M/s. Diaspark Infotech Pvt. Ltd., Indore V. The NFAC ,New Delhi, Delhi

ITA 271/Ind/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5774 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 23-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Period of limitation; Reasonable cause
• Section: 154; 43B; 143(1); 250; 13

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ - इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE - BENCH [Conducted through Virtual Court] [Ahmedabad-Indore] BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील सं./ ITA No.271/Ind/2021 नधा रण वष /Asstt. Year: 2018-19 Diaspark Infotech P. Ltd. Labh-Ganga, 582, MG Road Indore. PAN : AACCS 7899 G Vs. National Faceless Appeal Centre (NFAC) Delhi. अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri K.C. Agrawal, AR Revenue by : Shri P.K. Mitra, CIT-DR स ु नवाई क तार ख/Date of Hearing : 16/03/2022 घोषणा क तार ख /Date of Pronouncement: 30/03/2022 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal filed by the assessee is against order dated 28.10.2021 passed in DIN & Order no.ITBA/NFAC/ S/250/2021- 22/ 1036630276(1) by the National Faceless Appeal Centre relating to the Assessment year 2018-19. 2. Sole grievance raised by the assessee before the Tribunal is that the National Faceless Appeal Centre (“NFAC” for short) has dismissed the assesee’s appeal as being time barred by 184 days. ITA No.271/Ind/2021 2 The ld.NFAC ought to have condoned the delay of 184 days and adjudicated the issue on merit. 3. Brief facts of the case is that the assessee is a private limited company and filed its return of income for the Asstt.year 2018-19 on 7.3.2019 declaring total taxable income of Rs.2,88,40,270/-. The return was processed under section 143(1) of the Income Tax Act, 1961 by the DCIT, Centralised Processing Centre, by which the AO made an addition of Rs.34,14,004/- on account of disallowance under section 40A(7) on the basis of tax audit report. The assessee has made this claim towards gratuity provision, which the assessee itself has disallowed while computing the income under section 43B and while filing return of income, thus amounts to double disallowance. Therefore, the assessee filed a rectification application under section 154 of the Act, however, after lapse of considerable time, rectification petition was not disposed of by the Department, and ultimately, the assessee-company filed statutory appeal under section 246(1)(a) of the Act, before the Commissioner of Income Tax (Appeals) on 12.2.2020 wherein a delay of 184 days in filing the appeal was caused. The above appeal was migrated to NFAC, Delhi vide notification no.76 of 2020 dated 25.9.2020 issued by the CBDT. Notice of hearing under section 250 of the Act on 24.12.2020 was issued to the assessee for furnishing its submissions. The ld.NFAC by its impugned order dismissed the appeal of the assessee only on the point of limitation, as follows: “4.3 In the instant case, the reason given by the appellant is that the appellant was unaware of the fact that there was certain adjustment and demand raised in the intimation u/s 143(1). In Form No. 35 the appellant itself has admitted that intimation u/s 143(1) of the Income Tax Act, 1961 was passed on 13/06/2019 and served by CPC on 12/07/2019. No doubt, a short and reasonable delay can be condoned. But here in this case the appeal has been filed on 12/02/2020 after 184 days from the due date of filing appeal. The ITA No.271/Ind/2021 3 reason furnished by the appellant does not justify such a long delay in filing appeal. Thus, the cause as explained by the appellant doesn't appear to be reasonable and sufficient. The language used in section 249(3) is "sufficient cause" and not "reasonable cause". 'Sufficient cause' is much more stringent that the term 'reasonable cause' and even if a cause is reasonable, it has to be ascertained whether it was a sufficient cause or not. The cause given by the appellant is very general and unverifiable. If this kind of reason is accepted, then any one can take this plea. It has already been discussed above that for qualifying u/s 249(3) for condonation of delay, the appellant must show that he was diligent all along with taking appropriate steps and if he appears to be guilty of lapses or negligence, then he must be prepared to have his remedy barred without expecting condonation. 4.4 On the basis of the circumstances of the case, it is held that the appellant was not having "sufficient cause" for delay in filing appeal. The appeal filed by the appellant is held to be invalid and non- maintainable being out of time. For statistical purposes, the appeal is treated as DISMISSED in-limine.” 4. The ld.AR appearing for the assessee argued before us that the ld.NFAC has erred in not condoning the delay, despite having sufficient reasons. It is submitted that immediately on receipt of order under section 143(1) of the Act, the assessee filed a rectification application under section 154, but the same was pending before the CPC. As there was no fruitful results received from the CPC, the assessee filed statutory first appeal with delay of 184 days. The impugned delay was caused due to pendency of rectification application and non-consideration of the same till the date. Even on merit of the case, the ld.AR submitted that CPC has erred in making disallowance of Rs.34,14,004/- under section 40A(7) of the Act on the basis of tax audit report whereas the said amount has already been disallowed by the assessee-company in the computation of total income under section 43B of the Act, hence, such disallowance resulted in double addition on the income of the assessee by the AO, which is not permissible in law. Without ITA No.271/Ind/2021 4 considering this issue, the ld.NFAC has grossly erred in dismissing the appeal, which is against the principle of natural justice. The ld.AR further pleaded that the impugned delay in filing appeal before the first appellate authority being bona fide and no reason can be attributed to the assessee, the same be condoned and the matter may be sent back to the NFAC for adjudication on merits. 