2020 (3) TMI 1282 - AT - Income Tax

Condonation of delay - delay of 1250 days - Whether the assessees failure to file the appeals in time is supported by sufficient cause so as to condone the delay of 1250 days in filing the appeals? - HELD THAT -. The Madras High Court considered an issue in the case of Sreenivas Charitable Trust v. Dy. CIT 2005 (10) TMI 36 - MADRAS HIGH COURT and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression sufficient cause should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay. 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. 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 of 1250 days and admit the appeals for adjudication. Sale of Agricultrual land - Admission of additional ground - HELD THAT - Purpose of assessment proceeding is to tax/assess the taxable liability/income of the assessee correctly in accordance with law and if the assessee is entitled to certain relief, deduction or benefit, the assessee should not be denied or deprived of it, even if the claim pertaining to the same is made for the first time before the Tribunal during pendency of appeal before it. In the present case, the issue raised in additional ground is legal issue which goes to the root of the matter and for deciding the legal issue no new facts are required to be considered as all the facts are already recorded in the orders of the authorities below. In view of the matter, we do not find any force in the argument of the Ld. DR that the assessees cannot raise the additional ground on the simple reason that it was not challenged before the Assessing Officer. We, therefore, admit the additional ground and restore the issue to the file of the Assessing Officer for verification and fresh adjudication on the legal issue raised by the assessee. On merits, the facts of the case have already been narrated in the affidavits filed by the ld. AR which is not required to be reiterated. Since we have admitted the appeals for adjudication, the additional ground raised by the assessee which goes to the root of matter which was not at all raised before the lower authorities on earlier occasion needs to be remitted to the file of the Assessing Officer for fresh consideration. The Assessing Officer has to go through the relevant title deed, notifications etc. so as to decide whether the land sold by the assessees is agricultural land or not. Thus, the additional ground of appeals is partly allowed for statistical purposes. Since we have remitted the additional ground to the file of the Assessing Officer for fresh adjudication, at this stage, we refrain from going into main grounds.

Summary

Issues Involved:
1. Condonation of delay in filing the appeals.
2. Admission of additional grounds of appeal.
3. Determination of whether the land sold was rural agricultural land and thus exempt from capital gains tax.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeals:
The appeals were filed with a delay of 1250 days. The assessees filed condonation petitions accompanied by affidavits explaining the reasons for the delay. The primary reasons included the death of the father who handled the tax matters, the assessees' residence in the US, and a misunderstanding about the nature of the land sold. The Tribunal considered whether the delay was supported by "sufficient cause" and referred to various judgments emphasizing that substantial justice should be preferred over technicalities. The Tribunal noted that the Revenue did not file any counter-affidavit opposing the condonation and concluded that the delay was not deliberate. Consequently, the delay was condoned to advance substantial justice.

2. Admission of Additional Grounds of Appeal:
The assessees filed petitions to admit an additional ground of appeal, asserting that the land sold was rural agricultural land and thus exempt from capital gains tax. This ground was not raised earlier due to a misunderstanding by the tax consultant and the father of the assessees. The Tribunal referred to Rule 11 of the ITAT Rules, 1963, and various judicial precedents, which allow the Tribunal to admit new grounds of appeal to ensure correct assessment of tax liability. The Tribunal admitted the additional ground, emphasizing that it was a legal issue that did not require further factual investigation and remitted the issue to the Assessing Officer for fresh adjudication.

3. Determination of Whether the Land Sold Was Rural Agricultural Land:
The Tribunal noted that the issue of whether the land sold was rural agricultural land was not raised before the lower authorities. The affidavits provided by the assessees indicated that the land was situated outside the limits of the municipality at the time of transfer and was not a capital asset attracting taxable capital gains. The Tribunal directed the Assessing Officer to verify the relevant title deeds, notifications, and other documents to determine if the land sold was indeed rural agricultural land. This issue was remitted to the Assessing Officer for fresh consideration.

Conclusion:
The appeals were admitted after condoning the delay of 1250 days, and the additional ground regarding the nature of the land sold was admitted and remitted to the Assessing Officer for fresh adjudication. The Tribunal refrained from addressing the main grounds of appeal at this stage, focusing on the need for a thorough verification by the Assessing Officer. The appeals were partly allowed for statistical purposes.