2025 (4) TMI 401 - AT - Income Tax

Condonation of delay filling appeal before ITAT - delay of 1607 days - applicant must satisfy the court that he was prevented by any sufficient cause from prosecuting his case - HELD THAT - Discretion to condone the delay has to be exercised judiciously based on facts and circumstances of each case. It is the fit case where the delay has to be condoned irrespective of the duration/period of the delay. In this case the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 1607 number of days. We also note that there is no allegation from the Revenue that the appeal was not filed by the assessee within the time deliberately. Therefore we are inclined to prefer substantial justice rather than technicality in deciding the issue. We also find that if we reject the application of the assessee for condoning the delay then it would amount to legalise injustice on technical ground whereas the Tribunal is capable of removing injustice and to do justice. Thus we condone the delay of 1607 days in filing the appeal and proceed to hear the appeal on merit for the adjudication. On merits of the case present appeal is against the penalty levied u/s. 271 1 c of the Act which is set-aside to the file of AO to pass fresh order. Rectification order with a delay of 1607 days also to be condoned due to insolvency and medical condition and stated facts appeals were filed late.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the substantial delay in filing appeals by the assessee should be condoned.
The sufficiency of the reasons provided by the assessee for the delay in filing appeals.
The applicability of precedents and legal principles in condoning delays in filing appeals.
Whether the penalty under section 271(1)(c) of the Income Tax Act, 1961 should be upheld or set aside.
The appropriateness of the ex-parte assessment orders under section 144 of the Income Tax Act, 1961.

ISSUE-WISE DETAILED ANALYSIS

Condonation of Delay

Relevant Legal Framework and Precedents: The judgment discusses the legal framework for condoning delays, referencing the Income Tax Act, 1961, and various precedents. Notably, the principles laid down by the Hon'ble Apex Court in Mst. Katiji (167 ITR 471) and other judgments were considered.
Court's Interpretation and Reasoning: The Tribunal emphasized that the length of the delay is not as critical as the sufficiency of the cause for the delay. The Tribunal referenced the judgment of the Madras High Court in CIT v. K.S.P. Shanmugavel Nadai and Ors, which highlighted the need to consider the reasonableness of the cause for delay rather than its length.
Key Evidence and Findings: The assessee provided affidavits, medical bills, and other documents to substantiate claims of ill health, financial stress, and legal issues, which contributed to the delay. The Tribunal found these reasons sufficient to condone the delay.
Application of Law to Facts: The Tribunal applied the principles of substantial justice over technical considerations, highlighting that the delay was not deliberate and was adequately explained by the assessee.
Treatment of Competing Arguments: The Revenue opposed the condonation, citing a Madras High Court judgment that refused to condone a significant delay. However, the Tribunal found the assessee's reasons compelling and noted the absence of any contrary evidence from the Revenue.
Conclusions: The Tribunal decided to condone the delay, emphasizing the importance of deciding cases on their merits rather than technical grounds.

Penalty under Section 271(1)(c) and Ex-parte Assessment Orders

Relevant Legal Framework and Precedents: The penalty under section 271(1)(c) pertains to concealment of income or furnishing inaccurate particulars. The Tribunal considered whether the penalty was justified given the circumstances of the case.
Court's Interpretation and Reasoning: The Tribunal noted that the ex-parte assessment orders were passed due to the assessee's non-cooperation, which was attributed to the assessee's financial and health issues.
Key Evidence and Findings: The Tribunal observed that the assessee had attempted to provide explanations and evidence for the credits in bank accounts, which were not adequately considered by the Assessing Officer.
Application of Law to Facts: The Tribunal found that the penalty could not be upheld without a thorough examination of the merits of the case, which had not occurred due to the ex-parte nature of the proceedings.
Treatment of Competing Arguments: The Tribunal acknowledged the Revenue's position but emphasized the need for a fair hearing and consideration of the assessee's explanations.
Conclusions: The Tribunal set aside the penalty and the ex-parte assessment orders, remanding the case for a fresh adjudication by the Assessing Officer, with directions for the assessee to cooperate fully.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The length of the delay becomes insignificant if there was sufficient cause for such delay which prevented the assessee in filing the appeal." This reflects the Tribunal's focus on the sufficiency of cause over the duration of the delay.
Core Principles Established: The Tribunal reinforced the principle that substantial justice should prevail over technicalities, particularly in cases where the delay is not deliberate and is adequately explained.
Final Determinations on Each Issue: The Tribunal condoned the delay in filing the appeals, set aside the penalty under section 271(1)(c), and remanded the ex-parte assessment orders for fresh adjudication, emphasizing the need for the assessee's cooperation in the proceedings.

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