ADITYA SAPRU ,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 9(3)(2), MUMBAI

ITA 1421/MUM/2025

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The case involves Aditya Sapru, the appellant, contesting an order from the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi, which pertained to an assessment order under section 143(3) of the Income-tax Act, 1961 for the Assessment Year 2013-14. The primary contention was regarding the restriction of the claim of deduction under section 54 of the Act. The appeal was significantly delayed, and the tribunal focused on the delay issue rather than the substantive merits of the case. The tribunal found the delay to be inordinate and unjustified, leading to the dismissal of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668720 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Other Referred Cases: Basawaraj and Ors vs The Special Land Acquisition Officer, Anshul Agarwal vs New Okhla Industrial Development Authority, N. Balakrishnan V. M. Krishnamurthy, State of West Bengal vs. Administrator, Howrah Municipality, Surinder Kumar Boveja Vs. CWT, Rankak and Ors. v Rewa Coalfields Ltd., Brijbandhu Nanda vs. Commissioner of Income-tax, Mewa Ram (Deceased by L. Rs) &Ors. v. State of Haryana, Jagdish Lal and Others V.s State of Haryana, M/s. Binami Cement Limited Vs. State of Rajasthan & Others, Oriental Aroma Chemical Industries Limited Vs. Gujarat Industrial Development Corporation
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ADITYA RAI
• Assessee Lawyers: SATISH MODY; DHIREN TALATI
• Keywords: Condonation of delay; Reasonable cause; Period of limitation; Capital Gains; Bonafide mistake; Time period of passing order
• Section: 143(3); 154; 54

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.1421/MUM/2025 (A.Y. 2013-14) Aditya Sapru 716, Ferns Paradise, 8th Street, Outer Ring Road, Doddanekundi, Bengaluru, Karnataka – 560 037 v/s. बनाम Assistant Commissioner of Income Tax, Circle – 9(3)(2), Room No. 540, Aayakar Bhavan, Maharishi Karve Road, New Marine Lines, Mumbai - 400020, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: APLPS9178P Appellant/अपीलार्थी .. Respondent/प्रतिवादी Appellant by : Shri Satish Mody & Shri Dhiren Talati,AR Respondent by : Shri Aditya Rai (Sr. DR) Date of Hearing 12.06.2025 Date of Pronouncement 24.06.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 03.10.2022 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 17.03.2016 for the Assessment Year [A.Y.] 2013-14. P a g e | 2 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai 2. In the grounds of appeal, it is claimed that the ld.CIT(A) erred in : 1. Restricting the claim of deduction u/s 54 of the Income Tax Act 1961 only to the extent of Rs. 18,72,360/- being construction cost incurred from the date of sale of property at Hiranandani Gardens Powai Mumbai i.e. from 26.11.2012 till the completion of the project in Jan 2013. 2. Not allowing the full claim of deduction u/s 54 of the Income Tax Act 1961 in accordance with law, of the entire construction cost of the New house of Rs. 2,58,13,721/- and the second house purchased on 27.11.2013 for Rs. 99,35,550/-being restricted to Rs. 2,01,14,431/- (Rs. 82,70,277/- + Rs. 1,18,44,154/-) so as to render the Long Term Capital Gains to Rs. NIL. 3. At the outset, it is intimated by the Registry that the appeal of the assessee is delayed by 790 days. In this regard a written application alongwith relevant affidavits have been submitted with a request to condone the delay. In the oral and written submissions made, the ld.AR has contented that the delay was unintentional and bonafide. It is stated that the assessee, a Management Consultant, was earlier settled in Mumbai and got relocated to Bengaluru. The assessment order for the year was passed by the AO at Mumbai u/s 143(3) of the Act by disallowing the entire claim of deduction u/s 54 of the Act. The work related to the attending of the appeal proceedings was handed over to Mumbai based C.A. M/s Kastury & Talati. The assessee was very well represented before the ld.CIT(A) for assessment and subsequent rectification proceedings u/s 154 of the Act and the learned CIT(A) passed both the orders on the same date being 03.10.2022. The P a g e | 3 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai quantum assessment appeal was partly allowed and the 154 matter appeal was fully allowed. After analysing both the orders of the ld. CIT(A), the CA advised the assessee that since the appeal w.r.t 154 matter was fully allowed, there was nothing to be done further and that since the appeal w.r.t 143(3) order was only partly allowed, an appeal be filed before the Hon’ble ITAT Mumbai. However, due to mistake of the staff, no appeal was filed against the quantum appeal order. The assessee accordingly was under the bonafide impression that appeal against the CIT(A) order w.r.t 143(3) had been filed before the ITAT. However, subsequently on being realised the mistake, appeal was filed though belatedly after 819 days on 28.02.2025. 3.1 It is further submitted that the delay in filing the appeal is purely a bonafide mistake and a genuine error from the side of the Chartered Accountant and his staff .There is no malafide intention either on the part of the CA or the assesse in not filing the appeal in time. It is also pleaded that no injustice will be caused to the revenue, if the delay in filing the appeal is condoned but grave injustice will be caused to the assessee as on merits he has a very good case. A lenient view of the matter under consideration may be taken and the delay in filing the appeal be condoned. Reliance is placed on a few decisions of the P a g e | 4 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai coordinate bench of ITAT, Mumbai claiming that on similar facts, delay was condoned. 4. The ld.DR representing the department has vehemently objected to the delay stating that there was no sufficient reason for the delay. Moreover, the appeal is inordinately delayed. 5. We consider it appropriate to adjudicate on the delay rather than merits of the case at the outset considering the enormity of the delay. We need to examine the issue in the light of facts and the circumstances of the case and also in view of the in terms of section 5 of the Limitation Act, whereby discretion is vested in the Court/Appellate Authority to admit an appeal or an application, after the expiry of the prescribed period of limitation, if the appellant shows ‘sufficient cause' for not preferring the application within the prescribed time. The expression 'sufficient cause’ commonly appears in the provisions of order 22 Rule 9 (2), CPC and Section 5 of the Limitation Act. The Court while allowing such application has to draw a distinction between delay and inordinate delay for want of bona fides of an inaction or negligence which would deprive a party of the protection of Section 5. “Sufficient cause” is a condition precedent for exercise of discretion by the Court for condoning the delay. Courts P a g e | 5 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai have time and again held that when mandatory provision is not complied with and that delay is not properly, satisfactorily and convincingly explained, the Court cannot condone the delay on sympathetic grounds alone. The law of Limitation is enshrined in the legal maxim “'Interest Reipublicae Ut Sit Finis Litium” (It is for the general welfare that a period be put to litigation). 5.1 To understand the scope of the term “sufficient cause” in matters of delay, reliance is placed on the decision of Hon'ble Supreme Court in the case of Basawaraj and Ors vs The Special Land Acquisition Officer, AIR 2014 SC 746 wherein the Hon'ble Supreme Court held that the sufficient cause does not include the negligent manner in which the applicant had acted or/ and there was a want of bona fide, on his/her part. If a party does not act diligently or remains inactive, it cannot qualify as sufficient ground allowing the court to exercise discretion in favour of such a party. Condonation of delay is not an automatic right but requires the person requesting it to provide a valid explanation for each day of delay and demonstrate a reasonable cause. “Sufficient Cause” cannot be liberally interpreted, if negligence, inaction or lack of bona fides is attributed to the party. In the case of P a g e | 6 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai Anshul Agarwal vs New Okhla Industrial Development Authority (2011) 14 SCC 578, the hon’ble Apex Court held that the reason provided for the delay must be something beyond the individual's control that prevented them from approaching the Court. 5.2 It is well established in law that the period of limitation has to be construed somewhat strictly as it has the effect of vesting for one and taking away right from the other. To condone the delay in a mechanical or a routine manner may amount to jeopardizing the legislative intent behind Section 5 of the Act. Where the parties chose to sleep over their rights for prolonged periods without any just cause, can hardly claim equity in justice particularly faced with the statutory provisions of Section 5 .In construing enactments which provide period of limitation for institution of proceedings, the purpose is to intimate people that after lapse of certain time from a certain event, a proceeding will not be entertained where a strict grammatical construction is normally the safe guide. 5.3 The hon’ble Apex Court in the case of N. Balakrishnan V. M. Krishnamurthy, AIR 1998 SC 3222 held as under:- \"11. Rules of limitation are meant to see that parties do not resort dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the P a g e | 7 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai damage caused by reason of legal injury. Law of limitation fixes a life span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for laundering the remedy may lead to unending uncertainty and consequential anarchy. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. 