Ishvarbhai Lallubhai Patel Vs Assessment Unit (ITAT Surat)
The Income Tax Appellate Tribunal (ITAT) Surat has ruled in favor of a 77-year-old farmer, Ishvarbhai Lallubhai Patel, condoning a 162-day delay in filing an appeal and ordering a fresh assessment. The case pertained to the Assessment Year 2015-16, where the Assessing Officer (AO) had made an addition of ₹74,17,350 to the assessee’s income under Section 50C of the Income-tax Act, 1961, after determining the fair market value of a jointly sold property. The appeal was initially rejected by the Commissioner of Income Tax (Appeals) [CIT(A)] on procedural grounds, as it was filed beyond the permissible period without an adequate explanation.
The tribunal acknowledged that Patel, an uneducated farmer engaged in vegetable farming, had relied on his tax consultant, who failed to inform him about the assessment proceedings and subsequent demand notices. Upon realizing the issue, Patel sought the assistance of a new consultant, who advised him to file a delayed appeal. The CIT(A), however, refused to condone the delay, citing insufficient justification and dismissed the appeal without examining the merits of the case. Patel, through his legal representative, argued before ITAT that the delay was due to circumstances beyond his control and requested a fresh assessment.
Citing the principle of natural justice and previous judicial precedents, the ITAT observed that the phrase “sufficient cause” in Section 253(5) of the Income-tax Act allows for flexibility in cases where justice would otherwise be denied due to technicalities. The tribunal referenced the Supreme Court’s stance that procedural delays should not override substantial justice. It noted that Patel’s lack of legal knowledge, coupled with misleading advice, constituted valid grounds for condonation. The ITAT set aside the CIT(A)’s order and remitted the case to the AO for reassessment, subject to a cost payment of ₹15,000 to the ITAT Bar Association, Surat.
The ruling underscores the importance of ensuring fair hearings, especially for individuals lacking financial and legal expertise. While directing a fresh assessment, the ITAT advised Patel to remain diligent in future proceedings and avoid unnecessary adjournments. The order was pronounced in open court on January 10, 2025.
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 14.08.2024 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2015-16.
2. The grounds of appeal raised by the assessee are as under:
“(1) The C.I.T(A) erred in law and on the facts and circumstances of the case in rejecting condonation of delay by not allowing opportunity of personal hearing.
(2) The C.I.T(A) has violated principal of natural justice in rejection of appeal for condonation of delay.
(3) The C.I.T(A) has erred in law and on the facts and circumstances of the case not verifying and considering that (1) in computing capital gain deduction of original cost/indexed cost should have been calculated and allowed as deduction, (2) assessment order is time barred.”
3. Facts of the case in brief are that the assessee filed the return of income for the AY.2015-16 on 30.03.2016, declaring total income of Rs.2,69,960/-. Subsequently, the assessee had filed revised ITR on 27.02.2017, declaring the total income as returned earlier. The assessee with other five co-owners had jointly sold immovable property, situated at Block No.32, S. No.27, 28 & 29, Paiki – 1, Moje – Barthana, Kosad, Surat for sale consideration of Rs.1,71,72,500/- with Sub-Registrar Office, Choryasi. The Stamp Duty Valuation authority (SVA) calculated Fair Market Value (FMV) of the property at Rs.4,45,04,100/-. There is a difference of Rs.2,73,31,600/- between the sale consideration and value determined by SVA as per provisions of section 50C of the Act. Various notices u/s 142(1) and show cause notices u/s 144 of the Act were issued but there were noncompliance to the said notices. Hence, the Assessing Officer (in short, ‘AO’) passed order u/s 144 of the Act because assessee failed to discharge the onus cast on him though he was given sufficient opportunities. The assessee had not furnished the computation of capital gain/loss. The cost / indexed cost of the land and details are not available. The assessee’s share was 1/6 of the sale value and accordingly, AO made addition of Rs.74,17,350/- as long-term capital gain taxed the same for AY.2015-16. Total income was determined at Rs.76,87,310/- u/s 144 r.w.s. 147 r.w.s. 144B of the Act.
4. Aggrieved by the order of AO, the assessee filed this appeal before CIT(A). The CIT(A) observed that assessment order was passed on 08.04.2023, but the appellant had filed appeal on 23.10.2023, which was delayed by 162 days. The appellant had acknowledged this delay in Form No.35. The reason for condonation of delay was that the AR did not inform about assessment proceedings about the subsequent demand notices. Then assessee approached another tax consultant after which the whole facts came to knowledge. The CIT(A) relied upon various decisions and observed that the appellant had failed to come forth with any substantial clarification to support the applications for condonation elaborating in the backdrop of sufficient reason that would justify condonation of delay involved in preferring of such appeal. The CIT(A) held that the appellant had not shown any sufficient cause for delay in filing appeal. He, therefore, did not admit the appeal and dismissed the same in limine.
5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted a paper book containing pages 1 to 32. He submitted that assessee is an old man of 77 year. The assessee is uneducated and was carrying on agricultural activities. The assessee was not aware of procedure under Income-tax matter. After three to four months, when tax consultant was asked about the progress in this matter, no proper and satisfactory response was given and therefore assessee got his file back from his and had given it to another tax consultant. The new Consultant after making study of the file, advised him to file belated appeal against assessment order and make request to condone the delay before CIT(A). The CIT(A) denied condonation of the delay and dismissed the appeal of assessee. The ld. AR submitted that that AO has passed an order u/s 144 of the Act. He further submitted that the CIT(A) has passed the order u/s 250 of the Act on 14.08.2024 wherein the delay was not condoned by him. The ld. AR contended that assessee could not represent his case before CIT(A) due to circumstances beyond his control. He requested to set aside the order of CIT(A) and remit the issue back to file of AO for fresh assessment on merit in the interests of justice. He has relied upon various decisions of Hon’ble Supreme Court, High Court and Tribunals.
6. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that assessee was negligent and careless during the appellate proceedings; hence, the order of CIT(A) should be upheld.
7. We have heard both the parties and perused the materials available on record. It is an undisputed fact that the assessee has been non-compliant to the statutory notices and the show cause notice issued to him by the AO. The CIT(A) did not condone the delay and passed the order u/s 250 of the Act without discussing anything on merit by observing that the delay of 162 days was not properly explained. We find that assessee is an uneducated senior citizen, aged 77 years. He was engaged in sale of vegetables grown in his own agricultural land. He was not properly advised by his old Consultant during the assessment proceedings and after passing of assessment order. Considering the facts of the case, we are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. The expression “sufficient cause” used in section 253(5) of the Act is sufficiently elastic to enable the Tribunal to apply the law which subserves the ends of justice. It has been held in a number of cases that 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. Accordingly, we hold that the interests of justice would be met in case the AO re-examines the entire issue afresh subject to payment of cost of Rs.15,000/- (Rupees fifteen thousand only) by the assessee to the credit of the “Income Tax Appellate Tribunal Bar Association, Surat Bench, Surat” within two weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass fresh assessment order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all details and explanations as needed by the AO by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes.
8. In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 10/01/2025.
