K.C. Devdas for the Assessee. M. Narmada, DR for the Revenue

This is assessee’s appeal for the A.Y 2010-11 filed against the order of the CIT (A)-Kurnool, dated 4.3.2015.

2. At the outset it is seen that there is a delay of 1422 days in filing of this appeal before the Tribunal. The assessee has filed an application for condonation of delay stating as under:

“1. I, D. Peda Reddaiah, S/o D.Subbarayudu, Aged about 47 years, Prop. of Sri Lakshmi Venkateswara Wines, housed at 11/231, Badvel Road, Mydukur Village, Kadapa District, Andhra Pradesh, do solemnly affirm and state as under:

2. I am an illiterate and not well conversant with the Statutory provisions and I carried on business in wines for two years at Mydkur Village. I don't have any formal education.

3. I have carried on wines business under the name and style of Sri Lakshmi Venkateswara Wines for about two years. For the Assessment Year 2010-11, an order was passed by the Commissioner of Income Tax (Appeals), Kurnool on 04/03/2015. It was served on 28/03/2015. As I was not well conversant with the facts of the case and on the basis of the order passed by the Assessing Officer, I relied on some professional, who did not appear before the Assessing Officer or before the Commissioner of Income Tax (Appeals), Kurnool.

4. The order passed by the Assessing Officer was u/s 143(3) r.w.s 144 of the LT. Act, 1961. Thus, it was an order passed without my representation as advocates in this area who are supposed to appear on my behalf and to whom I had given the Power of Attorney did not appear before the Revenue Authorities and the matter ended with an order being passed ex-parte by the Assessing Officer on 25/03/2013.

5. On further appeal to the Ld CIT (A), Kurnool, my Authorised Representative did not appear and the CIT (A) dispose of the appeal on the ground there were no compliances and that there being no response and merely relying on the reasons of the AO, dismissed the appeal. There was no adjudication on merits.

6. Later sometime in the first week of April, 2019, I approached Mr. Bhaskara Reddy, Advocate, who informed me that an appeal should have been filed long back and therefore, presently the appeal is being filed to the Income Tax Appellate Tribunal with a prayer for condonation of delay.

7. the order of the CIT (A) was passed on 04/03/2015. The order was served on 28/03/2015. When I consulted Mr. Bhaskara Reddy, Advocate, I was informed that an appeal to the ITAT is to be filed with a prayer for condonation of delay. The appeal is being presently filed on 18/04/2019 with a delay of 1422 days.

8. The deponent being an illiterate and uneducated pleads for condonation of delay in filing the appeal.

9. There was no intention to default and the entire delay occurred on account of my illiteracy and not nuances of law and therefore, the appellant prays to condone the delay of 1422 days and proper adjudication of the matter on merits as the income from wines I am informed has been estimated far beyond the normal range.

10. If the delay is condoned, a meritorious case would be heard on merits by hearing both the deponent and the Department and on the contrary, if the delay is not condoned, a meritorious case would be thrown out on the threshold violating the principles of natural justice and fair play. Solemnly affirmed on the 10th day of April, 2019”.

3. In addition to the averments in the petition, the learned counsel for the assessee has further submitted that the assessee has a strong case on merits and therefore, the delay should be condoned and the assessee’s case should be considered on merits. In support of his contention that where there is a strong case on merits, the delay should be condoned, he placed reliance upon the following decisions:

i) The Hon'ble A.P. High Court in the case of Surya General Traders vs. Commercial Tax Officer & others (1997) (3) ALT 110, 31.03.1997.

ii) The Hon'ble A.P. High Court in the case of M/s. Madhupal Estates (P) Ltd vs. ITO in ITTA No.294 of 2016 dated 8.8.2016

iii) The Hon'ble Madras High Court in the case of M/s. Hosanna Ministries in T.C. Appeal No.3 of 2017

iv) The Hon'ble Bombay High Court in the case of CIT vs. KF Bioplants (P) Ltd (2015) 59 Taxmann.com 449 (Bombay).

4. The learned Counsel for the assessee submitted that in view of the above decisions, the delay of 1422 days should be condoned and the matter should be remitted to the file of the AO for reconsideration of the issue on merits since the assessment was also completed ex-parte the assessee u/s 144 of the Act.

5. The learned DR, on the other hand, strongly opposed the condonation of delay stating that there was also a delay of 292 days in filing of appeal before the CIT (A) which was not condoned by the CIT (A). Therefore according to him, it is evident that the assessee has not been vigilant in protecting his interest and has not filed an appeal with bonafide reasons. He therefore, submitted that the orders of the AO and the CIT (A) should be confirmed.

