UNICORN DEALTRADE PVT. LTD.,KOLKATA V. CENTRALIZED PROCESSING CENTRE (CPC), , BENGALURU

ITA 2083/KOL/2024

AI Insights

The case involves Unicorn Dealtrade Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) - 3, Ahmedabad, concerning an intimation order under Section 143(1) of the Income Tax Act, 1961, which added an income of Rs. 23,20,740 for the Assessment Year 2013-14. The primary contention was the dismissal of the appeal by the CIT(A) on grounds of delay without considering the merits of the case. The assessee argued that the delay was due to reliance on the rectification mechanism under Section 154, which was a genuine and unavoidable circumstance. The ITAT found merit in the assessee's arguments and remitted the case back to the CIT(A) for a decision on the merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469558 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Other Referred Cases: Collector, Land Acquisition vs. Mst. Katiji and Ors. 167 ITR 471, Vedabhai vs. Shantaram Baburao Patil 253 ITR 798
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Opportunity of being heard; Principle of natural justice; Transactions in derivatives; Procedural lapse
• Section: 250; 154; 143(1)

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Vs. CPC, Bengaluru (Appellant) (Respondent) PAN: AAFCA4866J Appearances: Assessee represented by : Deep Agrawal C.A. and Shubhankar Ghosh, AR. Department represented by : Rajat Datta, Sr.DR. Date of concluding the hearing : December 2nd, 2024 Date of pronouncing the order : January 21st, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-3, Ahmedabad [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2013-14 dated 23.08.2024, which has been passed against the intimation order u/s 143(1) of the Act, dated 26.09.2014. 2. The assessee has raised the following grounds of appeal: Page | 2 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 2 of 9 “1. For the facts and in the circumstances, the CIT(A) erred in dismissing the appeal on the grounds of delay without appreciating the reasons provided by the appellant for the delay in filing the appeal. The appellant had duly filed rectification applications under Section 154 and had a genuine belief that rectification could resolve the dispute. The rectification applications were rejected, prompting the appellant to file the appeal, which led to an unavoidable delay. 2. For the facts and in the circumstances, the CIT(A) failed to consider the appeal on merits. The appellant’s grounds of appeal were substantial and warranted examination, but due to the rejection of condonation of delay, the merits were not evaluated. 3. For the facts and in the circumstances, the CPC erred in making an addition of ₹23,20,740/- under Section 143(1) of the Income Tax Act, 1961, without providing any valid basis or justification. The disallowance of loss amounting to ₹23,20,740/- is grossly unjustified and arbitrary. The appellant submits that the addition made is contrary to the provisions of law and liable to be deleted. 4. For the facts and in the circumstances, the rejection of the appeal as well as the rectification without considering it on merits resulted in a violation of the principles of natural justice. The appellant was deprived of a fair opportunity to present its case. 5. That the appellant craves leave to add/alter, modify, amend, delete and/or withdraw any or all of the grounds of appeal.” 3. The brief facts of the case are that the assessee had filed the return of income on 17.08.2013 declaring total income of Rs. 89,980/-. While issuing intimation u/s 143(1) of the Act, the Assessing Officer (hereinafter referred to as ld. 'AO') determined the total income of Rs. 23,20,740/-. Aggrieved with the intimation received, the assessee filed an appeal before the Ld. CIT(A) disputing the addition, who dismissed the appeal treating the same as filed beyond the limitation to file the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before us. 4. We have heard rival contentions and perused the record and the submissions made were also examined. A perusal of Form No. 36 shows Page | 3 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 3 of 9 that the assessee has filed the appeal not against the intimation u/s 143(1) of the Act but against the rejection of the rectification application. A perusal of the order dated 06.01.2020 of the Asstt. Director, CPC, Bengaluru shows that the rejection of the rectification application is for the following reasons: “On Verification, it is seen that there is no prima facie error in the order which you have sought to be rectified. Therefore, your application for Rectification under Sec.154 is rejected, for the following reasons (if any)'' Your rectification request could not be considered at CPC the rectification rights, in your case are being transferred to your Assessing Officer. In view of this, this rectification application is rejected. Kindly contact your Jurisdictional A.O. for the same. The details of the Jurisdictional Assessing Officer are available on the website https://www.incometaxindiaefiling.gov.in under my Profile - PAN details post log in to know your Jurisdiction details.” 5. In the written submission filed, it is submitted by the assessee as under: “The appellant is a private limited company engaged in various trading activities, including Futures & Options trading. The appellant duly filed its return of income for the Assessment Year 2013-14. This income included a significant component of derivative income from F&O trading amounting to ₹1,13,89,679. Simultaneously, the appellant incurred a loss of ₹23,20,740 on F&O trading, which was adjusted against the derivative income. Filing of the Original Return: In the original return filed on 12.08.2013, the appellant correctly reported the derivative income of ₹1,13,89,679 under the head \"Income from Other Sources.