5.4 In the case of State of West Bengal vs. Administrator, Howrah Municipality, AIR 1972 SC 749, the Hon'ble Supreme Court held that:- ...........parties must act bonafidely, expeditiously and with due care. A casual or a negligent litigant who has acted with utter irresponsible attitude, cannot claim the condonation of delay in law when the right has accrued to the other side. The expression \"sufficient cause\" will always have relevancy to reasonableness. The actions which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant. It is neither expected nor can it be a normal conduct of a public servant or a litigant that they would keep the files unmoved, unprocessed for months together on their tables. 5.5 The Hon'ble Delhi High Court in its decision in the case Surinder Kumar Boveja Vs. CWT 287 ITR 52 has categorically held that delays cannot be routinely excused. In this decision, the Hon'ble High Court has further held as under: \"Where the delay is prolonged and the assessee is not able to show that the delay had occurred in spite of exercise of due attention and diligence, the assessee cannot complain, if the delay is not condoned.\" 5.6 In the decision rendered in the case of Rankak and Ors. v Rewa Coalfields Ltd. reported at AIR 1962 SC 361, the hon’ble Apex Court has held that the party has to show reason for delay on the last day of the limitation period and for each day thereafter. It was further held that condonation is not a matter of right and that the Courts have to exercise discretionary jurisdiction. P a g e | 8 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai 5.7 The issue of condonation of delay had come up before Hon'ble Orissa High Court in the case of Brijbandhu Nanda (44 ITR 688). The delay was not condoned by the Tribunal and on further appeal, the Hon'ble High Court had held that there is no justification for the delay as under: \"Even assuming that the questions referred are questions of law, I am of opinion that there was no error on the part of the Tribunal in not condoning the delay in Its discretion. In fact, as appears from the assessee's own petition for condonation of delay in I.T.A. Nos. 85, 86 and 87 of 1954-55 dated May 5, 1955, the assessee does not appear to have explained why he waited for 56 days after he received the order on February 5, 1954, as aforesaid. It further appears from a letter dated April 9, 1954, from the Assistant Registrar of the Appellate Tribunal, Bombay, that the appeals were received by him on April 7, 1954, that is to say, one day beyond the period of limitation. In view of sub-rule (2) of rule 7, which provides that a memorandum of appeal, sent by post, shall be deemed to have been presented to the Registrar or to the officer authorised by the Registrar, on the day on which it is received in the office of the Tribunal at Bombay, it is clear that the appeals were received by the Registrar out of time. We have discussed the general mandatory aspect of the provisions of the Act and the rules thereunder in our decision in Govinda Chowdhury V. Commissioner of Income-tax referred to above............Thus, even the delay of one day was not condoned by the Hon'ble Orissa High Court. 5.8 Moreover, in cases where the assessee has not come up clean and the reasons given are not based on facts, the delay cannot be condoned merely because of sympathy. It was so decided in the case of Mewa Ram (Deceased by L. Rs) &Ors. v. State of Haryana, AIR 1987 SC 45. The Hon'ble Supreme Court have time and again held that when mandatory provision is not complied with and that delay is not properly satisfactorily and convincingly explained, the court cannot condone the delay on sympathetic grounds alone. In the case of P a g e | 9 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai Jagdish Lal and Others V.s State of Haryana (1996) 6 SCC 267 wherein it was observed by the Hon'ble court that the appellant kept on sleeping for the period and suddenly decided to file the appeal. Again Hon'ble High Court of Rajasthan & Others, in the case of M/s. Binami Cement Limited Vs. State of Rajasthan & Others, (S.B. (sales Tax) Revision Petition No.556/2011) decided that delay in filing the appeal cannot be condoned for the reason that appellant failed to explain the specifically the delay for the particular period. It has been held that the courts, including the Supreme Court, no doubt have recommended liberal approach in considering applications for condonation of delay, yet the concepts such as liberal approach, justice oriented approach and substantial justice cannot be employed to jettison the substantial law of limitation especially when on facts the authority before which application under section 5 of Limitation Act is filed, finds no justification for the delay. 5.9 It has been held by the Courts that while considering the application under section 5 of the Limitation Act, the courts do not enjoy unlimited and unbridled discretionary powers and the discretion has to be exercised within reasonable bounds. It has been further held that the discretion under section 5 of the Limitation Act has to be systematically P a g e | 10 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai exercised duly informed by reasons and that whims or fancies, prejudices or predilections cannot and should not form the basis of exercising the discretionary powers to condone delay. In the case of Oriental Aroma Chemical Industries Limited Vs. Gujarat Industrial Development Corporation [(2010) 5 SCC 4591, the Hon'ble Supreme Court has held that even while a liberal approach is desirable in condoning the delay of short duration, stricter approach is required to be applied in cases of inordinate delay. 6. Thus, it is a settled law that the assessee must show that he was diligent in taking proper steps and the delay was caused notwithstanding his due diligence. It is for him to explain the reason for the delay and it is not the function of authorities to find the cause for delay. The Appellate Authority has to examine whether the sufficient cause has been shown by the appellant for condoning the delay and whether such cause is acceptable or not. Even though substantial justice should not be defeated by technicalities but that does not mean that any plea without any possible or acceptable basis and even without hearing, resemblance or rationality has to be accepted and delay has to be accepted and condoned which shall be against the very spirit of law. The time P a g e | 11 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai prescribed for filing the appeal will become meaningless in such an event. 6.1 Perusal of the facts shows that the assessee in the present case appears to be negligent and has not taken appropriate steps to peruse the remedy till 819 days and thus did not take necessary action in filing the appeal within the prescribed time. Our aforesaid view is that in absence of a sufficient/reasonable cause leading to the delay in filing of an appeal, the same does not merit to be condoned. 6.2 Further from the facts emanating from the case, it is coming out clearly that the overall approach of the assessee, through out has been of prolonging, stretching the matter just to keep the appeal proceedings pending. Thus, on these given facts, we are of the considered view that the delay in filing of the appeal cannot be condoned in absence of any justifiable reason. Though it is well accepted that no appellant derives any benefit by filing a delayed appeal, however the same should not be used as a tool, or an excuse to avoid and prolong and thus delay further consequent proceedings from the Department. Accordingly, in this case, the assessee has not been able to explain the reason for delay for the entire period and has merely taken a general plea based on general reasons. P a g e | 12 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai 6.3 The delay is undoubtedly substantial although the assessee has claimed that it was mainly on account of wrong advise of his CA who did not give correct advise at the relevant point of time. As a result, the assessee who was banking upon the CA remained unaware of filing of appeal. The assessee has also submitted an affidavit of the concerned CA who was also presented before us during appeal. Though we do not find any reasons to conclude that the delay was malafide, the fact remains that the assessee being an individual taxpayer should have been more conscious of his statutory obligations knowing fully well the implication thereof. It is further noticed from the assessment order that the assessee himself attended assessment proceedings. Therefore, certain element of negligence is palpable on his part and putting all the blame on the tax consultant would not absolve him of his own responsibility in this regard. In the case under consideration, it is nowhere evident that whether the assessee made any effort or attempt to contact his counsel engaged in the tax proceedings after passing of impugned order appeal order passed by the ld.CIT(A). 6.4 Even in respect of the claim of deduction u/s 54 of the Act, it appears from the record that the stand of the assessee attitude is dilatory and inconsistent which is evident from the fact that the assessee P a g e | 13 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai made only part compliance before the AO. Before the ld.CIT(A), the assessee made a fresh claim of deduction even in respect of construction cost incurred before the date of sale of the impugned property. Before us, the assessee took a fresh ground claiming that it he is eligible even for the purchase of a new property in Bangalore, a claim which was hitherto not raised before the lower authorities. Seen in the light of these above stated facts and legal position emerging from the catena of judgement of hon’ble Apex court(supra), we conclude there was no ‘sufficient cause’ for this unreasonable admitted delay of 819 days in filing appeal before the Bench which cannot be condoned. Accordingly, the condonation application being bereft of any ‘sufficient cause’ is hereby rejected. 7. In the result, the appeal is dismissed on account of delay. Since the appeal stands dismissed there is need to adjudicate on the merits therein. Order pronounced in the open court on 24.06.2025. Sd/- Sd/- SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) P a g e | 14 ITA No. 1421/Mum/2025 A.Y. 2013-14 Aditya Sapru, Mumbai Place: म ुंबई/Mumbai ददनाुंक /Date 24.06.2025 Lubhna Shaikh / Steno आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयिकरण/ ITAT, Bench, Mumbai. "