If sufficient cause exist court can condone delay in Appeal filing
Facts and Issue of the case
These two appeals filed by the assessee are directed against the different orders of CIT(A)-12, Bengaluru having common dated 22-09-2021, wherein the CIT(A) confirmed the levy of penalty u/s.271(1)(c) of the Income Tax Act [Act] at Rs.13,19,400/- and levy of penalty u/s.271F of the Act at Rs.5,000/-. In these cases, the assessment order was passed ex-parte vide order dt.18-12-2018 latter, the penalty order also passed ex-parte u/s.271(1)(c) and u/s.271F of the Act on 18-12-2018. Consequent to this, the assessee filed appeal before the CIT(A) against these two penalty orders. The appeal against 271(1)(c) was filed before the CIT(A) with the delay of 591 days and the appeal against the order of AO u/s.271 was filed with a delay of 775 days, though these appeals ought to have been filed within thirty days from the receipt of the penalty orders. The assessee filed condonation petition before CIT(A) explaining the reasons for delay with the assessee was a non- resident Indian and he was represented by GPA-holder Smt.Shobha Suresh Shet, the assessee through his mother Smt.Shobha Suresh Shet has engaged professional services of a tax consultant and furnished all the details to the said authorized representative. However, he failed to take any steps towards proper representation of the assessee before the AO or the CIT(A) and hence the assessee was failed to file appeal before the CIT(A) within the time. The assessee, when the notice for hearing came for the AY.2017-18 came and therefore assessment order passed u/s.143(3) of the Act on 27-12-2019, after making various additions. For this assessment year, assessee went for an advice of a tax consultant and he asked for earlier years’ records by that time, assessee came to know about the lapse on the part of the earlier counsel and advised to the present counsel that assessee filed the appeals against penalty orders before the CIT(A). Thus, there caused a delay of 591 days in the case of appeal against the order passed u/s.271(1)(c) and 775 days in the case of order passed u/s.271F of the Act. Further, the AR submitted that these facts were duly explained by the assessee before the CIT(A) in both the cases. However, he rejected the condonation petition holding that there was no reasonable cause for filing these appeals belatedly before him. Accordingly, the Ld.AR prayed that the delay may be condoned and appeal may be admitted.
Observation of the case
Court has heard the rival submissions and carefully perused the record. While considering a delay in filing the appeal, the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles.
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 non deliberate delay. Moreover, no counter-affidavit was filed by the Revenue denying the reasons advanced by the assessees. It is not the case of the Revenue that the appeals were filed deliberately with delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay has to be condoned.
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 assessees was a reasonable cause for not filing the appeals. We have to see the cause for the delay. 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. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 71 days cannot be considered to be inordinate or excessive. 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. It is pertinent to mention herein that the view taken by the present author in that case was overruled by the Third Member.
The Madras High Court in the case of Sreenivas Charitable Trust (supra) 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. In this case, the issue on merit regarding granting of deduction u/s. 80IB was covered in favour of the assessee by the Judgment of the Madras High Court. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression “sufficient cause” should receive a liberal construction. In our opinion, this Judgment of the Madras High Court is also squarely applicable to the facts of this case. A similar view was taken by the Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad).
The principles that emanate from the reference decisions are that, in the matter of condonation of delay in filing appeals beyond the limitation period, the courts are empowered to condone the delay, provided the litigant is able to demonstrate that there was “sufficient cause” in preferring appeal beyond the limitation period. The Courts have also held that the expression “sufficient cause” should receive liberal construction so as to advance substantial justice. Hence, the question of condonation of delay is a factual matter and the result would depend upon the facts of the case and the cause shown by the assessee for the delay. It has also been opined that generally delays in preferring appeals are required to be condoned in the interest of justice, where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay. In view of the foregoing, we are of the view that the assessees have shown sufficient cause for the delay in filing the appeals before the Tribunal. Accordingly, we condone the delay in filing these two appeals before the CIT(A) and remit the entire issue in dispute to decide it on merits to the file of CIT(A) in accordance with law.
The two assessee’s appeals are treated as partly allowed for statistical purposes.Suhas-Suresh-Shet-Vs-ITO-ITAT-Bangalore