2022 (4) TMI 843 - AT - Income Tax

Condonation of delay - delay of 41 months in filing appeal before the CIT(A) - according to the assessee, it could not realize the effect and consequence of the order passed under section 143(1) - HELD THAT - On a perusal of order of Ld.CIT (A) we find that the Ld.CIT (A) dismissed the appeal of the assessee, as un-admitted being not satisfied with the reasons adduced by the assessee for delay of 41 months in filing the appeal. The assessee explained that It is submitted that the delay occurred since the effect of consequence of the intimation under sub section 1 of section 143 was not realized immediately, that is to say that it was not clear to the assessee as to what was the nature of the disallowance resulting to a higher demand and the assessed income getting higher than the returned income. Upon hearing the parties, we find that this is a harsh decision as there is no supposition that everybody is the custodian of law, though ignorance of law is not an excuse for any wrong action. But in the instant case, according to the assessee, it could not realize the effect and consequence of the order passed under section 143(1). This, according to us, is a convincing reason. Therefore, without going into the merits of the case, we deem it fit to remit the matter to the file of the Ld.CIT (A) for a fresh consideration. The Ld.CIT (A) is directed to condone the delay of 41 months, admit the appeal and then, adjudicate the matter on merits after providing reasonable opportunity to the assessee. Appeal filed by the assessee is treated as allowed, for statistical purpose.

Summary

Issues:
1. Delay in filing the appeal condonation.
2. Grounds of appeal regarding disallowance under section 11 and 12.

Issue 1: Delay in filing the appeal condonation:
The appeal was filed by the assessee against the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2013-14, with a delay of 216 days. The Appellate Tribunal, ITAT Mumbai, referred to the directions issued by the Hon'ble Supreme Court due to the COVID-19 pandemic, where the period from 15.03.2020 till 14.03.2021 was excluded for computing the limitation period. Following these directions, the Tribunal condoned the delay in filing the appeal and proceeded to adjudicate the matter.

The primary issue raised by the assessee was the condonation of the delay in filing the appeal. The Tribunal considered the explanation provided by the assessee, stating that the delay occurred due to not realizing the consequences of the intimation under section 143(1) of the Income Tax Act immediately. The Tribunal acknowledged that the processing by the CPC, Bangalore is a routine exercise, and the assessee's entitlement under sections 11 and 12 cannot be decided through section 143(1). Emphasizing the liberal construction of the term "sufficient cause" for condonation of delay, the Tribunal referred to legal principles emphasizing substantial justice and the need to consider the conduct and attitude of the party seeking condonation.

Citing relevant legal precedents, including the Supreme Court judgments in N. Balakrishnan v. M. Krishnamurthy and B. Madhuri Goud v. B. Damodar Reddy, the Tribunal highlighted the principles guiding the consideration of applications for condonation of delay. The Tribunal concluded that the delay in filing the appeal should be condoned, remitting the matter back to the Commissioner of Income-tax (Appeals) for fresh consideration. The Tribunal directed the Commissioner to admit the appeal, condone the delay of 41 months, and adjudicate the matter on merits after providing a reasonable opportunity to the assessee.

Issue 2: Grounds of appeal regarding disallowance under section 11 and 12:
The assessee raised grounds of appeal related to the disallowance under section 11 and 12. The Tribunal noted that Ground No. 1, concerning the condonation of the delay in filing the appeal, was of prime importance in the present matter. Ground Nos. 2 and 3, addressing the merits of the case regarding the assessee's claim under sections 11 and 12, were to be considered depending on the outcome of Ground No. 1.

The Tribunal, without delving into the merits of the case regarding the disallowance under sections 11 and 12, remitted the matter back to the Commissioner of Income-tax (Appeals) for fresh consideration. The Tribunal directed the Commissioner to provide a reasonable opportunity to the assessee to present their case and adjudicate the matter on merits. The appeal filed by the assessee was treated as allowed for statistical purposes.

This comprehensive analysis of the legal judgment by the Appellate Tribunal ITAT Mumbai covers the issues of delay in filing the appeal condonation and the grounds of appeal related to the disallowance under sections 11 and 12 for the assessment year 2013-14.