SCHNEIDER ELECTRIC IT BUSINESS INDIA PRIVATE LIMITED(FORMERLY KNOWN AS AMERICAN POWER CONVERSION (INDIA) PVT LTD.),BANGALORE V. JOINT COMMISSIONER OF INCOME TAX, LARGE TAX PAYERS, , BANGALORE

ITA 2002/BANG/2024

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The case involves Schneider Electric IT Business India Pvt. Ltd., which appealed against an order from the NFAC, Delhi, concerning the assessment year 2010-11. The appeal was initially dismissed by the NFAC under the impression that it was settled under the VSV scheme, which the assessee had not opted for regarding the specific issues in the order. The assessee discovered this error during a routine review for a statutory audit and subsequently filed an appeal with the ITAT, leading to a significant delay. The ITAT considered the circumstances of the delay, including the COVID-19 pandemic and errors by both the NFAC and the assessee, and decided to condone the delay and remand the case for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474081 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Other Referred Cases: CIT v. K.S.P. Shanmugavel Nadai and Ors (153 ITR 596), Collector, Land Acquisition v. Mst. Katiji (167 ITR 471), Basawaraj v. Land Acquisition Officer (2013) 14 SCC 81, In Re: Cognizance for Extension of Limitation (Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURUPRASAD B L
• Assessee Lawyers: KETAN VED; C.A
• Keywords: Condonation of delay; Transfer pricing; Reasonable cause; Period of limitation; Time period of passing order
• Section: 143(3); 250; 263; 144C; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No. 2002/Bang/2024 Assessment Year: 2010-11 Schneider Electric IT Business India Pvt. Ltd., 187-3, 188-3, Jigani Industrial Area, Jigani, Bengaluru. PAN – AACCA 6398 Q Vs. The JCIT - LTU Bengaluru. APPELLANT RESPONDENT Assessee by : Shri Ketan Ved, C.A Revenue by : Shri Guru Prasad BL, CIT (DR) Date of hearing : 11.03.2025 Date of Pronouncement : 18.03.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 30/04/2021 in ITA No. ITBA/NFAC/S/250/ 2021-22/1032746369(1) for the assessment year 2010-11. ITA No.2002/Bang/2024 Page 2 of 7 . 2. First, it is noted that there is a delay of 1206 days in filing the appeal before the ITAT. The assessee has submitted a duly notarized condonation petition explaining the delay. In the petition, the assessee stated that for the year under consideration, two appeals were filed before the NFAC, as detailed below: 3. The assessee opted for the VSV scheme to settle the dispute related to the order passed under section 143(3) read with Section 263 of the Act. However, the NFAC mistakenly dismissed the assessee’s appeal under Section 143(3) read with Section 144C of the Act vide order dated April 30, 2021, holding that the issue had been settled under VSV scheme. As a result, the NFAC considered the appeal as infructuous. In reality, the assessee never opted for the VSV scheme for the issues arising in the order passed under section 143(3) read with section 144C of the Act. The assessee remained under the impression that the appeal was still pending before the NFAC. It was only during a routine review of pending appeals for the statutory audit that the assessee discovered that the NFAC had dismissed the appeal under the wrong assumption of facts that it was settled under the VSV scheme. 4. Upon realizing this mistake, the assessee immediately filed an appeal before the ITAT, which resulted in the delay of 1206 days. The assessee argued that the appeal could not be filed on time due to the ITA No.2002/Bang/2024 Page 3 of 7 . genuine belief that it was still pending before the NFAC. Therefore, the assessee’s representative requested the ITAT to condone the delay. 5. On the other hand, the ld. Departmental Representative (DR) argued that the assessee is a private limited company and assisted by professionals, making it unlikely that it could mistakenly believe the appeal was still pending before the NFAC. Furthermore, the ld. DR pointed out that the assessee had not provided any evidence showing that the NFAC failed to communicate the order passed under section 250 of the Act. The DR emphasized that the delay was excessive, inordinate and should not be condoned. 6. In response, the assessee’s Authorized Representative (AR) stated that the assessee was under the impression that the transfer pricing adjustment issue would be handled by the Jurisdictional ld. CIT(A) and not the NFAC. The ld. AR further argued that the transfer of the appeal from the Jurisdictional CIT(A) to the NFAC was legally incorrect. Consequently, the assessee expected to receive a notice from the Jurisdictional CIT(A), not the NFAC. 7. We have considered the arguments of both parties and examined the records. The delay of 1206 days is certainly significant. However, the length of the delay is not the primary concern; rather, the cause of the delay is what matters. If a reasonable cause exists, the delay can be condoned. 7.1 The Hon’ble Madras High Court, in CIT v. K.S.P. Shanmugavel Nadai and Ors (153 ITR 596), held that if a taxpayer is pursuing other ITA No.2002/Bang/2024 Page 4 of 7 . legal remedies, the time taken for those proceedings should be considered when deciding whether the delay in filing an appeal is justified. In that case, the Hon’ble Court condoned a delay of approximately 20 years, recognizing the taxpayer’s valid reasons. 7.2 The term “sufficient cause” is not explicitly defined in the Act. It generally refers to circumstances beyond a person’s control that prevented them from taking timely action. The Hon’ble Courts have repeatedly held that a liberal approach should be taken in condoning delays when justice is at stake. The Hon’ble Supreme Court, in Collector, Land Acquisition v. Mst. Katiji (167 ITR 471), established key principles for condoning delays: 1. A litigant does not benefit from filing an appeal late. 2. Denying condonation of delay may result in the rejection of a valid case without being heard on its merits. 3. Delay should not be examined with an overly rigid approach but in a practical and reasonable manner. 4. Substantial justice should take precedence over technical formalities. 5. There is no presumption that a delay is deliberate or caused by negligence. 6. The judiciary’s role is to prevent injustice rather than reject cases based on technical grounds. 7.3 Additionally, in Basawaraj v. Land Acquisition Officer (2013) 14 SCC 81, the Hon’ble Supreme Court ruled that sufficient cause must be an adequate and justifiable reason preventing the petitioner from ITA No.2002/Bang/2024 Page 5 of 7 . approaching the Hon’ble Court within the prescribed time. If negligence or lack of diligence is found, delay should not be condoned. 7.4 The assessee’s argument that it only discovered the NFAC’s decision after three years of statutory audits is unconvincing. Given the company’s professional support and annual audits, it should have identified the mistake much earlier. The delay of over three years is excessive, and the explanation provided is not fully satisfactory. 7.5 However, a review of the NFAC’s order indicates that it relied on the ITBA portal’s information, which incorrectly suggested that the assessee had opted for the VSV scheme. The NFAC dismissed the appeal without directly confirming this with the assessee. This was an error on the NFAC’s part. 7.6 At the same time, the assessee also failed to monitor the status of its appeal diligently. While it is surprising that the assessee did not receive formal communication from the NFAC regarding the dismissal, no evidence was presented to prove that such communication was never sent. However, the impression of the assessee that the impugned appeal shall be dealt by the jurisdictional CIT-A cannot be faulted in view of the CBDT order dated 13-08-2020 having reference to F.No. 187/3/2020- ITA-I. 7.7. However, we note that both the NFAC and the assessee bear responsibility for the dismissal of the appeal. The NFAC’s error contributed to the confusion, while the assessee’s lack of vigilance resulted in the significant delay. ITA No.2002/Bang/2024 Page 6 of 7 . 7.8 Before parting, it is also necessary to note that the part of the delay in filing the appeal by the assessee is also attributable to the covid period. As such, the Hon’ble Supreme Court of India, in the case of In Re: Cognizance for Extension of Limitation (Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020), provided a blanket extension of limitation periods for all judicial, quasi-judicial, and administrative proceedings due to COVID-19. The Hon’ble Court ruled that the limitation period from March 15, 2020, to February 28, 2022, shall be excluded for all legal proceedings. Accordingly, we are of the view that the assessee should also get some benefit of the Covid Period regarding the Delay in Filing the Appeal by (it) the Assessee. 7.9 In view of the above and to ensure fairness to both parties, we are inclined to condone the delay on the condition that the assessee pays ₹50,000 to the Prime Minister’s Relief Fund. With this condition met, we proceed to adjudicate the appeal on its merits. 7.10 Since the NFAC dismissed the appeal based on the incorrect assumption of facts that the issue was resolved under the VSV scheme, justice requires that the matter be reconsidered. We, therefore, remand the case back to the NFAC for fresh adjudication, ensuring compliance with legal provisions and allowing the assessee a fair opportunity to present its case. Accordingly, the appeal of the assessee is allowed for statistical purposes. ITA No.2002/Bang/2024 Page 7 of 7 . 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in court on 18th day of March, 2025 Sd/- (KESHAV DUBEY) Sd/- (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 18th March, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "