of delay.
8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee was shifted to Halol i.e. Panchmahal District of Gujarat due to employment and during that period the assessee was not able to coordinate with the tax consultant / professional in respect of the appeal filed before the CIT(A). The delay in filing the appeal before the Tribunal is that of 1190 days which has been thoroughly explain, due to the medical reason of the assessee and therefore, it will be appropriate to condone the delay before the Tribunal as well as before the CIT(A). This may be treated as exceptional case and should not be taken as precedent in any other matter. The matter is remanded back to the file of the CIT(A) for proper adjudication of the appeal on merit in respect of issue contested by the assessee. The assessee will fully cooperate with the hearing before the CIT(A). Needless to say, the assessee be given opportunity of hearing by following principle of natural justice.
9. In result, the appeal of the assessee is partly allowed for statistical purpose.
This Order pronounced in Open Court on 01/12/2023
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