2019 (6) TMI 402 - HC - Income Tax

Mandation of E-filling of appeal - appeal to CIT(A) - appeal had been filed manually within time was considered defective in the light of Rule 45 of the Rules - scope of amendment to Rule 45 w.e.f. 01.03.2016 - HELD THAT - Central Bureau of Direct Taxes, in recognition of the position that assessees were not fully aware of the new procedure, had issued Circular No.20/2016 dated 26.05.2016. The Circular recognizes the lacunae in the e-filing procedures. It also admits that Electronic Verification Functionality for the verification of e-appeals was made operational only with effect from 12.05.2016 for individuals and from 19.05.2019 for other persons. There were other issues as well including the prescription for word limit for grounds of appeal as well as the mapping of jurisdiction of the Appellate Commissioner. In recognition of the aforesaid difficulties, the time limit for application of the Circular was extended up to 15th June, 2016. E-appeals filed within the aforesaid extended period were to be treated as valid. In the present case, the manual appeal has, admittedly, been filed on time. CIT(A) has also heard the matter on merits on two(2) occasions and written submissions of the petitioner are available on record. In such circumstances, the statutory right of appeal granted to the petitioner, a substantive right, should not be whittling down by virtue of a procedural infirmity, admittedly, committed by it. Without it setting a precedent, I thus, direct the petitioner to comply with the provisions of Rule 45 within a period of three(3) weeks from today. Upon being satisfied with compliance thereof, the CIT(A) will take the appeal up for adjudication on merits without reference to limitation. Since the manual appeal has admittedly, been filed within time and upon payment of necessary fee, there is no necessity for the petitioner to remit the appeal fee yet again in respect of the appeal filed electronically. Necessary instructions be issued in this regard by learned Standing Counsel to the Authorities. This writ petition is allowed in the aforesaid terms. In the light of my conclusion as aforesaid, the impugned order is set aside.

Summary

Issues:
Challenge to order by Commissioner of Income Tax(Appeals) for assessment year 2013-14 - Validity of manual appeal filing in light of Rule 45 of Income Tax Rules, 1962 - Interpretation of Circular No.20/2016 dated 26.05.2016 regarding e-filing of appeals - Statutory right of appeal versus procedural requirements.

Analysis:
The petitioner challenged an order by the Commissioner of Income Tax(Appeals) for assessment year 2013-14, dated 28.12.2018. The appeal was filed manually on 28.04.2016, even though the petitioner was required to furnish the return of income electronically. Rule 45 of the Income Tax Rules, 1962 mandates electronic filing of appeals in Form No.35 for those who are required to file returns electronically. The petitioner's appeal was taken up for hearing on 10.10.2018 and subsequently on 11.12.2018, when a written submission was filed. The CIT(A) noted the appeal was filed manually and issued a notice on 11.12.2018, proposing to treat the appeal as non-est due to non-compliance with Rule 45.

The petitioner responded, citing Circular No.20/2016 dated 26.05.2016, which recognized issues with e-filing procedures and extended the time limit for e-appeals until 15th June 2016. The Circular acknowledged the operationalization of Electronic Verification Functionality for e-appeals from 12.05.2016 for individuals. The petitioner argued that the appeal filed manually on 02/05/2016 was valid under Rule 45 read with the Circular. The impugned order dated 28.12.2018 dismissed the appeal as invalid due to the manual filing.

The Court considered the technological upgradation of the Income Tax Department and the difficulties faced by both the Department and Assessees in transitioning to e-filing. Despite the procedural infirmity of manual filing, the Court upheld the petitioner's substantive right to appeal. The Court directed the petitioner to comply with Rule 45 within three weeks, after which the appeal would be adjudicated on merits without reference to limitation. The impugned order was set aside, instructing the appellate authority to pass appropriate orders on the e-appeal filed by the petitioner within three weeks after filing and hearing the petitioner.