Case Law Details
Jayesh Hirji Savla Vs ACIT – 5(1) (ITAT Mumbai)
Summary: In the case of Jayesh Hirji Savla vs. ACIT (ITAT Mumbai), the tribunal addressed a delay in filing an appeal regarding unexplained bank deposits, which had led to an assessment under Section 144 of the Income Tax Act. The delay was attributed to the assessee’s arrest during the assessment proceedings, which hindered proper representation. The CIT(A) had dismissed the appeal due to non-compliance, leading the assessee to approach the ITAT. The tribunal considered an affidavit submitted by the assessee and noted that there was no intention to benefit from the delay. The ITAT referenced the Supreme Court’s guidelines on condonation of delay, emphasizing a liberal, justice-oriented approach. It highlighted the need to balance technical considerations with substantial justice, ensuring that delays do not unfairly penalize parties, especially when reasonable cause is shown. Citing previous decisions from the Bombay High Court and Supreme Court, the tribunal found sufficient cause for delay and condoned it, remanding the matter for reassessment. This decision underscores the judiciary’s commitment to fair treatment and the importance of addressing delays pragmatically.
Assessee filed the return of income and the assessment was competed u/sec 143(3). Subsequently, the AO has received the information that the assessee has made high value deposits in the bank accounts and were not explained, therefore the AO has reason to believe that the income has escaped assessment and issued notice u/sec 148 and in compliance, the assesse has filed the return of income. Further the A.O has issued notice u/sec 143(2) and u/sec 142(1) to furnish the details of credit entries appearing in the bank account and there was no reply was filed. Since there was no compliance by the assessee, the AO has invoked the provisions u/sec 144 and relied on the material available on record and made best judgement assessment as the assesse could not substantiate with evidence the credits of high value transactions in bank account and the A.O has treated the amounts as unexplained money u/sec 69A and and passed the order u/sec 147 r.w.s144.
Before the CIT(A) too there was no compliance by the assessee to notices & therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee filed appeal before the Hon’ble Tribunal. Before the Tribunal assessee submitted that the CIT(A) has erred in confirming the action of the AO overlooking the information of the assessment proceedings and that he has a good case on merits and shall substantiate with the material evidences and prayed for an opportunity to explain before the lower authorities.
At the time of hearing, it was brought to the knowledge of the bench that there is a delay in filing the appeal before the Hon’ble Tribunal. The Assesse has filed an affidavit substantiating the facts for condonation of delay , inter alia, included that fat that he was arrested in a false case i.e. during the pendency of Assessment proceedings and that he was not represented properly before the Assessing Officer.
Tribunal considered the facts, provisions and the contents of the affidavit found that there is a reasonable cause explained and there is no benefit is derived in causing delay in filing appeal before the Hon’ble Tribunal. Tribunal noted the decision of the Hon’ble High Court Of Bombay in the case of Vijay Vishin Meghnani & Anr Vs. DCIT & Anr (398 ITR 0250)(Bombay).
Tribunal also noted the decision of the Hon’ble Supreme Court in B. Madhuri Goud v. B. Damodar Reddy (2012) 12 SCC 693, which had held that the following principles 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.”
Further the Tribunal noted that the Hon’ble supreme court in the case of Collector, Land Acquisition Vs. MST Katiji & others (167 ITR 471) (SC) had observed as under :
“The legislature has conferred the power to condone delay by enacting s. 5 of the Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on “merits”. The expression “sufficient cause” employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice—that being the lif purpose of the existence of the institution of Courts. 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. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherent bureaucratic methodology imbued with the note-making, file- pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community does not deserve a litigant non grata status. The Courts, therefore, have to be informed of the spirit and philosophy of the provision in the course of the interpretation of the expression “sufficient cause”. So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits.”
Respectfully following the observations and ratio of the decisions of Hon’ble Supreme Court and Hon’ble High Court, Tribunal found that the delay in filing the appeal before the Hon’ble Tribunal by the assessee is supported with sufficient cause and held that a pragmatic approach should be considered for condonation of delay and accordingly the delay was condoned.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These six appeals are filed by the assessee against the separate orders of the Commissioner of Income Tax (Appeals)-53, Mumbai passed u/sec 147 r.w.s 144 and u/sec 250 of the Act.
2. Since the issues involved in these appeals are common and identical, hence are clubbed, heard and a consolidated order is passed. For the sake of convenience, we shall take up the ITA No.3247/Mum/2024 for A.Y 2012-13 as a lead case and the facts narrated.
3. At the time of hearing, it was brought to the knowledge of the bench that there is a delay in filing the appeal before the Hon’ble Tribunal. The Assesse has filed an affidavit substantiating the facts for condonation of delay and we consider it is appropriate to refer to the notarised affidavit of the assesse as under:
“Jayesh Hirji Savla, aged about 55 years an adult Indian Inhabitant, having residential address at 502, New Shangrilla Apartment, LT Cross Road, Opp Vrundas Hotel, Borivali West, Mumbai 400092 do here by state on solemnly affirmation as under:
1. I state that, the learned Assessing Officer has passed an assessment order dated 20.12.2019 under section 147 r.w.s 144 of the IT Act 1961 for AY 2012-13 in my case which was served physically on 27.12.2019.
2. I say that due to my untimely arrest on 21.07.2019 in a false case i.e. during the pendency of Assessment proceedings, I was not represented properly before the Assessing Officer and did not reply to Notice u/s 142(1) dated 24/10/2019, 20/11/2019, 09/12/2019 and show cause notice dated 16/12/2019.
3. I Say that the Assessment Order was therefor passed u/s 144.
4. Isay that against the above assessment order, my wife Payal Jayesh Savla co- ordinate with accountant Mr. Bhupat Babubhai Patel and filed an appeal before (A) on 02.02.2020 by affixing my and later on it expired on 29.10.2020, digital signature, which was valid in that month
5. I say that before the Ld. CIT(A), my wife had through the accountant filed letter dated 09/12/2022, 28/01/2022 and 06/03/2022 informing about my arrest and stating that compiling details will take time and the matter was to be remanded to AO.
6. I say that as the details were relating to third party loans etc, and I being in custody, I was unable to provide any details.
7. I say that the learned CIT(A) has passed an order dated 03.04.2023 for AY 2012-13 in the present case which [email protected]. has on been served the email, i.e.,
8. I say that my wife had access to said email account and the said order of Ld. CIT(A) dated 03.04.2023 was received in the said account.
9. I say that my wife inadvertently did not check said email particularly as she had no hope of success in the proceedings as I was under custody.
10. I say that upon my release on bail on 22.02.2024, my Chartered Accountant who accessed my portal informed that six CIT(A) orders were passed in my case.
11. I say that I became aware of the CIT(A)’s order only after securing bail and attaining normality in the month of May 2024, which resulted in a delay of 385 days in filing the appeal.
12. I say that the delay is bonafide
13. I affirm that the above-stated facts are true and correct to the best of my knowledge, and I am making this affidavit to place the true facts on record.
Assessee wife’s –Smt Payal Jayesh Savla affidavit:
“I, Payal Jayesh Savla, AADHAAR CARD NO 277702271045, PAN NO AAKPS2909J, aged about 52 years, an adult Indian Inhabitant, residing at 502, Shangrilla Apartment, L T Road, Borivali West, Mumbai 400092, do hereby solemnly affirm and state as under:
1. I say that I am the wife of Mr. Jayesh Hirji Savla (hereinafter referred to as appellant], the appellant before the Hon’ble ITAT, Mumbai in ITA Nos, ITA 3242/MUM/2024, ITA 3243/MUM/2024, ITA 3244/MUM/2 024, ITA 3245/MUM/2024, ITA 324 6/MUM/2024, ITA 3247/MUM/2024.
