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2023 (2) TMI 1066 - AT - Income TaxCondonation of delay in filing the appeal before the CIT(A) - delay of 1950 days in filing the appeal - outbreak of Covid-19 pandemic - right to file appeal within the period of limitation provided under section 249(2) - processing of return of income u/s 143(1) whereby the claim of exemption under section 11 and 12 was denied and the entire gross receipts of the assessee was assessed as total income of the assessee - AR has contended that initially the assessee was advised to file the rectification petition under section 154 and time limit for filing the petition was upto March, 2020 however, in the meantime, there was a Covid-19 pandemic outbreak and a complete lockdown from 22nd March, 2020 which led to the delay in filing the application before CIT(A) - whether the explanation and reasons for delay was bonafide or was merely a device to cover an ulterior purpose such as laches on the part of litigant or an attempt to some limitation in underhand way? - HELD THAT - There is no dispute that the order under section 143(1) passed by CPC is highly unreasonable and very harsh for the assessee as the total gross receipts of the assessee was assessed to tax being a total income of the assessee without allowing the deduction of various expenditures which were part of the return of income. Thus, there is an apparent mistake from the order of CPC passed under section 143(1) however, the illegality or a mistake in the order of tax authorities itself cannot be a ground to be considered as reasonable cause for delay of 1950 days in filing the appeal. Assessee has not brought on record anything or any material to show that the assessee has finally filed a rectification petition under section 154 or if such petition is filed, the details of filing of such petition and the outcome of the said petition. In the absence of any detail or facts regarding filing of the petition under section 154 of the Income Tax Act we are unable to accept this argument and explanation of the assessee. There is no quarrel on the point if the assessee has chosen a wrong remedy then the time consumed in pursuing the wrong or improper remedy has to be excluded for the purpose of limitation in seeking the proper remedy by way of filing the appeal. But in the absence of filing any petition under section 154, no benefit can be allowed to the assessee merely because the assessee was thinking so. It is always a question whether the explanation and reasons for delay was bonafide or was merely a device to cover an ulterior purpose such as laches on the part of litigant or an attempt to some limitation in underhand way. In the case in hand, the assessee is completely silent about the cause of delay from 27th April, 2017 till March, 2020 when there was an outbreak of Covid-19 pandemic. In the absence of any explanation by the assessee for non-filing of the appeal before the CIT(A) or any petition under section 154 of the Income Tax Act the assessee was not able to explain the reasonable cause for inordinate delay in filing the appeal before the CIT(A). The CIT(A) has passed a speaking order and came to the conclusion that the assessee has failed to explain the reasonable cause for the delay of 1950 days in filing the appeal. The fact remains same before us as the assessee is not able to explain a reasonable cause for delay at least from April, 2017 to March, 2020 for not taking any steps for filing the appeal before the CIT(A). - Decide against assessee.
Issues Involved:
1. Condonation of delay in filing the appeal before the CIT(A). 2. Legality of the computation of income by CPC under section 143(1). Issue-Wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal Before the CIT(A): The primary issue revolves around whether the assessee's delay of 1950 days in filing the appeal before the CIT(A) can be condoned. The assessee argued that the delay was due to the COVID-19 pandemic and the subsequent lockdown, which disrupted normal operations. The assessee also cited the Hon'ble Supreme Court's suo moto cognizance for the extension of limitation periods due to the pandemic. However, the CIT(A) rejected this explanation, noting that the delay was not justifiable as the pandemic began three years after the original deadline for filing the appeal had passed. The CIT(A) emphasized that the assessee failed to exercise its right to file an appeal within the statutory period and that the delay was a result of deliberate inaction. The CIT(A) referred to several judicial precedents, highlighting that the term "sufficient cause" should be interpreted reasonably and that inordinate delays due to negligence cannot be condoned. The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee did not provide a reasonable explanation for the delay from April 2017 to March 2020. The Tribunal noted that although the Supreme Court extended the limitation period due to the pandemic, this extension could not apply retroactively to cover the period of inaction before the pandemic. The Tribunal concluded that the CIT(A) had correctly applied the law and judicial principles in rejecting the condonation of delay. 2. Legality of the Computation of Income by CPC under Section 143(1): The assessee also challenged the computation of income by CPC, which assessed the entire gross receipts as taxable income without allowing any expenditure deductions. The assessee argued that this computation was illegal and arbitrary, as it did not consider the necessary expenditures incurred to achieve the objectives of the trust. The Tribunal acknowledged that the CPC's order under section 143(1) was harsh and unreasonable, as it did not allow for the deduction of legitimate expenditures. However, the Tribunal clarified that the illegality or mistake in the CPC's order could not serve as a reasonable cause for the delay in filing the appeal. The Tribunal reiterated that the assessee should have taken timely steps to address the issue, either by filing a rectification petition under section 154 or by appealing within the statutory period. Since the CIT(A) dismissed the appeal on the grounds of limitation and did not address the merits of the assessment, the Tribunal did not delve into the substantive issues of the computation of income. The Tribunal's decision focused solely on the procedural aspect of the delay in filing the appeal. Conclusion: The Tribunal dismissed the appeal of the assessee, upholding the CIT(A)'s decision to reject the condonation of delay. The Tribunal emphasized the importance of adhering to statutory timelines and found that the assessee failed to provide a reasonable explanation for the inordinate delay. Consequently, the other grounds raised by the assessee regarding the computation of income became infructuous. The order was pronounced on 24.02.2023 at Allahabad, U.P.
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