The Kannur District Merchants Co-Op. vs Income Tax Officer

[Cites 6, Cited by 0] Kerala High Court The Kannur District Merchants Co-Op. ... vs Income Tax Officer on 28 October, 2025 Author: A.Muhamed Mustaque Bench: A.Muhamed Mustaque 1 ITA No.76 of 2025 2025:KER:80943 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE & THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON TUESDAY, THE 28TH DAY OF OCTOBER 2025 / 6TH KARTHIKA, 1947 ITA NO. 76 OF 2025 AGAINST THE ORDER DATED 23.06.2025 IN ITA NO.181/COCH/2025 OF I.T.A. TRIBUNAL, COCHIN BENCH ------- APPELLANT/APPELLANT/ASSESSEE: THE KANNUR DISTRICT MERCHANTS CO-OP. SOCIETY LTD., NO.C 1728, VYAPARA BHAVAN, PARAKANDY, KANNUR, REPRESENTED BY ITS SECRETARY - MANOHARAN M.P., PIN - 670001. BY ADVS. SRI.R.JAIKRISHNA KUM.NARAYANI HARIKRISHNAN SRI.C.S.ARUN SHANKAR SHRI.ANISH P. SHRI.AKHIL SHAJI SHRI.K.SURESH CHANDRAN RESPONDENT/RESPONDENT/RESPONDENT: INCOME TAX OFFICER, WARD 1 AND TPS, OFFICE OF INCOME TAX OFFICER, INCOME TAX DEPARTMENT, KANNUR, PIN - 670012. BY ADVS. SRI.G.KEERTHIVAS SHRI.HARIKUMAR G. (GOPINATHAN NAIR) THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 28.10.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 ITA No.76 of 2025 2025:KER:80943 JUDGMENT Harisankar V. Menon, J. The appellant, an assessee under the Income Tax Act, 1961 (hereinafter referred to as the 'Act'), was assessed by Annexure A order dated 26.09.2022, disallowing the deduction under Section 80P of the Act claimed by it. An appeal was instituted before the first appellate authority against the above assessment, with a delay of 343 days in filing the same. The first appellate authority condoned the delay of 343 days in filing the appeal. However, since the appellant did not avail of the various opportunities granted by the authority for the final hearing, the appeal was rejected for "non-prosecution" by an order dated 21.05.2024. Further appeal to the Income Tax Appellate Tribunal was also a belated one, with a delay of 225 days. The Tribunal, by the impugned order dated 23.06.2025 (Annexure E), refused to condone the delay, thereby rejecting the application filed in that regard along with the appeal. It is challenging the afore 3 ITA No.76 of 2025 2025:KER:80943 order that the appellant has instituted this appeal. 2. Heard Sri.R.Jaikrishna, the learned counsel for the appellant-assessee, as well as Sri.Harikumar G., the learned Standing Counsel for the respondent revenue. 3. Two issues arise for consideration in this appeal: the legality or otherwise of the rejection of the appeal by the appellate authorities, including the Tribunal. 4. The appeal to the Tribunal has been admittedly delayed by 225 days. The affidavit accompanying the application states that the appellant was unaware of the service of the first appellate order, as it did not receive any alert on the registered e-mail or phone number. The delay has been explained in detail, with reference to various dates as seen from the affidavit dated 18.02.2025 filed before the Tribunal. The affidavit also states that it was only when penal steps were taken subsequent to the rejection by the first appellate authority that the appellant realized about the rejection of the appeal. The Tribunal refused to accept the 4 ITA No.76 of 2025 2025:KER:80943 afore contentions and rejected the appeal in view of the judgment of the Apex Court in Mrinmoy Maity v. Chhanda Koley and Others [(2024) SCC OnLine SC 551]. 5. In our opinion, sufficient reasons have been highlighted in the affidavit seeking condonation of the delay. The judgment of the Apex Court in Collector, Land Acquisition, Anantnag and Another V. Mst Kaitij and Others [(1987) 2 SCC 107] advocates for a liberal approach to the condonation of delay, noting that a litigant does not stand to benefit by filing an appeal belatedly. It was also held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, since the other side cannot claim a vested right in an injustice being done due to a non-deliberate delay. Similarly, in Esha Bhattacharjee. V. Managing Committee of Raghunathpur Nafar Academy and Others [(2013) 12 SCC 649], also, the Apex Court extended a similar 5 ITA No.76 of 2025 2025:KER:80943 treatment. The reliance placed by the Tribunal on the judgment of the Apex Court in Mrinmoy Maity (supra) was not apposite, as the Apex Court in that case was dealing with the issue of the institution of a writ petition after a lapse of four years from the date of the cause of action. However, here the delay was only of 220 days, which ought to have been condoned by the Tribunal. Hence, the order of the Tribunal is to be set aside. 6. We further notice that the first appellate authority has rejected the appeal for non-prosecution. A reading of the first appellate order states that, although there were multiple postings before the authority, the appellant did not appear and therefore, the appeal was rejected for non-prosecution. In our opinion, the first appellate authority is not justified in rejecting an appeal for non-prosecution, since the provisions of Section 250 of the Act do not entitle the appellate authority to reject an appeal for non-appearance of the appellant. Therefore, the very 6 ITA No.76 of 2025 2025:KER:80943 rejection of the appeal by the first appellate authority was incorrect and arbitrary. In the result, this appeal is allowed, setting aside the impugned order of the Tribunal and remitting the matter back to the first appellate authority for fresh disposal on merit. Sd/- A.MUHAMED MUSTAQUE JUDGE Sd/- HARISANKAR V. MENON JUDGE ln 7 ITA No.76 of 2025 2025:KER:80943 APPENDIX OF ITA 76/2025 APPELLANT'S ANNEXURES: ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE ASSESSING AUTHORITY DATED 26.09.2022. ANNEXURE B TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE ASSESSING AUTHORITY DATED 26.09.2022. ANNEXURE C TRUE COPY OF THE ORDER PASSED BY THE COMMISSIONER INCOME TAX (APPEALS), NFAC, NEW DELHI DATED 21.05.2024. ANNEXURE D TRUE COPY OF THE DELAY CONDONATION PETITION ALONG WITH AFFIDAVIT DATED 18.02.2025. ANNEXURE E CERTIFIED COPY OF THE ORDER PASSED BY THE TRIBUNAL DATED 23.06.2025. ANNEXURE F TRUE COPY OF THE SHOW CAUSE NOTICE FOR THE PENALTY DATED 31.7.2024.