M/s. Raksha Realtors Private Limited, Bangalore V. DCIT, Central Circle-2(3), Bangalore

ITA 116/BANG/2023

AI Insights

M/s. Raksha Realtors Private Limited appealed against the order of the NFAC, which had dismissed their appeal due to alleged delay in filing. The original assessment for the year 2013-14 included a partial disallowance of deduction under section 57 of the Income Tax Act, leading to an addition of Rs. 14,80,939 to the assessee's income. The NFAC dismissed the appeal on procedural grounds, noting a delay in filing beyond the statutory period. However, the Tribunal noted that the assessee had filed a manual appeal within the due date and subsequently e-filed the appeal, which was not considered by the NFAC. The Tribunal referenced similar cases where procedural technicalities did not override substantive justice and remitted the case back to the NFAC for a decision on merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129242 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 26-03-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 22-02-2023
• Other Referred Cases: Vedabhai alias Vaijayantabai Baburao Patil vs. Shantaram Baburao Patil, Luxury Goods Retail Pvt. Ltd. vs. ITA No.3508/Mum/2016, Gemini Iron and Steel Pvt. Ltd. vs. ITA No.377/Chen/2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Reasonable cause; Time period of passing order; Set aside
• Section: 139; 143(3); 142(1); 250; 251; 143(2); 139(1); 72