6. Having regard to the rival contentions and the material on record, I find that the assessment was completed u/s 143(3) r.w.s. 144 of the Act, because none appeared for the assessee before the AO inspite of several notices issued to him u/s 143(2) and 142(1) on 12.01.2012, 6.02.2012, 4.5.2012, 31.07.2012, 21.8.2012, 10.09.2012, 22.10.2012. The assessee’s representative had appeared only on 29.09.2012 but did not furnish any information called for by the AO and it was in these circumstances, that the AO completed the assessment u/s 143(3) r.w.s. 144 by estimating the income from wine business and also by disallowing sundry creditors to the extent of Rs.24,90,000/- as the assessee failed to prove the genuineness of the creditors, by estimating the interest on sundry debtors to the extent of Rs.3,59,200/- @18% and making an addition of Rs.64,656/-; and also bringing to tax the interest income of Rs. 21,476/- received from Bank. I find that though the assessee filed an appeal before the CIT (A) with a delay of 292 days, he did not file any application for condonation of delay and therefore, the CIT (A) has not admitted the appeal. Even though the notices were issued by the CIT (A) to the assessee on 30.01.2015, 20.2.2015 and 30.03.2015, there was no response by the assessee to the said notices. It was in these circumstances, that the CIT (A) did not admit the appeal and also confirmed the assessment order on merits as well. The assessee has now filed an appeal before the Tribunal with a delay of 1422 days stating that he was not advised properly by the Authorised Representative and that he was not aware of the steps to be taken against the assessment order. The conduct of the assessee is therefore, does not appear to be of a vigilant assessee. Let us therefore consider the decisions relied upon by the learned Counsel for the assessee and the circumstances therein in which were considered by the Hon'ble Courts for condoning the delay and whether they would apply to the case before the Tribunal.

6.1 In the case of Surya General Trades (Cited Supra), there was a delay of one year, five months and nine days in filing of the appeal and the reason given therein for the delay was that the assessee erroneously advised that no appeal need to be filed for the relevant A.Y as the demand against him for the earlier A.Ys were pending before the Tribunal and whatever order would be passed for that year would automatically apply for the subsequent year and it was only when he met his Counsel that he was explained that the appeal has to be filed in respect of each year. It was in these circumstances that the Hon'ble High Court has held that where a person has a good case on merits, the State should not take technical plea of limitation so as to deprive him of his just dues.

6.2. In the case of Madhupal Estates (P) Ltd (Cited Supra) also there was a short delay of only 53 days in filing of the appeal before the Hon'ble High Court and the Hon'ble High Court had condoned the delay.

6.3 In the case of M/s. Hosanna Ministries (Cited Supra) also, there was a delay of 1902 days in preferring the appeal and the reasons for the delay was that the assessee was not aware that an appeal could be filed to the Tribunal against the order of the rejection of registration by the CIT (A) u/s 12AA of the Act and it is only after obtaining the professional advise that the appeal was filed.

6.4 The Hon'ble Madras High Court at Para 21 to 27 of its order has held as under:

21. Now, we come to the main reason i.e., the reason of delay shown for the rejection of the appeal through the impugned order. No doubt, the delay of 1902 days is a huge and enormous delay. But, when we look at the reasons given by the assessee for such a delay, it shows that it is not attributable to any lame excuses on medical grounds or otherwise. But, it is only the reason of either non advise on the part of the professional, who has been engaged by the assessee or the ignorance of law by the assessee itself. Assessee knew well that if a plea of ignorance of law is taken, that would be, on the face of it, rejected by the court/Tribunal, nevertheless, such a plea alone had been taken by the assessee and that itself would show the inherent genuineness attached with the reason cited by the assessee for such huge delay.

22. In this regard, we would emphasise that no doubt, the delay that too a long delay has to be explained with proper reasons. But, it does not mean that every day's delay must be explained. The court must take a pragmatic view in appreciating the reasons attributable to the delay caused to the party to approach the court of law. No pedantic view or approach to be adopted by the court in considering the reasons given by the parties for delay in approaching the court.

23. In this regard, we would like to quote a decision of the Hon'ble Apex court, in the matter of Collector, land acquisition -vs- M.S.T.Katiji and others reported in I.T.R.Vol.167(1987) Page 471. In the said Judgment, their Lordships have given certain principles based on which, the issue with regard to the delay can be approached and the said portion of the order of the Judgment cited supra is reproduced hereunder: And such a liberal approach is adopted on principle as it is realized that:

1.Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

2.Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.

3.Every day's delay must be explained does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner.

4.When substantial justice and technical considerations 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 a non-deliberate delay.

5.There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.

6.It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

24. That apart, in a similar situation in a related appeal in T.C.A.No.886/2016 where also the very same facts have been given or adduced by the assessee for the huge delay of 1631 days in approaching the Tribunal. After having considered the very same reason cited in the said case as has been stated herein also, we have taken a view that in the given circumstances even such a huge delay can be condoned. The relevant portion of the order of us passed today in the said appeal is extracted hereunder:

6.1. A perusal of the petition for condonation of delay would show, (as was contended before us by the learned counsel for the appellant), that the Chartered Accountant engaged in the matter, one, Mr.A.Johnson, FCA, was unaware of the fact that an appeal could be filed against the order of the CIT, post the amendment made in Section 253(1)(c) of the Act.

6.2. The reason, we have come to the conclusion that the counsel for the Assessee would have taken instructions from the Assessee in preparing the petition for condonation of delay, is, because, the name of the Chartered Accountant is mentioned in the petition. Learned counsel could not have conjured up the name of the Chartered Accountant. There is nothing on record to suggest that the Revenue refuted this averment made in the petition.

6.3. Therefore, the matter has to be appreciated from a different angle, which is, can a litigant be prejudiced on account of, virtually, ignorance of law displayed, by a professional engaged by him, to prosecute his case before the appropriate forum.

7. The answer to this poser lies in the felicitous observations of the Supreme Court in the case of : Motilal Padampat Sugar Mills V. State of U.P., AIR 1979 SC 621 - wherein, it accepted the dicta of Maule, J. and Lord Atkin, that while ignorance of law is no excuse, (a maxim of different scope and application), there is not and never has been a presumption that everyone knows the law. (See observations made in this behalf at page 629) :

6. The claim of the appellant to exemption could be sustained only on the doctrine of promissory estoppel and this doctrine could not be said to be so well defined in its scope and ambit and so free from uncertainty in its application that we should be compelled to hold that the appellant must have had knowledge of its right to exemption on the basis of promissory estoppel at the time when it addressed the letter dated 25th June, 1970. In fact, in the petition as originally filed, the right to claim total exemption from sales tax was not based on the plea of promissory estoppel which was introduced only by way of amendment. Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law. Over a hundred and thirty years ago, Maule, J., pointed out in Martindala v. Faulkner, (1846) 2 CB 706 "There is no presumption in this country that every person knows the law: it would be contrary to common sense and reason if it were so". Scrutton, also once said: "It is impossible to know all the statutory law, and not very possible to know all the common law." But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans v. Bartlem, 1937 AC 473 " ...... the fact is that there is not and never has been a presumption that every one knows the law. There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application." It is, therefore, not possible to presume, in the absence of any material placed before the Court, that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated 25th June, 1970. We accordingly reject the plea of waiver raised on behalf of the State Government. ... (emphasis is ours)

25. In view of these reasons, the order impugned of the Tribunal rejecting the appeal of the assessee mainly on the ground of delay, is liable to be interfered with. In addition, we also feel that the further reason given by the Tribunal for arriving at such a conclusion that the assessee was not engaging in activities in accordance with the objects specified in the trust deed also is not supported by materials as we are satisfied that the assessee has been functioning after proper registration with the authorities concerned under the Juvenile Act and a recent certification issued dated 14.12.2016 of the authorities concerned as referred to above would be valid for next five years. Therefore, the genuineness or otherwise of the functioning of the assessee cannot be easily doubted, in view of the certification issued by the Directorate of Social Defence, Government of Tamil Nadu as stated supra.

26. Therefore, even that reason given by the Tribunal for its conclusion in the order impugned cannot stand in the legal scrutiny. Therefore in our view, both the reasons cited in the impugned order of the Tribunal are liable to be interfered with and accordingly, the impugned Judgment is set aside.

27. In the result, we allow the appeal remitting the matter to the Tribunal for taking decision on merits on the issue raised by the assessee. There shall be no order as to costs”.

6.5 Similarly, the Hon'ble Bombay High Court in the case of CIT vs. KF Bioplants (P) Ltd (Supra) has condoned the delay of 1845 days in filing of the appeal by the Revenue on the ground that the failure of the revenue to remove the objection within time was an unintentional lapse and admission of the appeal by itself would not cause any prejudice to the assessee therein.

6.6 I find that none of the above decisions are exactly similar to the case of the assessee. However, from the principles laid down therein, that ordinarily a litigant does not benefit by the delay and by refusing to condone the delay a meritorious matter might be thrown out at the very threshold and cause of justice being defeated. I am inclined to condone the delay and remand the issue to the file of the AO for a decision on merits after giving the assessee a fair opportunity of hearing. This delay is condoned subject to the condition that the assessee pays a sum of Rs.10,000/- to the P.M’s Relief Fund within a period of one month days from the date of receipt of this order and shall file the proof of the same before the AO, only after which the AO shall take up the assessment proceedings. The assessee shall also cooperate with the AO for an early completion of the assessment.

7. In the result, assessee’s appeal is treated as allowed for statistical purposes.

Order pronounced in the Open Court on 30th April, 2020.