5. Per contra, the ld.DR appearing for the Revenue has no serious objection in remitting the matter back to the file of NFAC for fresh adjudication. However, he defended that there is no sufficient cause for condonation of the delay of 184 days, and the Revenue authorities have justified in not condoning the delay. 6. We have gone through the files on records and materials placed before us. The return of income filed by the assessee for the Asstt.Year 2018-19 was processed under section 143(1) of the Act on 13.6.2019 by observing that disallowance of expenditure on account of provision for gratuity as mentioned in the tax audit report were not taken into account while computing total income in the return filed by the assessee, and accordingly, the CPC raised a tax demand of Rs.11,08,870/-. Against this order under section 143(1) of the Act, the assessee filed a rectification application under section 154 of the Act, however, no decision was taken thereon, and the same is said to be pending. Thereafter, the assessee filed an appeal on 12.2.2020, which was subsequently transferred to NFAC on 25.9.2020. However, the appeal of the assessee was dismissed by the NFAC on account of delay of 184 days in filing appeal. The assessee explained before the NFAC the reason for delay in presenting the appeal that the delay was occurred because the assessee was not aware about demand being made, and it was only when recovery letter was received, the assessee came to know the ITA No.271/Ind/2021 5 impugned addition, and immediately preferred a rectification application under section 154, but still no decision was taken by the concerned authority, which was still pending. Since no reply has been received by the assessee in respect of rectification application, and considerable time lapsed after filing of rectification application, the assessee preferred appeal. Therefore, the assessee was prevented by sufficient reason for not filing the appeal in time. However, the ld.NFAC did not satisfy with the explanation given by the assessee and held that the assessee has not made out any sufficient reasons for condonation of 184days in filing appeal before it. 7. We find that as per section 249(3) of the Act, Commissioner (Appeals) has discretionary power to condone delay in filing appeal before him, if the assessee has sufficient cause for not presenting the appeal within the period of limitation. Such power should be exercised with a view to do justice to all the parties. We are of the view that the reasons narrated by the assessee for delay in filing of the appeal have not been appreciated by the Revenue authorities in right perspective. We find no deliberate attempt by the assessee to make its appeal time barred, because the assessee is not going to gain anything by making its appeal time barred. More so when a double addition to the extent of Rs.34,14,004/- has been made to the income of the assessee, no tax-payer would forgo his right of appeal simply by making his appeal time barred and bear a huge tax liability. There is no justifiable reason with the Revenue authorities not to condone the delay. It is settled proposition of law that the matter relating to condonation of delay should be judged broadly and not in a pedantic manner. For this proposition, we find support from the judgment of Hon’ble Apex Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353. ITA No.271/Ind/2021 6 However, the ld.NFAC turned down the request of the assessee to condone the delay without proper application of mind to the cause shown by the assessee in regard to the delay. It is pertinent to note here a classic observation of Full Bench of Hon’ble Madras High Court in the case of Krishna V. Chathappan, ILR 13 Mad 269 that the words "Sufficient cause" should receive a liberal construction so as to advance substantial justice when no negligence nor inaction nor want of bona fides is imputable to the appellant." Exactly similar situation exists in the present case. Therefore, we are convinced that the assessee has sufficient cause for delay of 184 days in filing appeal, and no mala fide intention can be judged from the action of the assessee in making its appeal time barred. Accordingly, we condone the delay of 184 days in filing of the appeal before the ld.NFAC and set aside the impugned order dated 28.10.2021 and direct NFAC to dispose of appeal of the assessee on merit within a period of 4 months of receipt of this order and by affording proper opportunity to the assessee to represent its case. Needless to state that the assessee should cooperate with the NFAC and get the appeal disposed of on merit. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 30 th March, 2022. Sd/- Sd/- (MANISH BORAD) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Indore/Ahmedabad, Dated 30/03/2022 Kolkata *vk ITA No.271/Ind/2021 7 आदेश क त'ल(प अ)े(षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु +त / Concerned CIT 4. आयकर आय ु +त(अपील) / The CIT(A) 5. (वभागीय त न ध, आयकर अपील य अ धकरण / DR, ITAT, 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, / ITAT, 1. Date of dictation : 15-3-2022 2. Date on which the typed draft is placed before the Dictating Member. : 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 7. Date on which the file goes to the Bench Clerk. : 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :