2021 (11) TMI 213 - AT - Income Tax

Condonation of delay - inordinate delay of 508 days - sufficient cause - whether 508 days was excessive or inordinate? - HELD THAT - 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 of 508 days has to be condoned. Whether 508 days was excessive or inordinate ? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. The Madras High Court in the case of Sreenivas Charitable Trust 2005 (10) TMI 36 - MADRAS HIGH COURT 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 case the delay is not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal is empowered and capable of removing injustice, in our opinion, the delay of 508 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merits. In view of the above, we condone the delay of 508 days in filing the appeal and admit the appeal for adjudication. Disallowance being PF ESI contribution of employees paid beyond the due date u/s. 36(1)(va) r.w.s. 43B - HELD THAT - As contribution is deposited within the due date of filing return u/s. 139(1) - As relying on M/S JANA URBAN SERVICES FOR TRANSFORMATION PVT. LTD. VERSUS THE DY. COMMISSIONER OF INCOME TAX, CPC, BENGALURU. 2021 (10) TMI 842 - ITAT BANGALORE we allow this ground taken by the assessee and there cannot be any disallowance by invoking the provisions of section 36(1)(va) r.w.s. 43B - Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of Delay
2. Disallowance of PF and ESI Contribution
3. Levy of Interest under Sections 234A, 234B, and 234C

Issue-wise Detailed Analysis:

1. Condonation of Delay:
The primary issue was whether the delay of 508 days in filing the appeal before the CIT(A) should be condoned. The assessee attributed the delay to the Accountant's failure to file the appeal and subsequent departure from the organization during the COVID-19 pandemic. The Tribunal emphasized that the expression "sufficient cause" should be interpreted to advance substantial justice, citing the Madras High Court's decision in Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357). The Tribunal also referenced the Supreme Court's principles in Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471), which favor substantial justice over technicalities. Consequently, the Tribunal decided to condone the delay, emphasizing that rejecting the application would result in legalizing an injustice on technical grounds.

2. Disallowance of PF and ESI Contribution:
On the merits, the issue concerned the disallowance of ?11,78,481 for delayed deposit of employees' PF and ESI contributions. The assessee argued that the contributions were made before the due date for filing the return under Section 139(1) of the Income-tax Act, 1961. The Tribunal referred to several judgments, including Essae Teraoka Pvt Ltd v. DCIT (366 ITR 408) and CIT v. Sabari Enterprises (298 ITR 141), which held that contributions made before the due date for filing the return are allowable. The Tribunal concluded that the disallowance was not justified since the contributions were made within the permissible time frame, thus allowing the assessee's appeal on this ground.

3. Levy of Interest under Sections 234A, 234B, and 234C:
The assessee contested the levy of interest under Sections 234A, 234B, and 234C. Specifically, the assessee argued that the interest under Section 234A was not leviable as the return was filed within the extended due date of 31 October 2018. The Tribunal did not provide a detailed analysis of this issue in the judgment, as the primary focus was on the condonation of delay and the disallowance of PF and ESI contributions. However, given the favorable decision on the primary issues, it can be inferred that the Tribunal would likely address the interest levies in line with the established legal principles and the facts of the case.

Conclusion:
The Tribunal allowed the appeal by the assessee, condoning the delay of 508 days and ruling in favor of the assessee on the disallowance of PF and ESI contributions. The Tribunal emphasized the importance of substantial justice over technicalities and cited various judicial precedents to support its decision.