Judgement Text

ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” “B’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA No.116/Bang/2023 Assessment Year: 2013-14 M/s. Raksha Realtors Pvt. Ltd. Divyasree Chambers, Wing A, O Shaugnessy Road Langford Town Bangalore 560 025 PAN NO : AACCR6184R Vs. CIT (A) NFAC, Delhi APPELLANT RESPONDENT Appellant by : Shri Avinash Mallya, A.R. Respondent by : Shri Ganesh R. Ghale, D.R. Date of Hearing : 27.03.2023 Date of Pronouncement : 18.04.2023 O R D E R This appeal by the assessee is directed against order of the NFAC, Delhi dated 30.12.2022 for the assessment year 2013-14. 2. The assessee has raised following grounds of appeal: 1. The order of the Commissioner of Income Tax (Appeals), NFAC passed u/s 250 of the Act dated 30/12/2022, in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case. 2. The learned CIT(A) was not justified in confirming the partial disallowance of deduction u/s 57 of the Act, in turn adding an amount of Rs.14,80,939/- to the total income of the assessee in the interest of principles of natural justice. ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore Page 2 of 8 3. The learned Commissioner of Income Tax (Appeals), NFAC failed to appreciate that the manual appeal was preferred within the stipulated time limit and further e-filing of the appeal also being done within the time prescribed and thus the order dismissing the appeal on the grounds of purported delay in filing the appeal, was ball in law, under the facts and circumstance of the appellant's case. 4. The learned Commissioner of Income Tax (Appeals), NFAC failed to take cognizance to the appeal which was manually filed and instituted before the aforementioned authority, which was well within the statutory limitation period prescribed u/s 249(2) of the Act, on the facts and circumstances of the appellant's case. 5. The learned Commissioner of Income Tax (Appeals), NFAC failed to appreciate that the appeal filed by the appellant on 13.06.2016 was in mere compliance with the new e-filing rules brought about by the Income Tax authority vide IT (Third Amdt.) Rules,2016. 6. The learned Commissioner of Income Tax (Appeals), NFAC, grossly erred by not appreciating the adjournment request filed by the appellant for the said appeal and initiated the passing an order u/s 250 of the act, which was not only perverse to the facts and circumstances but also violative of the principles of natural justice as the said order was passed within the time frame of the adjournment sought for by the appellant. 7 The learned Commissioner of Income Tax (Appeals), NFAC, failed to issue a show cause notice or any prior proposition notice to the appellant regarding the dismissal of the said appeal on the grounds mentioned in the order, which precluded the appellant from clarifying the contention raised by the learned Commissioner, thus resulting in causing hardships to the appellant in the nature of additional litigation cost and burden. 8. For the above and other grounds that may be urged during the hearing of the appeal, the Appellant prays that the appeal be allowed in the interest of equity and justice. 3. The facts of the case are that the assessee is a private limited company registered under the Indian Company's Act,1956 and is engaged in the business of property development. The assessee had duly filed it's return of income u/s 139(1) of the Income-tax Act,1961 ['the Act' for short] for the impugned assessment year 2013-14 on 29.09.2013 declaring a total income of Nil after ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore Page 3 of 8 setting off the loss from income of other sources against the income from business. The case of the assessee was subsequently selected for scrutiny under CASS and a notice u/s 143(2) of the Act intimating the same was served on 23.09.2014. Subsequently, various particulars were called for by the learned assessing officer u/s 142(1) of the Act for which responses were accordingly furnished by the assessee. The Assessing officer passed the assessment order u/s 143(3) of the Act on 29.01.2016 making additions of Rs. 14,80,939/- on account of partial disallowance of deduction claimed u/s 57 of the Act and added this amount to the total income of the assessee bringing this amount to tax. The date of service of the assessment order and the demand notice on the assessee was effectuated on 31.03.2016. Furthermore, the assessee instituted an appeal before the Commissioner of Income Tax (Appeals) on 28.04.2016 within the confines of the limitation period provided u/s 249(2) of the Act with a copy of the physical application of Form 35 filed before the Commissioner of Income Tax (Appeals) on 28.04.2016. Pursuant to the filing of the aforementioned appeal manually, the assessee undertook to e-file the same aforesaid appeal before the Commissioner of Income Tax (Appeals), NFAC in compliance with the new mandate brought about by the Income Tax Authority vide IT (Third Amdt.) Rules,2016 to the provisions enshrined under Rule 45 contained in Part X of the Income Tax Act Rules, 1962. The assessee following this new mandate e-filed the appeal on the Income Tax Portal on 13.06.2016 and by virtue observed compliance with the New Mandate brought about by the income tax authorities. The appellate proceeding was started with issuance of ITNS 51. Subsequently, the appeal was migrated to the National Faceless Appeals Centre in terms of Notification No. 76 of 2020 in S.O. 3296(E), dated 25.09.2020. In response to the notice of hearing issued on 28-01-2019, 05-01-2021, 15-03-2022 and 16-12-2022 ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore Page 4 of 8 under section 250 of the Act, written submissions were made by the assessee on ITBA Portal on 18-02-2021. 3.1 The NFAC observed that there is a delay in filing of appeal. The appeal is to be filed within 30 days of the date of the service of the order. During the appellate proceedings, NFAC observed from the Form No. 35 that the assessee filed the appeal on 13.06.2016 whereas the date of order u/s 143(3) on 29.01.2016 and as per Form No. 35 date of service for order was 31.03.2016. As per the dates given in Form 35, he observed that the appeal is filed beyond the prescribed due date by 30 days. There is a lapse on the part of the assessee regarding filing of the appeal within stipulated time. This shows that there is a delay of filing of the appeal in terms of section 249 (2) of the Act. In such a situation section 249(2) of the Act envisages that there should be sufficient cause for not prosecuting the appeal within the period prescribed. The NFAC further observed that there is a substantial delay in the filing of appeal for which no reason was given by the assessee. The assessee has failed to explain the delay in filing appeal. The NFAC observed that a conscious and considered decision was taken by the assessee at the relevant point of time for not filing of appeal against the impugned order. It is well-settled law that a distinction must be made between a case where the delay is inordinate and where the delay is of few days only. The inordinate delay in the instant case clearly demonstrated that these appeals were not prosecuted with due care. 3.2 The NFAC observed that on the issue of a routine delay and an inordinate delay, the Hon'ble Supreme Court in the case of Vedabhai alias Vaijayantabai Baburao Patil vs. Shantaram BaburaoPatil [2002] reported in 122 Taxman 114, has made a distinction between delays that are trivial and cases where ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore Page 5 of 8 inordinately large delays had occurred. The Hon'ble Supreme Court further held that the cases of trivial delays have to be liberally considered, however the cases of inordinate delays have to be approached cautiously. The relevant portion of the order of the Hon'ble Supreme Court is reproduced as under: - • "In exercising discretion, under section 5 of the Limitation Act the courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case, the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the later case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard." 3.3 In view of the above detailed discussion, the NFAC held that the assessee has no "sufficient cause" in terms of section 249(3) of the Act, for not presenting, the appeal within the prescribed period. It is well-settled law that an assessee is not entitled to the condonation as a matter of right. For an assessee to succeed, the existence of sufficient cause is sine qua non and a condition precedent. It is manifestly evident that this ingredient is woefully lacking in this belated appeal filed by the assessee. Thus, the delay in filing the appeal by the assessee, was not condoned by the NFAC. Accordingly, the appeal was dismissed without any discussion on merits or on any other aspect by the NFAC. Since the appeal of the assessee before NFAC failed due to the delay in filing of appeal, the appeal of the assessee was treated as dismissed u/s. 250r r.w.s. 251 of the Act without considering the merits of the appeal filed by the NFAC. Against this, the assessee is in appeal before us. 4. I heard the rival submissions and perused the materials available on record. In my opinion, the mistake committed by assessee by not filing the appeal before NFAC is a procedural irregularity as the assessee has manually filed the appeal before NFAC. For this purpose, I take support of order of the Tribunal in I ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore Page 6 of 8 the case of Luxury Goods Retail Pvt. Ltd. In ITA No.3508/Mum/2016 dated 5.5.2017, wherein held as under: “7. We have head both the parties, perused the orders of the authorities below and the decisions relied on. The undisputed facts in this case are that the Assessee filed return of income manually on 30.11.2011 that is within the due date specified u/s 139(1) of the Act. On the very same day, the Assessee also intimated the Assessing Officer as to why it could not file the return electronically and the return filed manually be taken on record. In response to the notice u/s 142, the Assessee filed return on 11.10.2012. The Assessing Officer acting upon this electronic return denied the set off of carry forward of losses to the Assessee on the ground that the Assessee did not file the return of income electronically within the due date specified under the provisions of Section 139(1) of the Act. The Ld. CIT (Appeals) agreed with the view of the Assessing Officer. Now the question before us to be addressed is as to whether original return filed manually can be treated as a valid return or not. No doubt, the requirement is that the Assessees should file returns electronically within the due date specified u/s 139(1) in order to be eligible for set off and carry forward losses. The mandatory requirement of law for set off and carry forward of losses is that the return should be filed within the due date under the provisions of Section 139(1) of the Act. Here the Assessee filed return of income under 139(1) manually instead of filing the return electronically. The reasons as to why the Assessee could not file the return electronically was also given. In such circumstances, we are of the considered view that simply because the Assessee could not file the return electronically within the provisions of section 139(1), the benefit of set off and carry forward of losses cannot be denied for the reason that the Assessee did file return of income manually within the due date specified u/s 139(1) of the Act. The claim for set off and carry forward of losses cannot be denied on a too technical reasons on the ground that the electronic return filed by the Assessee is belated when the Assessee filed return of income manually within the due date specified u/s 139(1) of the Act. 8. The provisions of section 292B also comes to the rescue of the Assessee in as much as the return filed cannot be invalid merely by the reason of any mistake, defect or omission in such return of income when in substance and effect if such return is in conformity with or according to the intent and purpose of this Act. The return filed manually may at best be said to be a defective return and not an invalid return. The third member of the Mumbai Bench held that the return filed separately by the four cells of the Assessee declaring total loss claimed by the Assessee did comply in substance and in effect within the intent and purpose of the Act and in view of the provisions of Section 292B and the defect is not material in the light of the provisions of Section 292B. While holding so, it was observed as under : “15. The issue for our consideration is whether the assessee is entitled to carry forward the loss incurred by it in the business of trading in shares by the four cells/units established by the assessee in India. ln this connection it would be relevant to refer the provisions of section 80 which is non obstante provision. According to this section, no loss which has not been determined in pursuance of a return filed in accordance with the provisions ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore Page 7 of 8 of sub-section (3) of section 139 shall be carried forward and set off under sub-section(l)of section 72 or subsection (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub- section (3) of section 74A. This clearly shows that the loss determined by the Assessing Officer cannot be carried forward and set off under the above provisions unless the return has been filed in accordance with the provisions of sub-section (3) of Section 139.” 9. Therefore, in view of what is discussed above and keeping in view the said decision, we hold that the return filed by the Assessee manually within the due date specified u/s 139(1) is a valid return. Since we are holding that the return filed manually is a valid return, the Assessing Officer shall act upon this return and recompute the income/losses of the Assessee in accordance with law after giving adequate opportunity of being heard to the Assessee. 10. In the result, the appeal of the Assessee is allowed.” 4.1 Further, in the case of Gemini Iron and Steel Pvt. Ltd. In ITA No.377/Chen/2020 dated 2.11.2021 for the assessment year 2013- 14, the Tribunal has held as under: “4. Now before Tribunal, the ld. counsel stated that the assessee is not aware of any notification issued by CBDT i.e., notification No.20/2016 dated 26.05.2016, that the appeal is to be filed through e-filing. The assessee filed appeal through e- filing on 15.12.2016 and cited the reason for delay in filing through e-filing. Hence, ld. counsel requested that the appeal be admitted before CIT(A) and the same may be directed to adjudicate on merits. When these facts were confronted to ld. senior DR, she stated that the appeal can be admitted and remanded back to the file of the CIT(A) for adjudication on merits. 5. After hearing both the sides and going through the facts, I direct the CIT(A) to admit the appeal because delay was in e-filing and not on manual filing. Hence, it cannot be considered delay before CIT(A) and even if, it is delay, there is reasonable cause and hence, I condone the delay. I direct the CIT(A) to decide the appeal which is filed by the assessee through e-filing. Therefore, appeal of the assessee is set aside and matter remanded back to the file of the CIT(A) for adjudication on merits. 6. In the result, the appeal of the assessee is allowed for statistical purpose.” 4.2 In view of the above orders of the Tribunal, I remit the entire issue to the file of NFAC to decide it afresh on the basis of manual appeal filed before him. Ordered accordingly. ITA No.116/Bang/2023 M/s. Raksha Realtors Private Limited, Bangalore Page 8 of 8 5. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 18 th Apr, 2023 Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 18 th Apr, 2023. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(Judicial) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.