ITAT condones delay in filing of appeal by illiterate agriculturists

Kapoor Singh Vs ITO (ITAT Chandigarh)

Introduction: The article delves into the legal proceedings of the case “Kapoor Singh Vs ITO” before the Income Tax Appellate Tribunal (ITAT) Chandigarh. It primarily focuses on the delay in filing appeals, the reasons behind it, and the subsequent arguments made by the appellant’s representative.

Detailed Analysis:

The Legal Representative’s Argument: The authorized representative (AR) argued that the delay in filing appeals was due to the illiteracy of the agriculturist assessees, who were unaware of the dismissal of their appeals by the CIT(A). The AR highlighted the Delay Condonation Applications, emphasizing the unintentional delay and the lack of knowledge about tax laws.

Judicial Precedents and Principles: The AR cited the Hon’ble Apex Court’s opinion in N.Balakrishnan Vs. M. Krishnamurthy, stressing that a court should consider condoning delay unless there is deliberate inaction or lack of bonafide. The principle of “sufficient cause” under Section 5 of the Limitation Act was emphasized, advocating a liberal construction for substantial justice.

Conclusion: Considering the applications for condonation of delay and applying the principles laid down by the Hon’ble Apex Court, the ITAT Chandigarh decided to condone the delay in filing the appeals. The article concludes by highlighting the need for substantial justice and the restoration of the appeals to the Ld. First Appellate Authority for further adjudication on merits.

The Ld. AR submitted that the delay in filing the captioned appeals was for the reason that all the assessees were agriculturists and were illiterate and they had no knowledge about the intricacies of the Income Tax Law and, therefore, the appeals could not be filed in time and these assessees were also unaware that the appeals on merits already had been dismissed by the Ld. CIT(A). The Ld. AR drew our attention to the Delay Condonation Applications alongwith Affidavits filed in all the appeals and submitted that the assessees came to know of the dismissal of their appeals only on receipt of notices of demand u/s 221 of the Income Tax Act, 1961 and it was only after that the assessees took suitable steps for filing the appeals before the Tribunal. It was submitted that no assessee would stand to benefit from late filing of the appeals and if the assessees are not permitted to be heard on merits because of the delay in filing of the appeals, there will be gross miscarriage of justice. The Ld. AR also submitted that the Ld. CIT(A) had not followed the order of the jurisdictional Bench of the ITAT i.e. ITAT Chandigarh, which was in favour of the assessee, and, therefore, the assessees had merits covered in their favour but the same could not be argued, if the delay is not condoned. The Ld. AR prayed that the appeals of the assessee be admitted on merits by condoning the delay which was both unintentional as well as due to lack of knowledge of the correct procedure of law by the assessees.

Hon’ble Apex Court in the case of N.Balakrishnan Vs. M. Krishnamurthy, vide Judgement dated 03.09.1998, opined that a Court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the Court is always deliberate. The Court went on to opine that in every case of delay there can be lapse on the part of the litigants concerned but that alone is not enough to turn down his plea and shut the door against him. The Hon’ble Apex Court further held that if the explanation does not smack of mala fides or it is not put forth as a part of a dilatory strategy, the court should show utmost consideration to the suitor. It was further held that there is no presumption that the delay in approaching the court is always deliberate and the words “sufficient cause” u/s 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice.

Therefore, on the facts of the present cases and keeping in view the applications submitted by the captioned assessees for the condonation of delay and respectfully applying the principles laid down by the Hon’ble Apex Court, as stated in the preceding paragraphs, we are of the considered opinion that on the facts and circumstances of the cases, the explanation for delay offered by the assessees cannot be said to smack of mala fides or that it was put forth as a part of dilatory strategy.

FULL TEXT OF THE ORDER OF ITAT CHANDIGARH

These five appeals filed by the captioned assessees are having identical issues and, therefore, were heard together and are being disposed off by this common order for the sake of convenience.

2.0 For the sake of convenience, ITA No. 1479/Chd/2019 in the case of Sh. Kapoor Singh is taken as the lead case. In this case, the return of income was filed declaring an income of Rs. 28,56,450/- for assessment year 2011-12 and subsequently the case was selected for scrutiny under CASS. The assessee had declared income from interest on land compensation. Thereafter, a detailed questionnaire was issued and it was seen during the course of assessment proceedings that the assessee had declared interest on enhanced compensation by declaring Rs. 28,56,449/- as taxable u/s 34 of the Income Tax Act, 1961 (hereinafter called ‘the Act’) and further an interest of Rs. 1,87,79,455/- was claimed as exempt. The assessee had claimed refund of Rs. 14,31,330/-. It further noticed by the Assessing officer that the assessee, alongwith his family had received Rs. 10,34,32,945/- as principal amount and Rs. 10,81,79,525/- as interest out of which the assessee’s share came to Rs. 2,06,86,589/- as principal and Rs. 2,16,35,905/- as interest on land compensation. The assessee was required to explain as to why the interest received amounting to Rs. 2,16,35,905/- may not be taxed in terms of provisions of section 56(2)(iii) of the Act. The assessee relied on the judgement of the Hon’ble Apex Court in the case of CIT Vs. Ghanshyam HUF 315 ITR 1 (SC) and submitted that in view of that judgement computation had been made and refund had been claimed and that further no tax was imposable. However, the Assessing officer did not accept the assessee’s contention and completed the assessment at a total income of Rs. 1,10,51,268/-.

