Delay to be Condoned if Explanation does not Smack of Mala Fides and no Dilatory Strategy Involved: ITAT

Sh. Kapoor Singh vs. The ITO

Sh. Gian Singh vs. The ITO,

Sh. Gurmail Singh vs. The ITO

Sh. Hardev Singh vs. The ITO,

Sh. Sham Singh vs. ITO,

(Order pronounced on 23.05.2022)

The five appeals filed were having identical issues and were heard and disposed of together. For convenience, ITA No. 1479/Chd/2019, the case of Sh. Kapoor Singh is taken as the lead case.

In the case, the return of income was filed declaring an income of Rs. 28,56,450 for assessment year 2011-12 and subsequently the case was selected for scrutiny under CASS. The assessee had declared income from interest on land compensation. It was observed by AO that the assessee had declared interest on enhanced compensation by declaring Rs. 28,56,449 as taxable u/s 34 of the Income Tax Act, 1961 and further an interest of Rs. 1,87,79,455 was claimed as exempt. The assessee had claimed refund of Rs. 14,31,330. The Assessing officer noticed that the assessee, the assessee received Rs. 2,06,86,589 as principal and Rs. 2,16,35,905 as interest on land compensation. The interest received was asked to be taxed under section 56(2)(iii) of the Act to which the assessee opposed but the Assessing officer completed the assessment at a total income of Rs. 1,10,51,268. On identical reasoning, the assessment of four other assessees were completed.

Appeal before CIT(A): Aggrieved with these additions, the assessees approached the Ld. First Appellate Authority challenging the additions. Ld. CIT(A) upheld the additions made by the Assessing officer but directed the benefit of TDS to be given to the assessees.

Appeal before ITAT: In the appeal, the facts of the case were not disputed except condonation of delay in filing the appeals. The AR submitted that there was substantial delay in filing the captioned five appeals as all the assessees were agriculturists and were illiterate and they had no knowledge about the intricacies of the Income Tax Law. They were unaware that the appeals on merits already had been dismissed by the Ld. CIT(A). the tribunal relied on the case of N.Balakrishnan Vs. M. Krishnamurthy, where it was held that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the Court is always deliberate.  The Hon’ble Apex Court further held that, “if the explanation does not smack of mala fides or it is not put forth as a part of a dilatory strategy, the court should show utmost consideration to the suitor. It was further held that there is no presumption that the delay in approaching the court is always deliberate and the words “sufficient cause” u/s 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice.”

Therefore, the tribunal condoned the delay in the cases of all the captioned assessees. The appeals were accordingly admitted for the purpose of hearing on the merits of the case.

As to the merits of the case, no paper book has been filed before the tribunal in any of the cases containing basis documentary evidences which would show the break-up of payments received or the copy of orders passed by the competent authority granting compensation or even the documents which would prove that the lands in question were compulsorily acquired or documents to prove that the lands acquired were agricultural lands. Hence, the tribunal was unable to take a view on merits of the appeal.

But in the interest of substantial justice, we restore these appeals to the file of Ld. First Appellate Authority, CIT(A) with a direction to adjudicate the issue after giving adequate opportunity to assessee to present their case and due consideration to the various judicial precedents and documentary evidences which the assessee might like to submit.

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