2025 (10) TMI 693 - AT - Income Tax

Appeal dismissed for 2,121-day delay; condonation denied as belated, lacking sufficient cause and bona fides

ITAT, Mumbai dismissed the appeal without admission for adjudication by refusing to condone a 2,121-day delay. The Tribunal found the appeal a belated ... Contesting the revisionary proceeding with the prayer for condonation of delay of almost six years - eligible reason to condone the delay of 2121 days in filing the present appeal before the Tribunal - redressal of contesting the ‘order giving effect’ to the revisionary order - Revision u/s 263 - Bogus purchases - chronology of the multiple proceedings - Assessing Officer has accepted the bogus purchase bills from bogus hawala bill providers and made an addition only to the extent of 12.5% of these total bogus purchases whereas the addition ought to have been made of the entire amount - Against the dismissal of the first appeal, assessee went in appeal before the Coordinate Bench of ITAT, Mumbai and Coordinate Bench dismissed the appeal of the assessee holding that assessee could not establish the identity of the parties and genuineness of the said transaction and On this order of the Coordinate Bench, assessee moved a miscellaneous application HELD THAT:- Having perused the ‘order giving effect’ to the impugned revisionary order as well as the appellate orders of ld. CIT(A) and the Coordinate Bench including that for miscellaneous application, the present appeal is filed merely to exploit the process of law, without justifiable reasons and establishment of bonafides. The conduct of assessee and the averments in the affidavit do not fall under “sufficient cause” required for the condonation of delay. Phrases like “liberal approach”, “justice oriented approach” and cause for the advancement of “substantial justice” cannot be employed to defeat the law of limitation so as to allow stale matters or as a matter of fact, dead matters to be revived and reopened by taking aid of the Limitation Act. The law of limitation is founded on public policy and enshrined in the legal maxim “interest reipublicae ut sit finis litiun”, i.e., it is for the general welfare that the period of limitation be put to litigation. Every public policy requires that there should be an end to the litigation, otherwise it would be a dichotomy, if the litigant is made immortal, vis-à-vis the right in parties. Tax statute has provided for limitation for filing appeals before various authorities and the same provides discretionary power to the authorities for condoning delay, provided there is sufficient cause with reasonable explanation, establishing bonafides of the case. In the present set of facts as elaborated above, and the redressal approach adopted by the assessee at the first instance, travelling from the first appeal before ld. CIT(A) to now pending admission of appeal before the Hon'ble High Court, the delay of 2121 days in filing the present appeal against the revisionary order is not within the stipulated timeline and does not fall within the canons of “sufficient cause”. No reason to condone the delay of 2121 days in filing the present appeal before the Tribunal, to admit the appeal for its adjudication. Accordingly, the appeal so filed is dismissed, on account of the aforesaid delay, without its admission for adjudication. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the delay of 2,121 days in filing the appeal before the Tribunal against an order passed under section 263 is liable to be condoned having regard to the explanation offered and the litigation history. 2. Whether the appeal against the revisionary order under section 263 should be admitted for adjudication where the assessee had chosen to challenge the 'order giving effect' and pursued alternate fora (CIT(A), ITAT, High Court) instead of filing a timely appeal against the revisionary order. 3. As a consequential and related legal question considered (insofar as relevant to the reason for dismissal): whether the revisional exercise under section 263 directing addition of entire alleged bogus purchases (100% disallowance) was legally sustainable in light of the record and judicial precedents. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of Delay (2,121 days) Legal framework: The Tribunal has discretion to condone delay in filing appeals subject to demonstration of 'sufficient cause' and bonafides; the law of limitation is founded on public policy requiring an end to litigation (interest reipublicae ut sit finis litium). Procedural timelines for filing appeals against orders are prescribed and available remedies include condonation only upon satisfactory explanation. Precedent treatment: The Court relied on established principles that the discretionary power for condonation must be exercised where 'sufficient cause' is shown; the bench cited broader jurisprudential maxims underlying limitation law. (Specific case law references appear in the record of authorities below, e.g., reliance on principles of limitation and requirement of bonafides.) Interpretation and reasoning: The Tribunal examined the affidavit and chronology. It noted that the assessee pursued alternate remedies (challenging the order giving effect, appeals to CIT(A), ITAT, miscellaneous application, and a pending High Court appeal), elected not to challenge the revisionary order within the prescribed 60-day period, and had ample opportunity to file a timely appeal. The conduct was held to reflect a deliberate choice of litigation strategy rather than inability or unavoidable impediment. The Tribunal emphasized that invoking liberal or justice-oriented phrases cannot be used to defeat limitation rules and revive stale matters. The explanation in the affidavit was held insufficient to inspire confidence as demonstrating bonafide cause for delay. Ratio vs. Obiter: Ratio - The dismissal of the appeal for non-condonation of a 2,121-day delay is a core dispositive holding. The legal reasoning that deliberate election of alternate remedies does not constitute 'sufficient cause' for condonation is ratio. Conclusions: The delay of 2,121 days is not condoned. The appeal is dismissed without admission for adjudication on account of delay; the tribunal found no sufficient cause or bonafide explanation to merit condonation. Issue 2 - Admissibility and Abuse of Process (related to Issue 1) Legal framework: Admissibility is governed by limitation rules and the Tribunal's discretion; repeated or belated invocation of remedies may amount to abuse of process where a litigant seeks multiple chances after exhausting available remedies. Precedent treatment: The Tribunal applied established principles that litigation cannot be kept open indefinitely; public policy disfavors reopening of stale matters. The decision aligns with the idea that discretionary relief is not a license to exploit procedural rules after exhaustion of remedies. Interpretation and reasoning: The Tribunal found the assessee's conduct - acceptance of assessment initially, subsequent challenge only to orders giving effect, pursuit of appeal paths up to pending High Court admission, and then belated appeal against the revisionary order - demonstrated strategic litigation and amounted to abuse of process. The bench noted absence of any barrier that prevented a timely appeal against the revisionary order and deprecated counsel's failure to file power of attorney as reflecting lackadaisical approach. Ratio vs. Obiter: Ratio - Determination that the appeal was filed to 'exploit the process of law' and thus not a fit case for condonation/admission is part of the operative decision. Obiter - comments rebuking counsel's procedural lapses are ancillary but illustrative. Conclusions: The appeal is inadmissible for adjudication; proceedings dismissed on grounds of abuse of process and non-satisfaction of 'sufficient cause'. Issue 3 - Legality of Revisional Direction to Add 100% of Alleged Bogus Purchases (considered but not decided on merits) Legal framework: Section 263 permits revisional interference where an assessment is erroneous and prejudicial to revenue. Where findings demonstrate purchases to be bogus and suppliers non-genuine, authorities may treat unexplained purchases as income under relevant provisions (e.g., section 69C or analogous provisions), and judicial precedent has addressed whether disallowance may be confined to estimated profit margin or extend to full purchase amount. Precedent treatment (followed/distinguished): The revisionary authority directed the Assessing Officer to consider the ratio of a High Court decision holding that once categorical finding of bogus purchases exists, it is not incumbent to restrict disallowance to profit margin and that 100% addition may be appropriate. That High Court decision had its SLP dismissed by the Supreme Court; the Tribunal's coordinate bench and CIT(A) relied upon that precedent (N.K. Industries/Proteins decision as applied) in upholding 100% addition. The present Tribunal did not re-adjudicate merits but noted the authorities below had followed that precedent. Interpretation and reasoning: The record shows repeated findings by AO, CIT(A) and a Coordinate Bench that identity and genuineness of suppliers were not established (133(6) notices unserved; absence of delivery challans; lack of signatures; inability to produce parties). The AO initially made a limited addition (12.5% GP estimate) but revisionary authority found that once purchases are held to be bogus, entire purchase amount should be added back, leaving GP estimation as secondary. The Tribunal acknowledged these findings but did not adjudicate the correctness on merits because the appeal was dismissed on limitation grounds. Ratio vs. Obiter: Obiter - Any comment on the correctness or application of the 100% addition principle is necessarily obiter in the present order because the Tribunal declined to admit the appeal and thus did not decide the substantive controversy. The recorded reliance on the cited High Court/Supreme Court treatment is noted as background to the litigation history but is not the basis for the dismissal. Conclusions: Merits-oriented determinations regarding 100% addition for alleged bogus purchases were left intact by earlier fora (AO after giving effect, CIT(A), Coordinate Bench) and were not disturbed in the present order; however, the Tribunal's dismissal on limitation grounds renders any view on the substantive correctness of the revisional direction non-decisive in this appeal. Cross-References See Issue 1 and Issue 2 for interrelated reasoning: the Tribunal's refusal to condone delay (Issue 1) is grounded in findings of abuse of process and deliberate election of alternative remedies (Issue 2). The substantive question of the correctness of the revisional direction (Issue 3) was considered only insofar as it formed the background to the litigation chronology and was not finally adjudicated by this order.