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2020 (12) TMI 969 - AT - Income TaxCondonation of delay - delay in filing 738 days before the CIT(A) - sufficient cause of delay - HELD THAT - The assessee did not file an appeal before the first appellate authority within the time limit prescribed, on the bonafide belief that the demand that has arisen on account of disallowance of claim u/s. 80P would not be enforced and shall be kept in abeyance until the assessment order was rectified by fixing the final liability based on the Hon'ble Supreme Court judgment. When recovery proceedings were initially initiated on 01.02.2017, the assessee approached the Assessing Officer and orally it was informed to the assessee that the demand would not be enforced and the notice was issued in usual course along with other cases. As submitted by the assessee, later in December 2018, when there was threat of attachment of bank accounts and direction to pay atleast 20% of the total demand, the assessee was forced to file appeal before the CIT(A) on 30.01.2019. I am of the view that there was bonafide reasons on the part of the assessee for not filing the appeal within the prescribed time limit before the CIT(A). The delay in filing the appeal before the CIT(A) was solely on account of the clear statement by the Assessing Officer that the demand raised in the assessment order would be kept in abeyance till the final decision is taken by the Hon'ble Apex Court. The assessee was under bonafide belief that the A.O. would pass an order u/s. 154 of the I.T. Act confirming the demand citing the Hon'ble Apex Court judgment before starting recovery action. Therefore, there is 'sufficient cause' for filing appeal belatedly before the CIT(A) and the delay cannot be attributed to any latches on the part of the assessee.
Issues Involved:
1. Denial of deduction under Section 80P of the Income Tax Act. 2. Delay in filing the appeal before the CIT(A). 3. Initiation of recovery proceedings despite the demand being kept in abeyance. 4. Levy of interest under Sections 234A and 234B of the IT Act. Detailed Analysis: 1. Denial of Deduction under Section 80P: The assessee, a primary cooperative society, filed a return for the assessment year 2014-2015, declaring 'NIL' income after claiming a deduction under Section 80P amounting to ?33,98,863. The Assessing Officer (A.O.) disallowed this deduction, determining the taxable income at ?33,98,863. The A.O. noted that the jurisdictional High Court of Karnataka had previously decided in favor of the assessee on an identical issue, but an appeal was pending before the Apex Court. Consequently, the A.O. kept the demand raised in abeyance. 2. Delay in Filing the Appeal Before CIT(A): The assessee did not file an appeal within the prescribed time limit due to a bona fide belief that the demand would not be enforced until the Apex Court's decision. When recovery proceedings were threatened, the assessee filed an appeal before the CIT(A) with a delay of 738 days. The CIT(A) dismissed the appeal in limine, refusing to condone the delay. 3. Initiation of Recovery Proceedings: Despite the A.O.'s statement that the demand would be kept in abeyance, recovery proceedings were initiated, leading the assessee to file an appeal. The Tribunal noted that the assessee had a bona fide reason for the delay, based on the A.O.'s assurance that the demand would be kept in abeyance until the final decision by the Apex Court. 4. Levy of Interest under Sections 234A and 234B: The assessee contested the levy of interest amounting to ?3,66,520 under Sections 234A and 234B of the IT Act. The Tribunal did not specifically address this issue in the detailed analysis but focused on the delay in filing the appeal and the denial of the deduction under Section 80P. Tribunal's Findings: The Tribunal condoned the delay in filing the appeal, citing bona fide reasons and referring to judicial precedents that advocate for a liberal approach in such cases. The Tribunal directed the CIT(A) to consider the issue on merits, emphasizing the principles laid down by the Hon'ble Supreme Court in various cases, which favor substantial justice over technical considerations. Conclusion: The appeal filed by the assessee was allowed for statistical purposes, with the Tribunal directing the CIT(A) to adjudicate the issues on merits. The Tribunal's decision was influenced by the bona fide belief of the assessee, the A.O.'s assurance regarding the abeyance of the demand, and judicial precedents advocating for the condonation of delays to advance substantial justice. The order was pronounced on November 20, 2020.
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