Case Law Details
Apollo Education Trust Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that the cause of substantial justice deserves to be preferred over technical consultation and hence delay of 133 days condoned because of non-deliberate delay.
Facts- The assessee, Apollo Education Trust, is a Public Charitable Trust registered u/s. 12A of the Income Tax Act, 1961. The case of assessee was taken on the reasons to believe that income has escaped assessment and a notice was u/s. 148 of the Act. Subsequently, statutory notices were issued for which the assessee submitted its response diligently. AO concluded the assessment by passing an order of assessment u/s.147 r.w.s 144 of the Act on 22.03.2022 and made the additions towards advance fees received from students as income to the extent of Rs.1,29,94,308/- and unexplained Credits u/s. 68 to the extent of Rs.16,12,390/-.
Assessee preferred an appeal before CIT(A) with a delay of about 133 days in filing the appeal. However, CIT(A) dismissed the appeal by not condoning the delay and without adjudicating the issues on merits. Being aggrieved, the present appeal is filed.
Conclusion- When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. Therefore, in our opinion, by preferring the substantial justice, the delay of 133 days has to be condoned.
In the case of People Education & Economic Development Society Vs/ ITO it is held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These appeals filed by the assessee are directed against order of CIT(A)-11, Bangalore for the AYs 2014-15 to 2017-18 dated 24.4.2024. Since the issue in all the appeals is common, these are clubbed together, heard together and disposed of by this common order for the sake of convenience. The assessee has raised various grounds of appeal which are common in nature except change in figures. Hence, we extract the grounds in ITA No.1212/Bang/2024 for the AY 2014-15 as follows:
1. “The impugned appellate Order passed by the learned Hon’ble Commissioner of Income Tax [Appeals) -Il dated 24/04/2024, in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant’s case.
2. The learned Commissioner of Income-tax [Appeals] is not justified in not condoning the delay in filing the appeal preferred by the appellant without properly appreciating the facts and reasons leading to delay in filing the appeal, by not appreciating that the delay in filing was not intentional or negligence or deliberate but it is due to the reasons beyond the control of the appellant, on the facts and circumstances of the case.
3. The learned Commissioner of Income-tax (Appeals) ought to have condoned the delay in filing the appeal and admitted the appeal and thereby ought to have adjudicated the grounds raised by the appellant in the interest of Justice and equity, on the facts and circumstances of the case.
4. Without prejudice, the appellant denies itself liable to be taxed on the income of Rs.1,15,66,754/- as against NIL income of the appellant, on the facts and circumstances of the case.
5. The learned CIT[A] and the learned assessing officer failed to appreciate the fact that the appellant follows the accrual basis of accounting and is not justified in considering advance fee of Rs.1,29,94,308/- received as income on the facts and circumstances of the case. Without prejudice the authorities ought to have reduced an amount of Rs.1,08,54,200/- being advance fees of earlier years considered as income during the current year.
6. The learned Commissioner of Income-tax [Appeals] and the learned Assessing Officer failed to appreciate that the deduction of 15% under section 11 is to be calculated on the gross receipts and not on the net receipts i.e. after application towards expenses incurred for the objects of the trust, on the facts and circumstances of the case.
7. The learned Commissioner of Income-tax [Appeals] failed to appreciate that the learned Assessing Officer was not justified in making an addition of a sum of Rs.16,12,390/- as unexplained credits u/s. 68 of the Act, on the facts and circumstances of the case.
8. The learned Commissioner of Income – tax [Appeals] failed to appreciate that the parameters for invoking the provisions of section 68 of the Act is absent and consequently the addition made by invoking the provisions of section 68 of the Act is not justified and requires to be deleted on the facts and circumstances of the case.