\" However, due to an inadvertent clerical mistake, the net figure of ₹90,68,939 (derivative income minus F&O loss) was reflected in the total column under \"Income from Other Sources.\" The loss on F&O trading was not separately shown as an expense, leading to a mismatch between the reported income and the total column. Intimation Under Section 143(1): Based on the original return, the Centralized Processing Centre (CPC) issued an intimation under Section 143(1) of the Act on 26.09.2014, disallowing the F&O loss of ₹23,20,740. The intimation was based on the perceived discrepancy in the reporting format, wherein the net figure of ₹90,68,939 was shown in the total column Page | 4 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 4 of 9 instead of the gross income and the corresponding loss being shown separately. Filing of Rectification under Section 154: Realizing the clerical mistake, the appellant filed a rectification request under Section 154 of the Act on 03.01.2020. In this request, the appellant correctly reported the derivative income of ₹1,13,89,679 under \"Income from Other Sources\" and separately claimed the F&O loss of ₹23,20,740 as an allowable expense. Rejection of the Rectification under 154: Despite the rectification request being made, the CPC rejected the request under Section 154 on 06-01-2020, maintaining the disallowance of the F&O loss. The appellant was not provided with any substantive reasoning for this rejection, leading to the filing of the appeal before the CIT(A). Filing of Appeal Before the CIT(A): Following the rejection of the rectification request, the appellant filed an appeal before the CIT(A) on 15.02.2020. There was an inadvertent delay of 9 days for filling the appeal before the CIT(A) from the rejection of rectification under Section 154. This appeal was filed to contest the addition made under Section 143(1) and sought to condone the delay in filing the appeal due to reliance on the rectification mechanism. Order of the CIT(A): The CIT(A), vide order dated 23.08.2024, dismissed the appeal primarily on the grounds of delay in filing. The CIT(A) observed that the delay in filing the appeal was excessive and not justified, as the CIT(A) did not consider the rectification application which was made by the appellant before filing the appeal which was rejected. Consequently, the merits of the appeal were not adjudicated, and the disallowance of ₹23,20,740 remained unexamined. The CIT(A) vide his order dated 23.08.2024 mentioned that an opportunity of hearing was provided to the appellant vide notice dated 06.08.2024 for hearing on 12.08.2024 to which no response was received. However, such was not the case, the appellant had duly responded on 12.08.2024 (e-filing acknowledgement number: 369567871120824). In the above reply the appellant had specifically provided the request for Condonation of Delay, however the CIT(A) failed to consider the reply in whole. Approach Before the ITAT: Page | 5 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 5 of 9 Aggrieved by the order of the CIT(A), the appellant has approached the Hon’ble Income Tax Appellate Tribunal (ITAT), Kolkata Bench. The appellant submits that the delay in filing the appeal before the CIT(A) was bona fide and warranted condonation to ensure justice. Further, the disallowance of ₹23,20,740 is contrary to the provisions of the Income Tax Act and deserves to be deleted.” 5.1. Further submissions have been made in this regard which are as under: “Submission: The appellant respectfully submits, as outlined in the facts of the case that the delay in filing the appeal before the CIT(A) was unintentional and arose due to genuine circumstances. The appellant had initially relied on the rectification mechanism under Section 154, believing it to be an appropriate remedy to address the clerical mistake in the reporting of income. However, upon rejection of the rectification application, the appellant promptly filed an appeal, which unfortunately led to a delay of 9 days. This delay was neither deliberate nor due to negligence but resulted from the sequence of pursuing available remedies in good faith. The CIT(A) dismissed the appeal on the grounds of delay without adequately considering the reasons provided by the appellant. Procedural aspects such as minor delays should not overshadow the substantive examination of legitimate grievances, especially when there is no prejudice caused to the revenue. The appellant submits that the delay was minimal and warrants condonation to uphold justice and fairness. Furthermore, the appellant was deprived of a fair opportunity to present its case due to the CIT(A)’s non-consideration of the reply submitted on 12.08.2024 in response to the hearing notice dated 06.08.2024. The appellant’s response, which included a detailed explanation of the delay and a request for its condonation, was not taken into account while passing the order. This oversight violates the principles of natural justice and has resulted in the appeal being dismissed on procedural grounds without any consideration of its merits. The appellant urges the Hon’ble ITAT to condone the delay in filing the appeal before the CIT(A), given that it was caused by unavoidable circumstances and was minimal in duration. Procedural lapses should not obstruct the adjudication of substantive issues, especially when the appellant has acted diligently in pursuing its remedies. As outlined in the facts of the case, the appellant submits that the delay in filing the appeal was due to unavoidable and genuine circumstances, Page | 6 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 6 of 9 specifically reliance on the rectification mechanism. Further the inadvertent delay of 9 days of filling appeal before the CIT(A) was un-intentional.” 6. The assessee has relied upon the decisions of the Hon'ble Supreme Court in the cases of Collector, Land Acquisition vs. Mst. Katiji and Ors. 167 ITR 471 and Vedabhai vs. Shantaram Baburao Patil 253 ITR 798 and has prayed that the Tribunal condones the delay, sets aside the order of the Ld. CIT(A) and remands the matter for adjudication on merits for which full cooperation has been assured. As regards the merit of the case, it is stated that the loss of Rs. 23,20,740/- incurred in Future and Options trading is a legitimate business loss. The derivative income of Rs. 1,13,89,679/- was accurately reported and the loss was incurred in the ordinary course of the assessee’s trading activities. The clerical error in the original return, where the net income was reported instead of separately disclosing the gross income and the loss was inadvertent and did not affect the computation of the assessee’s total income which was later rectified by filing an application u/s 154 of the Act. Subsequently, the CPC issued an intimation u/s 143(1) of the Act. The clerical error in reporting the loss from F&O trading is genuine and disclosed in the ITR and the audited financial statement and the clerical error in reporting should not serve as a basis for disallowing a legitimate claim as it does not alter the substantive correctness of the income reported or the computations presented. 7. The Ld. CIT(A) has held as under while dismissing the appeal: 7.1 First consider the belated filing of appeal by the appellant. It is seen that the intimation order u/s 143(1) of the I.T. Act was passed on 26.09.2014. The appellant has mentioned at para 2c of appeal memo that the aforesaid intimation order was received by him on 06.02.2020 after more than 5 years of passing of intimation. Which is not acceptable. The appeal was filed on 15.02.2020 after more than 5 years of passing of intimation. A request for condonation of delay in filing of appeal was filed by the appellant at para 14 & 15, which is as under Page | 7 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 7 of 9 \"That the appellant came to know from the department that the loss of Rs. 63,65,206/-was disallowed. That the appellant filed application u/s 154 of the Income Tax Act, 1961 for the mistake which is apparent from record. That the rectification application was rejected. That the appellant on advice from senior counsel is filing this present appeal. That due to technical error the appeal could not be filed in due time and as such due to reason beyond the control of the appellant, the appeal I is delayed. That the appellant prays that the delay in appeal is due to unavoidable circumstances and the delay may kindly be condoned. That the appeal should be accepted for sake of natural justice. That the appellant shall be ever praying for this of kindness\". Therefore, vide this office notice dated 07.08.2024, the appellant was requested to submit genuine reason for delay in filing of appeal and file condonation of delay in filing of appeal. In response of the said notice dated 07.08.2024, the appellant has not submit any reply till date. There is huge delay in filing of appeal. 7.2 The submissions of the appellant are considered but found to be not acceptable for the reason that the assessee should have consulted the accountant first after getting the intimation order u/s 143(1) and appeal should have been filed first. Being a responsible tax payer assessee should be more careful regarding filing the appeal. In this case, the appeal was filed on 15.02.2020 after more than 5 years of passing of intimation order dated 26.09.2014. Thus there is a gap of more than 5 years between the both dates. 7.3 Even the appellant has paid the appeal fee of Rs 1000/- on 07.02.2020 beyond the due date of filing of appeal which also proved that the fee payment has not been made before due date of filing of the appeal. 7.4 In absence of good and justifiable reasons for delay in filing the appeal, the appeal filed belatedly is held to be not maintainable and therefore, the same is not entertained and dismissed The Ld. CIT(A) has relied upon several decisions in support of his decision. 8. We have considered the submissions made. The Ld. CIT(A) has dismissed the appeal on account of delay of 5 years while the assessee contends that the intimation was issued on 26.09.2014 but was received by the assessee on 06.02.2020, which fact has not been accepted by the Ld. CIT(A) while dismissing the appeal on the ground of delay. As per the assessee, the delay was of 9 days only which was unintentional and ought to have been condoned. It is also observed that Page | 8 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 8 of 9 the assessee filed an appeal against the intimation u/s 143(1) of the Act after the rectification application u/s 154 of the Act was rejected. Since there is no basis for the Ld. CIT(A) to hold that the appeal was filed after a delay of 5 years whereas as per the assessee the delay was of only 9 days, the delay on the facts of the case was liable to be condoned as there was a sufficient cause for the delay. Accordingly, after examining the facts of the case, we deem it appropriate to remit the matter back to the file of the Ld. CIT(A) for disposal of the grounds taken by the assessee on merits, by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall be followed, wherever required. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes. Order pronounced in the open Court on 21st January, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.01.2025 Bidhan (P.S.) Page | 9 I.T.A. No.: 2083/KOL/2024 Assessment Year: 2013-14 Unicorn Dealtrade Pvt. Ltd. Page 9 of 9 Copy of the order forwarded to: 1. Unicorn Dealtrade Pvt. Ltd., C/o. Agarwal Vishwanath & Associates, 133/1/1A, S.N. Banerjee Road, Pushkal Bhawan, 3rd Floor, Kolkata, West Bengal, 700013. 2. CPC, Bengaluru. 3. CIT(A)-3, Ahmedabad. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "