2024 (5) TMI 1509 - AT - Income Tax

Delay in filing appeal against intimation u/s 143(1) with addition u/s 43B condoned due to bonafide belief

ITAT Bangalore condoned delay in filing appeal before CIT(A) against intimation u/s 143(1) containing addition u/s 43B. Assessee had bonafide belief that ... Delay in preferring the appeal before the CIT(A) - Addition u/s 43B in intimation issued u/s 143(1) - delay in filing the appeal before the CIT(A) from the date of intimation issued u/s 143(1) up to the date of the FAO (since the assessee has already preferred appeal as against the FAO before ITAT) which was dismissed by ITAT - HELD THAT:- As mentioned earlier, assessee was under bonafide belief that the addition u/s 43B made in the intimation u/s 143(1) would be discussed / mentioned in the scrutiny assessment since notice u/s 143(2) was already issued on 05.09.2018 i.e., prior to the date of intimation (the date of intimation is 01.03.2019). Hon’ble Supreme Court in the case of Collector, Land & Acquisition v/s Mst . Katiji & Others[1987 (2) TMI 61 - SUPREME COURT] has interpreted the term “sufficient cause” in the context of condoning the delay under section 5 of the Limitation Act, 1963. The Hon’ble Apex Court held the expression “sufficient cause” employed by the Legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub-serves the ends of justice, that being the life-purpose of the existence of the institution of Courts. In the instant case, the Revenue does not plead that there was malafide intention on the part of the assessee in preferring the appeal with a delay. The assessee does not stand to gain by preferring appeal with a delay. When technicalities are pitted against substantial justice, the former must give way to the latter. There is no reason not to accept the explanation offered by the assessee that it is only due to bonafide mistake that the appeal has not been preferred against the intimation issued against section 143(1) of the Act at the first instance. Revenue has not pleaded any rights to have been crystalized due to efflux of time. By condoning the delay, the highest that could happen is that a cause could be decided on merits which would go in the interest of justice. In view of this matter, we are of the opinion that delay in preferring the appeal before the CIT(A) is to be condoned. Appeal of the assessee is allowed for statistical purposes. Issues Involved:1. Validity of the order passed u/s 250 of the Income Tax Act, 1961.2. Violation of principles of natural justice by the CIT(A).3. Disallowance u/s 43B of the Act.4. Double disallowance under section 43B of the Act.Summary:1. Validity of the order passed u/s 250 of the Income Tax Act, 1961:The assessee challenged the CIT(A)'s order dated 24.11.2023, passed u/s 250 of the Income Tax Act, 1961, claiming it to be prejudicial, bad in law, and liable to be quashed.2. Violation of principles of natural justice by the CIT(A):The assessee argued that the CIT(A) dismissed the appeal without appreciating the facts and merits of the case and without affording an opportunity of being heard, thereby violating the principles of natural justice.3. Disallowance u/s 43B of the Act:The assessee contended that the net disallowance u/s 43B reported in the tax return was in accordance with the tax auditor's disclosure in Form No. 3CD. The adjustment of INR 6,12,81,302 was claimed to be liable for deletion. The Tribunal noted that the addition of Rs. 6,12,81,302 was made by way of adjustment in the intimation issued u/s 143(1) of the Act on 01.03.2019. The assessee did not initially file an appeal against this intimation, believing the addition would be discussed during scrutiny assessment proceedings.4. Double disallowance under section 43B of the Act:The assessee argued that the confirmation of the disallowance of Rs. 6,12,81,302 u/s 43B resulted in double disallowance, as it was already made in the tax return for AY 2017-18. The Tribunal observed that the AO, in the final assessment order, had incorrectly adopted the income figures from the intimation u/s 143(1) instead of the returned income, indirectly upholding the addition of Rs. 6,16,54,359.Condonation of Delay:The Tribunal considered the delay in filing the appeal before the CIT(A) and referred to the Hon'ble Supreme Court's interpretation of 'sufficient cause' in the context of condoning delay. The Tribunal emphasized that substantial justice should be preferred over technical considerations and noted that the assessee's delay was due to a bona fide mistake. The Tribunal condoned the delay and remanded the matter to the CIT(A) for a decision on merits in accordance with the law.Conclusion:The appeal of the assessee was allowed for statistical purposes, and the matter was remanded to the CIT(A) for adjudication on merits.