9. Without prejudice, to the right to seek waiver as per the parity of reasoning of the decision of the Hon’ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234 At 234 B and 234 C of the Income Tax Act on the facts and circumstances of the case. The appellant contends that the levy of interest under section 234 A, 234 B and 234 C of the Act is also bad in law as the period, rate, quantum and method of calculation adopted by the learned assessing officer on which interest is levied are not discernible and are wrong on the facts of the case.
10. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
11. For the above and other grounds to be urged during the course of hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.”
2. Facts of the case are that the assessee, Apollo Education Trust is a Public Charitable Trust registered u/s. 12A of the Income Tax Act, 1961 (in short “The Act). The Assessee runs educational institution and has been on records of the Department for more than 2 decades.
2.1 The case of assessee was taken on the reasons to believe that income has escaped assessment and a notice was under section 148 of the Act was issued on 30.03.2021. Subsequently, statutory notices were issued for which the assessee submitted its response diligently. The learned assessing officer concluded the assessment by passing an order of assessment u/s.147 r.w.s 144 of the Act on 22.03.2022 and made the following additions:
1. Advance fees received from students as income to the extent of Rs.1,29,94,308/-
2. Unexplained Credits under section 68 to the extent of Rs.16,12,390/-
2.2 Aggrieved by the order passed by the learned assessing officer u/s.147 r.w.s 144 of the act, the assessee preferred an appeal before the learned commissioner of Income Tax Appeals – 11, Bengaluru on 01.09.2022 with a delay of about 133 days in filing the appeal. The assessee had given reasons for the delay filing the appeal vide its submission dated 19.04.2024. The case of the assessee was heard and the learned Commissioner of Income Tax (Appeals) – 11 passed the order on 24.04.2024 by dismissing the appeals by not Condoning the delay in filing the appeal of about 133 days in filing the appeals and thereby did not adjudicate the issues on merits of the matter. The assessee being aggrieved by the order passed by the learned Commissioner of Income-tax [Appeals], filed appeals before this Tribunal.
3. The ld. A.R. for the assessee submitted that a professional consultant who was authorized to represent the assessee in the assessment proceedings and whose e-mail ID was the assessee’s official e-mail ID had not informed the Assessee about passing of the order of assessment nor advised the assessee trust regarding the requirement and the due date of filing the appeal before the ld. Commissioner of Income Tax, Appeal, due to miscommunication.
3.1 He submitted that on receiving the penalty notice u/s. 274 dated 25.08.2022, the Assessee enquired with the said professional consultant about the status of the Assessment Proceedings. To the shock of the assessee, it was brought to the notice of the assessee trust that the said professional consultant had received the assessment order and had missed filing the appeal before the learned Commissioner of Income Tax [Appeals]. Soon after coming to the knowledge of the assessee Trust about not preferring an appeal against the impugned order of assessment and also lack of communication of passing the impugned order which were not intimated to the assessee and not guiding the assessee as regard to the next course of remedy available against the impugned order of assessment passed, the assessee trust engaged the other professional who assisted the assessee in taking necessary immediate remedial action by preparing the appeal papers to be filed against the impugned orders of assessment and the appeals were filed immediately within a reasonable time i.e. the appeals before the learned Commissioner of Income Tax, Appeals – 11, Bengaluru was filed on 01.09.2022.
3.2 The ld. A.R. submitted that owing to the above reasons, the appeals could not be filed within the due date specified in the statute i.e. within 30 days from the date of receipt of the impugned order of assessment passed i.e. the assessee ought to have filed the statutory appeal before the learned Commissioner of Income -tax [Appeals] on or before 21/04/2022. Due to the reasons mentioned above the assessee was prevented with a reasonable cause in not filing the statutory appeal before the learned Commissioner of Income-tax [Appeals] within the statutory period and the appeal came to be filed only on 01/09/2022 with a delay of about 133 days.
3.3 He further submitted that the delay in filing the appeals was due to a reasonable and sufficient cause which was beyond the control of the assessee and due to miscommunication by the professional consultant in not guiding and bringing to the notice of the assessee about passing of the impugned order of assessments which was a cause for delay in filing the appeal before the learned Commissioner of Income-tax [Appeals].