2. I say that I had through an income tax consultant filed an appeal against the assessment orders passed u/s 144 for AY’s 2012-13, 2013-14, 2014-15, 2015-16, 2016- 17 & 2017-18 in the case of Mr Jayesh Hirji Savla which are impugned in the above appeals before the Ld CIT(A) 02.02.2020, using the appellant digital signature, which was valid at that time but expired on 29.10.2020.
3. I through my consultant also submitted letters to the Ld. CIT(A) on 09.12.2022, 28.01.2022, and 06.03.2022, explaining the appellant’s arrest in the false criminal conspiracy and the time required to compile the necessary details.
4. I say that the order of learned CIT(A) dated 03.04 2023 for AY 2012-13 was served via email to [email protected].
5. I say that although I had access to the aforementioned email account, I inadvertently did not check the email as I had lost all hope of success in the matter as the appellant was in custody and we were unable to compile details.
6. I affirm that the above-stated facts are true and correct to the best of my knowledge and belief, and I make this affidavit to place the true facts on record”
4. We considering the facts, provisions and the contents of the affidavit found that there is a reasonable cause explained and there is no benefit is derived in causing delay in filing appeal before the Honble Tribunal. Further the Honble High Court Of Bombay in the case of Vijay Vishin Meghnani & Anr Vs. DCIT & Anr (398 ITR 0250)(Bombay) has observed under;
“Appeal-Condonation of Delay-Claim for deduction under Section 80-0 made by Assessee was disallowed by AO for Assessment Year 1993-94 and confirmed by the Commissioner of Income Tax (Appeals)-Against order of Commissioner, assessee preferred appeal before Tribunal-Tribunal restored matter back to file of AO for Assessment Year 1993-94-AO passed order allowing claim under that section of the I.T. Act, 1961-Assessee preferred rectification application to AO to rectify his order for Assessment Year 1994-95 and Assessment Year 1996-97-Rectification application was rejected by AO-CIT(A) upheld order of AO-Assessee filed application for condonation of delay in filling appeal against order of CIT(A)— Tribunal held that assessee simply put responsibility for delay on Revenue- Tribunal dismissed two appeals filed by assessee holding that same as barred by limitation-Tribunal held that delay of 2984 days in filling appeal could not be condoned-Held, Supreme Court in case of Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi and others held that legal advice tendered by a professional and litigant acting upon it one way or other could be sufficient cause to seek condonation of delay and coupled with other circumstances and factors for applying liberal principles and then said delay can be condoned-None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority found that litigant deliberately and intentionally delayed filing of appeal-Tribunal though aware of these principles but possibly carried away by fact that delay of 2984 days was incapable of condonation-In process Tribunal went about blaming assessee and professionals and equally Department-Tribunal’s order did not meet requirement set out in law-Tribunal completely misdirected itself and had taken into account factors, tests and considerations which had no bearing or nexus with issue at hand-Tribunal, therefore, erred in law and on facts in refusing to condone delay-Explanation placed on affidavit was not contested nor Court found that from such explanation, High Court could not arrive at conclusion that assessee was at fault, he intentionally and deliberately delayed matter and had no bona fide or reasonable explanation for delay in filing proceedings-High Court condoned delay of 2984 days in filing appeals-Assessee’s Appeals allowed. Held “
5. Similarly the Hon’ble Supreme Court in B. Madhuri Goud v. B. Damodar Reddy (2012) 12 SCC 693, has held that the following principles 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.”
6. The Hon’ble supreme court in the case of Collector, Land Acquisition Vs. MST Katiji & others (167 ITR 471) (SC) has observed as under :
“ The legislature has conferred the power to condone delay by enacting s. 5 of the Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on “merits”. The expression “sufficient cause” employed by the legislature 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. 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. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherent bureaucratic methodology imbued with the note-making, file- pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community does not deserve a litigant non grata status. The Courts, therefore, have to be informed of the spirit and philosophy of the provision in the course of the interpretation of the expression “sufficient cause”. So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits.”
7. We respectfully follow the observations and ratio of the decisions of Hon’ble Supreme Court and Honble High Court and find that the delay in filing the appeal before the Hon’ble Tribunal by the assessee is supported with sufficient cause and a pragmatic approach should be considered for condonation of delay and accordingly the delay is condoned and we admit the appeals.
8. The assessee has raised the following grounds of appeal:
1 The Learned CIT(A) failed to appreciate that Assessee was unable to receive proper opportunity of hearing including before the Assessing Officer and hence the Ld CIT(A) erred in confirming the order of Ld Assessing officer and hence the order of Ld CIT(A) may be quashed/set-aside.
2 The Learned CIT(A) erred in confirming order of Assessing officer making following addition of following credit entries u/s 6 9A:
Rent 1,80,000/-
Loan taken – Rs 15,00,000/-
Loan given received back – Rs 14,78,922/-
Received from partner current account/proprietor Account – Rs 35,00,000/- Without appreciating that Section 69A is not applicable and nature and source of said credit entries are duly explained and hence the addition u/s 69A may be deleted.
3 The Ld CIT(A) erred in directing the Ld AO to verify whether bank interest of Rs 3239 and commission of rs 1,00,600/- is offered to tax.
4 The Appellant craves leave to add, delete or amend any of the grounds of appeal during the course of appellate proceedings.
9. The brief facts of the case are that, the assessee is engaged in the business and has filed the return of income for the A.Y 2012-13 on 29.03.2014 disclosing a total income of Rs.58,430/- and the assessment was competed u/sec 143(3) of the Act assessing a total income of Rs. 1,83,240/- vide order dated 17.03.2015. Subsequently, the Assessing Officer (A.O) has received the information that the assessee has made high value deposits in the bank accounts and were not explained, therefore the AO has reason to believe that the income has escaped assessment and issued notice u/sec 148 of the Act and in compliance, the assesse has filed the return of income on 09.06.2016 disclosing a total income of Rs.58,430/-.
Further the A.O has issued notice u/sec 143(2) and u/sec 142(1) of the Act to furnish the details of credit entries appearing in the bank account and there was no reply was filed. Finally the A.O has issued a show cause notice referred at Para 4 of the assessment order. Since there was no compliance by the assessee, the AO has invoked the provisions u/sec 144 of the Act and relied on the material available on record and made best judgement assessment as the assesse could not substantiate with evidence the credits of high value transactions in bank account of New India Co-operative, Borivali Branch Mumbai and the A.O has treated an amount of Rs.69,41,600/- as unexplained money u/sec 69A of the Act and assessed the total income of Rs.71,24,840/- and passed the order u/sec 147 r.w.s144 of the Act dated 20.12.2019.
10. Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and since there was no compliance by the assessee to notices.. Therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon’ble Tribunal.
11. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the Assessing officer overlooking the information of the assessment proceedings. Further the assessee has a good case on merits and shall substantiate with the material evidences and prayed for an opportunity to explain before the lower authorities. Per Contra, the Ld. DR supported the order of the CIT(A).
12. We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no compliance nor appearance in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The CIT(A) has issued the notices of hearing referred at Page 2 of the order but there was no proper response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the additions made by the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the facts, circumstances and principles of natural justice, we shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the Appeal. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes.
13. In the result, the appeal filed by the assessee is allowed for statistical purposes.
ITA.Nos.3242 to 3246/Mum/2024, A.Y 2013-14 to A.Y.20 17-18.
14. As the facts and circumstances in these appeals are identical to ITA No 3247/Mum/2024, for the A.Y 2012-13 (except variance in figures) and the decision rendered in above paragraphs would apply mutatis mutandis for these appeal also. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes.
15. In the result, the six appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 14.08.2024
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