2021 (12) TMI 559 - AT - Income Tax

Condonation of delay - delay of nine months on the part of the assessee in filing the appeal before the CIT(A) against the order passed by the AO u/s 143(1) - Short Term Capital Loss set off disallowed against the Short Term Capital Gain - HELD THAT - It is well settled that the term sufficient cause is to be construed liberally in order to advance the substantial cause of justice and not to shut the door on the assessee to avail the remedial measure provided under the statute. When the claim of the assessee for set of off for brought forward Short Term Capital Loss of the earlier years against the Short Term Capital Gain of the year under consideration was disallowed by the AO vide an order u/s 143(1), two remedies were available to the assessee i.e. to move the application u/s 154 for rectification before the AO or to file an appeal before the Ld. CIT(A). In the present case, the assessee availed the first remedy by filing an application u/s 154 before the AO and since no relief was forthcoming by availing the said remedy in as much as the application filed u/s 154 remained to be disposed of by the AO, the assessee after waiting for a reasonable time availed the second remedy which was available by filing the appeal before the Ld. CIT(A) - assessee cannot be said to have not acted diligently and is guilty of negligence. Delay of nine months in filing the appeal before the Ld. CIT(A) was a result of the fair and reasonable attempt made by the assessee to avail one remedy available to him by filing an application u/s 154 for rectification before the AO and the same, in my opinion, constituted a reasonable cause. We therefore, condone the delay of nine months on the part of the assessee in filing an appeal before the Ld. CIT(A) and setting aside the impugned order passed by the Ld. CIT(A), we remit the matter back to him for disposing of the appeal of the assessee afresh on merit in accordance with law after giving a proper and sufficient opportunity of being heard to the assessee.

Summary

Issues:
Appeal against order dismissing appeal as barred by limitation due to delay in filing.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) dismissing the appeal as barred by limitation. The assessee, an individual, had filed the return of income for the relevant year declaring a total income. The issue arose when the Deputy Commissioner of Income Tax did not allow the claim of the assessee for set off of brought forward Short Term Capital Loss against the Short Term Capital Gain earned during the year under consideration. This resulted in the determination of a higher total income chargeable to tax. The delay in filing the appeal before the Commissioner was explained by the assessee, stating that an application for rectification was filed, which remained pending, leading to the delay in filing the appeal.

The Commissioner rejected the application for condonation of delay, deeming the appeal as barred by limitation. The Tribunal, in its analysis, emphasized the importance of interpreting the term "sufficient cause" liberally to advance the cause of justice. It noted that the assessee had diligently pursued the available remedies by first filing an application for rectification before the Deputy Commissioner and subsequently filing the appeal before the Commissioner. The Tribunal found that the delay in filing the appeal was a result of the assessee's reasonable attempt to seek redressal through the available remedies.

Consequently, the Tribunal allowed the appeal for statistical purposes, condoning the delay of nine months in filing the appeal before the Commissioner. The matter was remitted back to the Commissioner for fresh disposal on merit, with proper opportunity for the assessee to be heard. The Tribunal's decision highlighted the importance of considering the circumstances and efforts made by the assessee in pursuing available remedies before deeming an appeal as barred by limitation.