3.4 He submitted that the assessee had in fact had brought to the notice of the learned Commissioner of Income-tax [Appeals] as regard to the reasons for delay in filing the appeal before him of about 133 days and the learned Commissioner of Income-tax [Appeals] without properly appreciating the reasons for the delay in filing the appeal on certain irrelevant observations and relaying upon certain judicial authorities and not considering the submissions and authorities relied upon by the assessee refused to condone the delay in filing the appeal of about 133 days, which is against the principles of natural justice.
3.5 He submitted that the learned Commissioner of Income-tax [Appeals] failed to appreciate that Assessee in not filing the present appeals within time is not deliberate or intentional and the Assessee by not filing the appeal in time would not gain any benefit and for the reasons as stated above the Assessee could not file the present appeal within the stipulated time which fact was not properly appreciated by the learned Commissioner or Income-tax (Appeals),
3.6 Hence, he humbly prayed before this Tribunal that that if the delay in filing the appeal before the learned Commissioner of Income-tax (Appeals) Of about 133 days is not condoned the Assessee would be put to great hardship and irreparable injury and on the other hand no hardship or injury would be caused to the revenue if condonation of delay is allowed. Wherefore, he humbly prayed before us to condone the delay in filing the appeals before the learned Commissioner of Income-tax (Appeals) of about 133 days and direct the learned Commissioner of Income-tax [Appeals] to condone the delay and hear the same on merits of the matter for the advancement of substantial cause of justice.
4. The ld. D.R. submitted that the appeals may be dismissed in limine without adjudicating the same as the delay was substantial and it is only due to the negligence of the assessee and delay shall not be condoned.
5. We have heard the rival submissions and perused the materials available on record. The contention of the ld. A.R. that the assessee has no malafide intention in filing the appeals belatedly before ld. CIT(A). It is to be noted that u/s 253(5) of the Act, the Tribunal may admit the appeals filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeals within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on the part of the assessee in not filing these appeals within the prescribed time.
5.1 However, all the appeals of the assessee for all these assessment years were dismissed, wherein he has not condoned the delay in filing these appeals before him. The ld. A.R. pleaded before us that the Tribunal may also condone the delay in filing the appeals before ld. CIT(A) and remitted the matter to the file of ld. CIT(A) since all the orders passed by Ld. CIT(A) are dismissed without condoning the delay.
5.2 We have gone through the reasons explained by the assessee for filing the appeals belatedly before ld. CIT(A). At this time, it is appropriate to mention the judgement of Hon’ble Supreme Court in the case of Concord of India Insurance Company Ltd. Vs. Smt. Nirmala Devi & Ors. Reported in 118 ITR 507 (SC), wherein it has been held that “the mistake of the counsel may in certain circumstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground”. Accordingly, the Hon’ble Supreme Court has held that there is a mistake of the counsel and therefore, the delay in filing the appeal has been condoned.
5.3 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late
(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
(3) ‘Every day’s delay must be explained’ does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay?
The doctrine must be applied in a rational, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay.
(5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
5.4 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. Therefore, in our opinion, by preferring the substantial justice, the delay of 133 days has to be condoned.
5.5 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
5.6 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay.
5.7 The Madras High Court in the case of Sreenivas Charitable Trust (280 ITR 357) (Mad.) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression “sufficient cause” should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression “sufficient cause” should receive a liberal construction.
5.8 In view of the above, we are condoning the delay of 133 days in filing the appeals before ld. CIT(A) belatedly and we remit the entire issue in dispute in all these appeals to the file of ld. CIT(A) to decide afresh in accordance with law after giving a fair opportunity of hearing to the assessee and decide accordingly.
6. In the result, all the appeals of the assessee are partly allowed for statistical purposes.
Order pronounced in the open court on 10th Sept, 2024
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