Ignorance of Law & Accountant’s Failure Constitutes Sufficient Cause for Delay: ITAT criticises Hypertechnical Approach by CIT(A) [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Mumbai, while condoning delay of 127 days, said that lack of legal awareness and professional negligence by an accountant can constitute "sufficient cause" for a delay in filing an appeal. The appellate bench criticised the CIT(A) for taking a hyper-technical approach.

The appellant Mahesh Prakash Bende is an individual taxpayer whose tax assessment was completed on a "best judgment" basis under Sections 144 and 147 of the Income-tax Act. Because the taxpayer had failed to respond to initial statutory notices, the Assessing Officer estimated their total income at ₹56.23 lakh by making additions to contract receipts and salary income.

When the taxpayer eventually filed an appeal before the Commissionerof Income Tax (Appeals) [CIT(A)], it was 127 days past the deadline.

The taxpayer submitted that the delay was caused by their lack of legal knowledge, their incapacity to use digital tax platforms, the unexpected absence of their former accountant, and the fact that they first knew of the tax demand after their company had already closed.

The CIT(A) [Commissioner of Income Tax (Appeals)], however, took a very strict view of these reasons. The appellate authority refused to condone the delay, stating that "ignorance of the law" and blaming the accountant were not valid cause for condoning delay. Therefore, the appeal was dismissed "in limine".

The assessee filed the second appeal before the appellate tribunal where the bench of Saktijit Dey (Vice President) and Makarakand Vasant Mahadeokar (Accountant member) disagreed with this stance.

“In our considered view, the expression “sufficient cause” appearing in section 249(3) of the Act is required to be construed liberally so as to advance substantial justice” said the bench.

The Tribunal noted that while the taxpayer’s conduct might show some degree of passivity, there was no evidence that the delay was intentional, malicious, or an attempt to abuse the legal process.

It accepted that real-world issues, such as dependence on an accountant and limited access to digital communications, are reasonable explanations for a delay.

“We find that the learned CIT(A) has adopted a hyper- technical approach in declining to condone the delay and dismissing the appeal in limine, thereby depriving the assessee of a statutory right of appeal. In the interest of justice, we are of the considered view that the delay deserves to be condoned and the matter requires to be restored to the file of the learned CIT(A) for adjudication on merits” decided the bench.

Accordingly, the ITAT set aside the order of the CIT(A), condoned the delay, and remanded the matter back for fresh adjudication after providing adequate opportunity of hearing to the assessee.

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