2.1 On identical reasoning, the assessment of four other assessees were completed as under:-

2.2 Aggrieved with these additions, the assessees approached the Ld. First Appellate Authority challenging the additions and Ld. CIT(A) upheld the additions made by the Assessing officer but directed the benefit of TDS to be given to the assessees.

3.0 Against this order of the Ld. CIT(A), the assessees have now approached this Tribunal and have raised the following grounds of appeal:-

1479/Chd/2019  

1. That the Id CIT(A) has wrongly confirmed the taxability of Interest of Rs 1,08,17,952/- on enhanced compensation without appreciating the fact that the interest under section 28 of Land acquisition Act is part and parcel of land compensation & same is exempt under section 10(37) of Income Tax Act

2. That the learned CIT(A) has wrongly invoke the provisions of Section 56(2)(viii) on interest on land compensation without appreciating the fact that the amendment through Finance Act 2009 has not changed the character of compensation & interest is part and parcel of compensation as per judgments given by Supreme Court.

1480/Chd/2 019

1. That the Id CIT(A) has wrongly confirmed the taxability of Interest of Rs 1,08,17,952/- on enhanced compensation without appreciating the fact that the interest under section 28 of Land acquisition Act is part and parcel of land compensation & same is exempt under section 10(37) of Income Tax Act

2. That the learned CIT(A) has wrongly invoke the provisions of Section 56(2)(viii) on interest on land compensation without appreciating the fact that the amendment through Finance Act 2009 has not changed the character of compensation & interest is part and parcel of compensation as per judgments given by Supreme Court.

1481/Chd/2019  

1. That the Id CIT(A) has wrongly confirmed the taxability of Interest of Rs 1,26,68,115/- on enhanced compensation without appreciating the fact that the interest under section 28 of Land acquisition Act is part and parcel of land compensation & same is exempt under section 10(37) of Income Tax Act

2. That the learned CIT(A) has wrongly invoke the provisions of Section 56(2)(viii) on interest on land compensation without appreciating the fact that the amendment through Finance Act 2009 has not changed the character of compensation & interest is part and parcel of compensation as per judgments given by Supreme Court.

1482/Chd/2 019

1. That the Id CIT(A) has wrongly confirmed the taxability of Interest of Rs 1,08,17,952/- on enhanced compensation without appreciating the fact that the interest under section 28 of Land acquisition Act is part and parcel of land compensation & same is exempt under section 10(37) of Income Tax Act

2. That the learned CIT(A) has wrongly invoke the provisions of Section 56(2)(viii) on interest on land compensation without appreciating the fact that the amendment through Finance Act 2009 has not changed the character of compensation & interest is part and parcel of compensation as per judgments given by Supreme Court.

1483/Chd/2 019

1. That the Id CIT(A) has wrongly confirmed the taxability of Interest of Rs 1,08,17,952/- on enhanced compensation without appreciating the fact that the interest under section 28 of Land acquisition Act is part and parcel of land compensation & same is exempt under section 10(37) of Income Tax Act

2. That the learned CIT(A) has wrongly invoke the provisions of Section 56(2)(viii) on interest on land compensation without appreciating the fact that the amendment through Finance Act 2009 has not changed the character of compensation & interest is part and parcel of compensation as per judgments given by Supreme Court.

