2025 (10) TMI 431 - AT - Income Tax

Appeal restored and 151-day delay condoned; case remanded for merits decision after granting assessee hearing opportunity

M/s. Chimanlal Govinddas Versus DCIT, Circle – 6, Pune

ITAT, Pune (AT) restored the appeal to the file of the CIT(A)/NFAC, directing condonation of a 151-day delay and remand for decision on merits after ... Condonation of delay - delay in filing of the appeal before the CIT(A) / NFAC by 151 days - reasonable cause shown by the assessee for delay in filing of the appeal or not? - HELD THAT:- We find in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. [1987 (2) TMI 61 - SUPREME COURT] has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. We find recently the Hon’ble Supreme Court in the case of Inder Singh [2025 (3) TMI 1479 - SUPREME COURT] has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.” We deem it proper to restore the issue to the file of the CIT(A) / NFAC with a direction to condone the delay and decide the appeal on merit after giving due opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes. ISSUES PRESENTED AND CONSIDERED 1. Whether delay of 132 days in filing the appeal before the Tribunal should be condoned. 2. Whether delay of 151 days in filing the appeal before the first appellate authority (Ld. CIT(A) / NFAC) ought to have been condoned by that authority. 3. Whether, having found sufficient cause to condone delay, the matter should be remitted to the first appellate authority for decision on merits. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of 132 days' delay before the Tribunal Legal framework: The Tribunal has jurisdiction to admit appeals notwithstanding delays where sufficient cause for delay is shown and where interests of substantial justice require condonation; principles established by higher courts require preference for substantial justice over mere technical lapse. Precedent Treatment: The Court applied high-court/supreme-court precedents emphasizing that meritorious issues should not be defeated by non-deliberate delay (citing the principle in Collector, Land Acquisition v. Katiji and the more recent exposition in Inder Singh). Interpretation and reasoning: The assessee filed an affidavit explaining the delay and medical evidence about the counsel's serious illness and disability; after considering the explanation and hearing the Revenue, the Tribunal exercised discretion to condone the delay. The Tribunal evaluated the competing considerations - technical non-compliance versus miscarriage of substantial justice - and found the latter to prevail. Ratio vs. Obiter: Ratio - where sufficient explanation (including serious medical incapacity of counsel) is furnished and prejudice to the Revenue is not shown, the Tribunal may condone delay to secure adjudication on merits. Obiter - none beyond reliance on the established principle favoring substantial justice. Conclusion: The Tribunal correctly exercised its discretion to condone the 132-day delay and admitted the appeal for adjudication. Issue 2 - Condonation of 151 days' delay before the first appellate authority Legal framework: First appellate authority must examine whether reasonable cause exists for delay before dismissing appeals; doctrines from superior courts require that meritorious matters should not be terminated on account of non-deliberate delay and that limitation should not scuttle adjudication on merits where adequate cause is shown. Precedent Treatment: The Court relied on the principle from Collector, Land Acquisition v. Katiji that substantial justice should be preferred to technical considerations, and on a more recent authoritative statement (Inder Singh) reiterating that merits should not be denied solely on limitation grounds. These precedents were followed (not distinguished or overruled). Interpretation and reasoning: The assessee's explanation to the first appellate authority was that a rectification application and an application to the Assessing Officer were pending, and that due to advice and ongoing rectification process the appeal was not filed in time - coupled with the counsel's medical incapacitation. The first appellate authority dismissed the appeal for 151 days' delay, finding no reasonable cause. The Tribunal found that the combination of (a) genuine pursuit of rectification with the Assessing Officer, (b) pending internal departmental process, and (c) medical disability of the counsel together constituted sufficient cause that warranted condonation rather than outright dismissal, particularly in light of the public policy favoring adjudication on merits. Ratio vs. Obiter: Ratio - where a bona fide rectification process was being pursued and significant medical incapacity of counsel is shown, such circumstances can constitute reasonable cause and mandate condonation rather than dismissal; the interest of justice requires appellate authorities to prefer determination on merits. Obiter - guidance that parties should avoid unnecessary adjournments on remand. Conclusion: The Tribunal concluded that the first appellate authority should have condoned the 151-day delay and therefore the matter must be restored for decision on merits after condonation. Issue 3 - Necessity and scope of remand for decision on merits Legal framework: Where delay is condoned, appellate authorities are required to adjudicate the appeal on merits after affording opportunity of hearing; remand is appropriate where the appellate authority dismissed the appeal for delay but sufficient cause is later found by the superior forum. Precedent Treatment: The Court applied settled principles that remand and direction to decide on merits is the appropriate remedy when a cause for condonation is established, so that substantive rights are adjudicated rather than extinguished by technical default. Interpretation and reasoning: Given the Tribunal's acceptance of sufficient cause and the policy that merits should be examined, the Tribunal directed restoration to the first appellate authority with an explicit direction to condone the delay and hear the appeal on merits. The Tribunal also imposed a procedural expectation on the assessee to make submissions without seeking unnecessary adjournments, balancing the need for expedition against fairness. Ratio vs. Obiter: Ratio - when delay is condoned by a superior forum, the correct course is to remit to the appellate authority with directions to condone the delay and decide the appeal on merits after giving opportunity of hearing. Obiter - admonition to the party to avoid frivolous adjournments on remand. Conclusion: The appeal was allowed for statistical purposes; the matter was remitted to the first appellate authority with direction to condone the delay and decide on merits after hearing the assessee. Cross-References and Interaction of Issues The Tribunal's findings on the 132-day delay before the Tribunal (Issue 1) and the 151-day delay before the first appellate authority (Issue 2) are consistent and interlinked: both are governed by the same overarching principle favoring substantial justice over technical dismissal. The Tribunal applied the stated precedents to both delays and, as a consequence, remitted the matter (Issue 3) to ensure adjudication on merits.