ITAT condones delay of 738 days for no willful omission or negligence

Fact and Issue of the case

The assessee is a primary cooperative society registered under the Karnataka Co-operative Society Act. The main object of the assessee is providing credit facilities to its members and other allied agricultural activities, such as trading in fertilisers and pesticides, seeds, manure, etc. For the assessment year 2014-2015, the return of income was filed declaring `NIL’ income after claiming deduction u/s 80P of the I.T.Act amounting to Rs.33,98,863. The assessment u/s 143(3) of the I.T.Act was completed vide order dated 23.09.2016 by determining the taxable income at Rs.33,98,863 after disallowing the claim of deduction made u/s 80P of the I.T.Act.

The A.O. had kept in abeyance the recovery of tax raised in the assessment order in view of the Department’s appeal pending on identical issue before the Hon’ble Apex Court. According to the assessee, since the demand raised was kept in abeyance, an appeal was not filed within the time limit prescribed, because the assessee was under bonafide belief that assessment order would be amended raising the demand and thereafter only an appeal needed to be filed. However, later, when the Assessing Officer threatened with recovery proceedings, an appeal was filed before the first appellate authority with a delay of 738 days. The CIT(A) did not condone the delay of filing the appeal before him. The appeal of the assessee was dismissed in limine without adjudicating the issues raised on merits. Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal.

Observation of the Tribunal

The Tribunal has heard the rival submissions and perused the material on record. The Assessing Officer while denying the claim of deduction u/s 80P of the I.T.Act, had noted that the Hon’ble jurisdictional High Court of Karnataka had on identical case had decided the issue in favour of the assessee. Further, the A.O. noted that the judgment of the Hon’ble jurisdictional High Court was not accepted and an appeal was pending before the Hon’ble Apex Court. The A.O. also stated that the demand raised on account of disallowance of claim u/s 80P of the I.T.Act shall not be enforced and be kept in abeyance. The relevant finding of the A.O. in this regard reads as follow:-

“After taking into account various aspects concerning the legal implications and the verdicts of the Courts, it is of the considered view that the case needs to be handled at par with jurisdictional decision of the Hon’ble High Court of Karnataka and other decisions referred by the assessee. However, it is not out of place to bring forth here that the decision of jurisdictional Hon’ble High Court of Karnataka allowing the deduction claimed u/s 80P has not been considered by the revenue in toto. In other words, revenue has preferred a plea before the Apex Court substantiating the stand that claim of deduction u/s 80P is not to be considered for the various reasons and legality of the aspect. Since the matter is pending before the Apex Court, it may be mentioned here that logical conclusion at this juncture in the instant case cannot be considered at par with judicial decision on the issue under question.

The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. MST. Katiji and Ors. reported in 167 ITR 471, had laid down six principles for consideration of the Courts while dealing with petitions for condonation of delay. The principles laid down by the Hon’ble Apex Court are as follow:-

(i) Ordinarilly, a litigant does not stand to benefit by loading an appeal late;

(ii) 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.

(iii) `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.

(iv) 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 non-deliberate delay.

(v) 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.

(vi) 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.

The Hon’ble Telangana High Court in the case of Thunuguntla Jagan Mohan Rao v. DCIT [(2020) 427 ITR 204 (Telangana)] had held that the assessee, an individual, not well versed in law, cannot be faulted with not filing an appeal on time against the revisional order of the CIT(A) because he was under bonafide believe that an appeal needs to be filed only against consequential / giving effect to the order of the A.O. Therefore, it was concluded by the Hon’ble High Court that delay in filing appeal against the revisional order u/s 263 of the I.T.Act ought to have been condoned by the ITAT.

The Co-ordinate Bench of the Delhi Tribunal in the case of Vishu Impex Pvt. Ltd. v. Department of Income Tax in ITA No. 2765 and 3703/Del/2011 dated 31.12.2015, had held that wrong advice by a Chartered Accountant is a reasonable and bonafide reason for the delay in filing the appeal and delay of 1297 and 1244 days was condoned. The relevant finding of the Hon’ble Delhi Bench of the Tribunal in the case, cited supra.

In view of the aforesaid reasoning and the judicial pronouncements cited supra, I condone the delay of filing the appeal before the CIT(A) and direct the CIT(A) to consider the issue on merits. It is ordered accordingly.