Length of delay is immaterial when there exists “sufficient cause”- ITAT condoned the delay of 1607 days
ITAT Ahmedabad in the case of Biren Dhirajlal Shah vs. Income Tax Officer, Ward-1, Gandhinagar [ITA Nos.: 194/Ahd/2021 and 190/Ahd/2024, Date of Order: 3 April 2025] has condoned the delay of 1607 days in filing the appeal.
Let us have a Short Overview of the case:
• The Tribunal emphasized that length of delay is immaterial when there exists “sufficient cause”.
• ITAT Observed as under:
“The delay is significant. But length of the delay becomes insignificant if there was sufficient cause… Accordingly, in our considered view, when there was a reasonable cause, the period of delay may not be relevant.”
Medical and financial hardship cited:
• Continuous health issues (2008-2009)
• Declared insolvent
• Involvement in cheque bouncing case
• Avoiding police and society due to fear and financial distress
• Not in a sound mental state to pursue legal recourse
Case Laws Relied Upon:
1. CIT v. K.S.P. Shanmugavel Nadai & Ors. [(1985) 153 ITR 596 (Mad)]
Delay of ~20 years condoned. Tribunal must consider if the assessee was pursuing other remedies or had valid reasons.
2. Collector, Land Acquisition v. Mst. Katiji [(1987) 167 ITR 471 (SC)]
• Six guiding principles laid down:
• Ordinarily, no benefit in filing late.
• Substantial justice should prevail over technicalities.
• “Every day’s delay must be explained” not to be applied pedantically.
• Delay not presumed to be deliberate or mala fide.
• Judiciary must remove injustice, not legalise it on technical grounds.
3. Basawaraj v. Land Acquisition Officer [(2013) 14 SCC 81]
• Sufficient cause means adequate reason, not negligence or lack of diligence.
• Court must evaluate if party acted bona fide and not remained inactive.
4. Ajay Dabre v. Pyare Ram [2023 SCC Online SC 92]
• Reiterated Basawaraj principles – courts cannot condone delay merely as a formality; justification must be shown.
5. Vareli Textile Industry v. CIT [154 Taxman 33 (Guj)]
• If delay is due to conscious abandonment, greater onus lies on the party to show sufficient cause.
• A meritorious case should not be thrown out due to technical delay.
Merits of the Case – Penalty u/s 271(1)(c):
• Assessment Order Issue:
• All credits (cheques and cash) in the assessee’s bank were added as income.
• No discussion or deduction of withdrawals.
• AO ignored assessee’s request (letter dated 22.01.2014) to assess under Section 44AF.
• AO called assessee’s submissions incomplete but gave no explanation.
• Held:
“It is settled law that only the credit sides of the bank do not represent the income.”
6. PCIT v. Shitalben Saurabh Vora (2022) 133 taxmann.com 441 (Guj)
• Bank deposits cannot be treated as income
Tribunal’s Final Observation:
• No affidavit filed by Revenue opposing condonation.
• No allegation of deliberate or mala fide delay.
• Substantial justice should not be defeated due to procedural lapse.
Held:
“If we reject the application… it would amount to legalise injustice on technical ground whereas the Tribunal is capable of removing injustice and to do justice
The Copy Of the order is as under:
