2025 (6) TMI 474 - AT - Income Tax

Tax tribunal condones 149-day delay in filing appeal citing substantial justice over technicalities but dismisses Section 80G(5) appeal as not maintainable after voluntary withdrawal

ITAT Bangalore condoned a 149-day delay in filing appeal, finding sufficient cause without malafide intention. The Tribunal emphasized substantial justice ... Delay filling appeal before ITAT - delay of 149 days - assessee in not filing appeal within the prescribed time - HELD THAT:- There is sufficient cause without any malafide intention on the part of the assessee in filing the appeal belatedly before us. It is to be noted that u/s 253(5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeals within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing this appeal within the prescribed time. We have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority. Whether delay was excessive or inordinate? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. [1984 (4) TMI 24 - MADRAS HIGH COURT] considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 149 days cannot be considered to be inordinate or excessive. Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) [2006 (1) TMI 215 - ITAT MADRAS-C] condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 149 days for the AY 2024-25 for both the appeals have to be condoned and accordingly we condone the delay and admit the appeals for adjudication. Rejection of application for approval u/s 80G(5) - Since the assessee trust had itself withdrawn the application for grant of approval u/s 80G(5)(iii) of the Act before the ld. CIT (Exemptions), therefore we are of the opinion that no cause of action arises to the assessee trust to prefer the present appeal before us. Accordingly we held that the present appeal is not maintainable and hence dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Tribunal in these appeals are:(a) Whether the delay of 149 days in filing the appeals before the Tribunal can be condoned under the provisions of the Income Tax Act, 1961, specifically u/s 253(5), and relevant judicial principles.(b) Whether the appeals filed by the assessee against the rejection orders of the CIT (Exemptions) dated 25.7.2024, rejecting the applications for approval u/s 80G(5)(iii) and registration u/s 12(1)(ac)(iii) of the Income Tax Act, 1961, are maintainable, given that the assessee had withdrawn the applications before the CIT (Exemptions).(c) Whether the Tribunal can direct the CIT (Exemptions) to resolve the technical difficulties faced by the assessee in filing fresh applications for approval/registration.2. ISSUE-WISE DETAILED ANALYSIS(a) Condonation of DelayRelevant legal framework and precedents: Section 253(5) of the Income Tax Act, 1961 empowers the Tribunal to admit appeals beyond the prescribed period of limitation if sufficient cause is shown. The Apex Court in Collector, Land Acquisition v. Mst. Katiji laid down six principles guiding condonation of delay, emphasizing a pragmatic and commonsense approach favoring substantial justice over technicalities. The Tribunal also relied on People Education & Economic Development Society v. ITO, which reiterated that when substantial justice and technical considerations conflict, the former must prevail.Court's interpretation and reasoning: The Tribunal examined the affidavit and explanation submitted by the assessee for the delay of 149 days. It found no mala fide intention or culpable negligence. The Tribunal highlighted that the delay was neither excessive nor inordinate, referencing judicial precedents where delays of several years were condoned. It emphasized that refusing condonation would legalize injustice on technical grounds, contrary to the judiciary's role to remove injustice.Key evidence and findings: The affidavit sworn before the notary public on 19.03.2025 and the reasons stated therein for delay were accepted as sufficient cause. The Tribunal noted the absence of any deliberate or negligent conduct causing the delay.Application of law to facts: Applying the principles from Katiji and PEEDS cases, the Tribunal found that the cause of substantial justice outweighed technical considerations, and hence condoned the delay and admitted the appeals for adjudication.Treatment of competing arguments: The Tribunal acknowledged the delay but rejected any suggestion of mala fide or deliberate delay. It also rejected any argument that the delay was excessive, relying on precedents condoning much longer delays.Conclusion: Delay of 149 days in filing the appeals was condoned, and the appeals were admitted for adjudication.(b) Maintainability of Appeals Against Rejection of Applications Withdrawn by AssesseeRelevant legal framework and precedents: The provisions under Sections 80G(5)(iii) and 12(1)(ac)(iii) of the Income Tax Act, 1961 govern approval and registration of charitable trusts for tax benefits. The CIT (Exemptions) is the competent authority to grant such approvals/registrations. An appeal against an order rejecting an application is maintainable only if there is a cause of action, i.e., the application was pending or rejected on merits, not if the application was withdrawn by the applicant itself.Court's interpretation and reasoning: The Tribunal noted that in both cases, the assessee trust had itself withdrawn the applications filed in Form No.10AB before the CIT (Exemptions). The CIT (Exemptions) accordingly rejected the applications on the ground of withdrawal. The Tribunal held that since the assessee itself withdrew the applications, no cause of action arose to challenge the rejection orders. Therefore, the appeals were not maintainable.Key evidence and findings: The orders of the CIT (Exemptions) explicitly stated that the applications were rejected because the assessee had withdrawn them. This was uncontested and undisputed.Application of law to facts: The Tribunal applied the principle that an appeal is maintainable only if there is a live cause of action. Withdrawal of the application by the assessee extinguished any cause of action against the rejection order. Hence, the appeals lacked maintainability.Treatment of competing arguments: The assessee's argument that technical difficulties prevented filing fresh applications and that the Tribunal should direct the CIT (Exemptions) to resolve these issues was considered. However, the Tribunal found that such issues did not create a cause of action against the rejection orders based on withdrawal. The respondent's contention on non-maintainability was upheld.Conclusion: Both appeals against the rejection orders of the CIT (Exemptions) were dismissed as not maintainable.(c) Direction to CIT (Exemptions) to Resolve Technical DifficultiesRelevant legal framework and precedents: The Income Tax Act does not explicitly empower the Tribunal to direct the CIT (Exemptions) to resolve technical difficulties faced by an applicant in filing fresh applications. The role of the Tribunal is appellate, to decide on the legality and correctness of orders passed by the lower authorities.Court's interpretation and reasoning: The Tribunal observed that the issues related to technical difficulties in filing fresh applications are procedural and administrative in nature. Since the appeals were not maintainable due to withdrawal of the original applications, the Tribunal declined to interfere or issue directions to the CIT (Exemptions) in this regard.Key evidence and findings: The assessee's submissions regarding technical difficulties were not supported by any statutory or procedural entitlement to relief from the Tribunal.Application of law to facts: The Tribunal held that the appropriate remedy for the assessee was to file fresh applications and resolve technical issues directly with the CIT (Exemptions), not to seek appellate relief against rejection orders based on withdrawn applications.Treatment of competing arguments: The Tribunal acknowledged the assessee's difficulties but emphasized adherence to procedural propriety and maintainability criteria.Conclusion: No direction was issued to the CIT (Exemptions) to resolve technical difficulties; the Tribunal refrained from exercising jurisdiction beyond the scope of the appeals.3. SIGNIFICANT HOLDINGS- 'When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay.'- 'If the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice.'- 'Since the assessee trust had itself withdrawn the application for grant of approval/registration before the ld. CIT (Exemptions), therefore we are of the opinion that no cause of action arises to the assessee trust to prefer the present appeal before us.'- 'The appeals filed by the assessee are not maintainable and hence dismissed.'- The Tribunal emphasized the constitutional principle that the Government cannot retain tax amounts not authorized by law, and refusal to condone delay would amount to legalizing an illegal and unconstitutional order.