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Judgment
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeal) Addl./JCIT(A)-12, Mumbai (hereinafter referred to as 'the CIT(A)') dated 20th March, 2026, for assessment year 2018-19.
Shri S.K. Gupta appearing on behalf of the assessee submits that the CIT(A) has dismissed appeal of the assessee in-limine without condoning delay in filing of appeal. The learned AR pointed that there was delay of four months in filing of appeal before the CIT(A). The reason for delay was explained to the CIT(A). The delay in filing of appeal before the CIT(A) was for the reason, the assessee was advised by the tax consultant to first avail the remedy of rectification of order under Section 154 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') before the Assessing Officer. The assessee is a cooperative society. During the period under appeal, the assessee received Rs.19,76,725/- as collection from it's Members and interest income of Rs.2,66,519/- from the bank. The collection from Members was claimed as exempt on the principles of mutuality and deduction under Section 80P(2)(d) of the Act was claimed on interest income. The Assessing Officer, disallowed assessee's claim of exemption on collection from Members, as well as, deduction under Section 80P(2)(d) of the Act. The addition was made by the Assessing Officer on wrong appreciation of facts, documents on record and provisions of the Act. The assessee was advised by the tax professionals to file rectification petition under Section 154 of the Act. The same was filed on 30th April, 2025. Since, the assessee was not successful in the proceedings under Section 154 of the Act, the assessee availed the remedy of appeal and filed appeal before the CIT(A). This resulted in delay of four months in filing of the appeal before the first appellate authority. The learned AR contended that the assessee had explained 'sufficient cause' for delay in filing of the appeal. The learned AR prayed for hearing the appeal of the assessee on merits as it involved the limited issue of disallowance under Section 80P(2)(d) of the Act on interest income received during the year and exemption of collection from Members of co-operative Society on the concept of mutuality.
Per contra, Shri Manoj Kumar, representing the Department vehemently defended the impugned order. The learned DR pointed that application under Section 154 of the Act is not an alternative remedy. In any case, the assessee had filed application for rectification on 30th January, 2025 i.e., on the last date of limitation for filing of the appeal before the CIT(A). The learned DR thus prayed for dismissing appeal of the assessee.
Both sides heard. The CIT(A) has dismissed the appeal of the assessee in limine after rejecting assessee's application for condonation of delay in filing of the appeal. Undisputedly, appeal before the CIT(A) is time barred by four months. A perusal of impugned order shows that the assessee has explained the reason for delay in filing of the appeal, as the assessee was pursuing the remedy of rectification of order under Section 154 of the Act. It is an undisputed fact that the assessee had filed application before the Assessing Officer under Section 154 of the Act on 30th January, 2025. Since, the same was dismissed, the assessee thereafter filed appeal before the CIT(A).
The Hon'ble Apex Court in unequivocal manner has held that acceptance of explanation furnished by the assessee explaining delay should be the rule and refusal an exception, more so when no negligence or inaction or want of bona-fide can be imputed to the defaulting party. By taking a pedantic and hyper technical view, the explanation furnished should not be rejected, causing loss and irreparable injury to the party against whom the lis terminates. The expression 'sufficient cause' should be liberally construed so as to sub-serve the ends of justice.
The Hon'ble Supreme Court of India in the case of Collector Land Acquisition vs. Mst. Katiji & Ors. 167 ITR 471 has held that liberal approach should be adopted while dealing with an application praying for condonation of delay. Refusing to condone delay can result in meritorious matter being thrown out at the very threshold and cause of justice being defeated. Pedantic and hyper technical approach should not be adopted while dealing with an application for condonation of delay.
In the case of Ram Nath Sao @ Ram Nath Sahu & Others vs Gobardhan Sao and Others, reported as 2002 SCC (3) 195/2002 SCR (2) 77, the Hon'ble Apex Court held that the expression "sufficient cause" within the meaning of Section 5 of the Limitation Act or Order 22 Rule 9 of Civil Procedure Code or any other similar provision should receive a liberal construction so as to advance substantial justice. The courts should not proceed with the tendency of finding fault with cause shown and reject the petition by a slipshod order in over jubilation of disposal derive. Acceptance of explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bona-fide can be imputed to the defaulting party.
After going through the reasons, I am satisfied that the assessee was able to show 'sufficient cause' for delay in filing of the appeal before the CIT(A). Thus, the delay of four months in filing of the appeal before the CIT(A) is condoned.
The appeal of the assessee is restored to the CIT(A) for adjudication on merits after affording reasonable opportunity of making submissions to the assessee, in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.