4.0 At the outset, the Ld. Authorised Representative (AR) submitted that there was substantial delay in filing the captioned five appeals which was as under:-

4.1 The Ld. AR submitted that the delay in filing the captioned appeals was for the reason that all the assessees were agriculturists and were illiterate and they had no knowledge about the intricacies of the Income Tax Law and, therefore, the appeals could not be filed in time and these assessees were also unaware that the appeals on merits already had been dismissed by the Ld. CIT(A). The Ld. AR drew our attention to the Delay Condonation Applications alongwith Affidavits filed in all the appeals and submitted that the assessees came to know of the dismissal of their appeals only on receipt of notices of demand u/s 221 of the Income Tax Act, 1961 and it was only after that the assessees took suitable steps for filing the appeals before the Tribunal. It was submitted that no assessee would stand to benefit from late filing of the appeals and if the assessees are not permitted to be heard on merits because of the delay in filing of the appeals, there will be gross miscarriage of justice. The Ld. AR also submitted that the Ld. CIT(A) had not followed the order of the jurisdictional Bench of the ITAT i.e. ITAT Chandigarh, which was in favour of the assessee, and, therefore, the assessees had merits covered in their favour but the same could not be argued, if the delay is not condoned. The Ld. AR prayed that the appeals of the assessee be admitted on merits by condoning the delay which was both unintentional as well as due to lack of knowledge of the correct procedure of law by the assessees.

4.2 On merits of the cases, the Ld. AR submitted that the facts of the cases were identical to the facts in the case of Shri Bharat Bhushan, Sirsa Vs. PCIT and others in ITA Nos. 597/Chd/2018, 598/Chd/2018, 599/Chd/2018, 600/Chd/2018 and 602/Chd/2018, wherein vide common order dated 11.01.2019, the Chandigarh Bench of the Tribunal had held identical issue in favour of the assessees. He relied on the aforesaid order and submitted that the appeals of the assessee may be allowed on merits

5.0 Per contra, the Ld. Sr. Departmental Representative (Sr. DR) vehemently opposed the applications for condonation of delay and submitted that the orders passed by the Ld. CIT(A) were not received back in the office of the CIT(A) and so it could not be said that the same had not been received by the assessees. It was further submitted that the dispatch register of the office of the CIT(A) also proves that the impugned orders had been dispatched and, therefore, the assessees contention regarding non-receipt of the orders for the purpose of condonation of delay was a mere afterthought. It was further submitted that the assessees being the agriculturists and illiterate persons would not call for a lenient view being taken in this regard because all persons are equal in the eyes of law. The Ld. Sr. DR submitted that the assessees applications for condonation of delay be dismissed at the very threshold and alternatively the orders of the Ld. CIT(A) on merit may be upheld.

6.0 We have heard the rival submissions and have also perused the material on record. The facts of the case are not in dispute and the only aspect to be considered initially is regarding the condonation of delay. It will be worthwhile at this juncture to reproduce the application received for condition of delay in one of the case i.e. in the case of Shri Kapur Singh and the same is being reproduced herein under for ready reference:-

“1. That the order of CIT (A) dated 06.08.2015 was received on 23.09.2019. In fact the original order dated 06.08.2015 was not received and subsequently assessee filed a letter to CIT (A) dated 19.09.2019 received in the office of CIT(A) on 19.09.2019mentioning “I have received notice of demand under section 221 of the Income Tax Act, 1961 for the outstanding demand for the assessment year 2011-12 against which I have filed the appeal with your goodself. Since, I am an illiterate person having only source of income from agricultural operations and I was not aware of the intricacies of income tax matters, as such did not follow up the status of appeal proceedings from the counsel. On receipt of the said demand notice from Income Tax office for deposit of pending demand, I contacted my counsel. Then, it has come to my knowledge that the office of your goodself has passed order against my appeal which I have never received.

Hence, you are requested to provide me copy of the order so that I may file the appeal with Hon’ble Tribunal accordingly.”

2. That in response to letter detailed above administrative officer of CIT(A) Panchkula vide office letter dated 23.09.2019 received on 23.09.2019sent a copy of the order of CIT(A) in question against which the appeal is filed before ITAT on 18.11.2019 within stipulated time. Further, they have informed that the order was despatched from their office vide order no. 220-221 dated 06.08.2015 by speed post. The assessee has approached the concerned postal authorities to enquiry who had taken the delivery of the order sent through speed post as on 06.08.2015. The concerned post office person has told that they do not have record of delivery belonging to such very old period as this belongs to the period more than 6 months. As such there is no delay in filing of appeal from the actual date of Receipt of CIT A order.

3. That if I take the date of the learned CIT(A)’s order dated 06/08/2015 as date of service on assessee then there is a delay of 1498 days in filing of appeal before ITAT on 18.11.2019.

4. Since I was not aware of the intricacies of income tax matters, as such did not follow up the status of appeal proceedings from the counsel. That on receipt of demand notice from Income Tax office for deposit of pending demand I contacted my counsel and enquired about the appeal status which is detailed above in previous paras.

5. That the assessee has not gained any benefit in late filing of the appeal and is keenly interested to pursue the appeal filed on merits. That a huge demand is raised in this case and if not permitted to persue the matter on merits then it will not be possible for me to deposit the tax even after sale of my total assets.

