2019 (6) TMI 425 - AT - Income Tax

Condonation of delay of 303 days - reason given that the CA of the assessee was suffering from backache which was supported by the medical certificate issued by the Orthopedic Surgeon - It was also submitted that there was frequent changes of MD of the assessee Corporation - HELD THAT - When there was a valid medical certificate issued by the Specialist Doctor, the CIT(A) cannot doubt the same without bringing any material contrary to the facts submitted by the assessee. The assessee s present Managing Director made a petition/affidavit affirming that there were frequent changes of Managing Directors of the assessee-Corporation and it was an inadvertent error on the part of the assessee for not taking steps to file the appeals before the CIT(A). The CIT(A) has not disputed the fact of frequent changes of Managing Directors of the assessee-Corporation. However, the CIT(A) wants to know why the assessee was prevented from filing the appeals before him. The assessee has already stated that his Chartered Accountant was sick and hence, there was delay in filing the appeals before the CIT(A). More so, the assessment orders for these assessment years were passed ex parte by the Assessing Officer u/s. 144 which itself shows that there is no proper presentation from the Counsel of the assessee before the Assessing Officer. Hence, in our opinion, there are good and sufficient reasons for filing the appeals belatedly before the CIT(A). Disallowance u/s 43B - assessee not remitted VAT payable before the due date of filing of the return of income - CIT(A) observed that the provisions of section 43B of the Act are not applicable to the assessee since the assessee had not produced any evidence to show that the provisions of section 43B have been complied by the assessee - HELD THAT - The assessee has not produced any evidence to show that the provisions of section 43B have been complied with by the assessee. In the absence of the same, the CIT(A) sustained the addition. Before us, the Ld. AR pleaded that the assessee may be given an opportunity to place necessary evidence in support of the claim of the assessee. Considering this request of the assessee, we are inclined to remit this issue to the file of the CIT(A) with a direction to give opportunity to the assessee to produce evidence to show that the provisions of section 43B have been complied with by the assessee - Appeal of the assessee allowed for statistical purposes.

Issues Involved:
1. Dismissal of appeals by CIT(A) without condoning the delay of 303 and 301 days for assessment years 2010-11 and 2011-12.
2. Disallowance of VAT by invoking section 43B for assessment year 2012-13.

Issue-wise Detailed Analysis:

1. Dismissal of Appeals by CIT(A) Without Condoning the Delay:

The appeals in ITA Nos. 107 & 108/Coch/2019 pertain to the dismissal by the CIT(A) due to delays of 303 and 301 days for the assessment years 2010-11 and 2011-12, respectively. The assessee attributed the delay to two primary reasons: the severe back pain of their authorized representative, supported by medical certificates, and frequent changes in the Managing Director position within the company.

The CIT(A) did not condone the delay, referencing section 249(3) of the Act, which allows for condonation only if "the appellant had sufficient cause for not presenting it within that period." The CIT(A) cited several legal precedents, including Ram Mohan Kabra (257 ITR 773) and Ajit Singh Thakur Singh v. State of Gujarat (AIR 1981 SC 733), emphasizing that the cause for delay must arise within the limitation period and be supported by cogent evidence.

Upon review, the CIT(A) found the medical certificates insufficient, noting that the authorized representative had attended a hearing before the Assessing Officer during the claimed period of incapacitation. Additionally, the CIT(A) found the explanation regarding the frequent changes in the Managing Director position unsubstantiated due to a lack of specific dates and reasons.

The Tribunal, however, disagreed with the CIT(A)'s stringent approach. It emphasized the validity of the medical certificates and the affidavit from the current Managing Director affirming the frequent changes in leadership. The Tribunal referenced the Supreme Court's decision in Vedabai alias Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil (253 ITR 798), advocating for a pragmatic and liberal approach in condonation matters, especially when the delay is not inordinate. Consequently, the Tribunal directed the CIT(A) to admit the appeals and dispose of them on merits, thus partly allowing the appeals of the assessee.

2. Disallowance of VAT by Invoking Section 43B:

In ITA No. 109/Coch/2019, the assessee contested the disallowance of Rs. 4,89,48,224/- by invoking section 43B, which mandates that certain expenses are deductible only on actual payment. The Assessing Officer disallowed the VAT payable amount as it was not remitted before the due date of filing the return.

The CIT(A) upheld the disallowance, noting the assessee's failure to provide evidence of compliance with section 43B. The assessee argued that the company was not engaged in any trading activity and thus, section 43B should not apply. However, this argument was not substantiated with evidence before the lower authorities.

The Tribunal, considering the assessee's request for an opportunity to present necessary evidence, remitted the issue back to the CIT(A). The CIT(A) was directed to allow the assessee to produce evidence showing compliance with section 43B. This ground of appeal was thus partly allowed for statistical purposes.

Conclusion:

The Tribunal's judgment resulted in the partial allowance of the assessee's appeals in ITA Nos. 107 & 108/Coch/2019, directing the CIT(A) to admit and consider the appeals on their merits. For ITA No. 109/Coch/2019, the issue was remitted back to the CIT(A) for fresh consideration with an opportunity for the assessee to present additional evidence. The order was pronounced in the open Court on May 20, 2019.

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