6. Attention of your honour is further invited to the following decisions of different courts which suggest that if there is no ill intention, the delay should be condoned:-

a) Improvement Trust Ludhiana Vs. Ujagar Singh & Ors, Civil Appeal No. 2395 of 2008 of June 9, 2010.

b)Jayvantsinh N Vaghelavs ITO, 40 Taxmann.com 491 (Gujarat)

c) Paras Rice Mills, Kurukshetravs CIT Karnal, ITA No. 657 of 2009 (P&H)

The prayer is for condoning the delay in accordance with the facts and circumstances of the case. Your honor is requested to condone the delay in filing of appeal for 1498 days from the date of CIT (A) order. Though it is once again affirmed that I did not receive the original order of CIT A passed on 16.08.2015 and the same was received only on 23.09.2019.”

6.1 All the other captioned assessees have filed similar applications for condonation of delay. Although, the Ld. Sr. DR has vehemently opposed the assessees’ prayers for condonation of delay, we note that more often than not, the Higher Courts have been liberal in condoning the delay. The Hon’ble Apex Court in the case of Bhivchandra Shankar More Vs. Balu Gangaram More & Ors. in Civil Apeal No. 4669 of 2019 [arising out of SLP (Civil) No. 28938 of 2014] on the condonation of delay, has held as under:-

“15. It is a fairly well settled law that “sufficient cause” should be given liberal construction so as to advance sustainable justice when there is no inaction, no negligence nor want of bonafide could be imputable to the appellant. After referring to various judgments, in B. Madhuri, this Court held as under:-

“6. The expression “sufficient cause” used in Section 5 of the Limitation Act, 1963 and other statutes is elastic enough to enable the courts to apply the law in a meaningful manner which serves the ends of justice. No hard-and-fast rule has been or can be laid down for deciding the applications for condonation of delay but over the years courts have repeatedly observed that a liberal approach needs to be adopted in such matters so that substantive rights of the parties are not defeated only on the ground of delay.”

16. Observing that the rules of limitation are not meant to destroy the rights of the parties, in N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, this Court held as under:-

“11. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to 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. The law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts.

So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.” As pointed out earlier, an appeal under Section 96 CPC is a statutory right. Generally, delays in preferring appeals are required to be condoned, in the interest of justice, where there is no gross negligence or deliberate inaction or lack of bonafide is imputable to the party seeking condonation of delay.”

6.2 Similarly, the Hon’ble Apex Court in the case of N.Balakrishnan Vs. M. Krishnamurthy, vide Judgement dated 03.09.1998, opined that a Court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the Court is always deliberate. The Court went on to opine that in every case of delay there can be lapse on the part of the litigants concerned but that alone is not enough to turn down his plea and shut the door against him. The Hon’ble Apex Court further held that if the explanation does not smack of mala fides or it is not put forth as a part of a dilatory strategy, the court should show utmost consideration to the suitor. It was further held that there is no presumption that the delay in approaching the court is always deliberate and the words “sufficient cause” u/s 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice.

6.3 Therefore, on the facts of the present cases and keeping in view the applications submitted by the captioned assessees for the condonation of delay and respectfully applying the principles laid down by the Hon’ble Apex Court, as stated in the preceding paragraphs, we are of the considered opinion that on the facts and circumstances of the cases, the explanation for delay offered by the assessees cannot be said to smack of mala fides or that it was put forth as a part of dilatory strategy. Therefore, we deem it appropriate to condone the delay in the cases of all the captioned assessees. The appeals  re accordingly
admitted for the purpose of hearing on merits of the case.

6.4 As far the merits of the cases are concerned, it is seen that the assessee has filed paper book containing various orders of the Tribunal which support the case of the assessee. However, it is further seen that no paper book has been filed before us in any of the cases containing basis documentary evidences which would establish the facts of the case. The assessees have not filed any documentary evidences before us which would show the break-up of payments received or the copy of orders passed by the competent authority granting compensation or even the documents which has proved that the lands in question were compulsorily acquired or documents to prove that the lands acquired were agricultural lands. In the absence of these documents, we are unable to take a view on the merits of the appeals before us. However, since we have already condoned the delay in filing the appeals before the Tribunal, in the interest of substantial justice, we restore these appeals to the file of Ld. First Appellate Authority with a direction to adjudicate the issue after giving due consideration to the various judicial precedents and documentary evidences which the assessee might like to submit before him. Needless to say, the Ld. First Appellate Authority will allow adequate opportunity to the assessees to present their cases before proceedings to pass orders in accordance with law.

7.0 In the final result, all the appeals stand allowed for statistical purposes.

Order pronounced on 23.05.2022.