Facts of the Case

  • The present appeal was filed by the assessee, M/s Deep and Veer Construction Co. Pvt. Ltd., challenging the order dated 19.01.2023 passed by the Income Tax Appellate Tribunal (ITAT).
  • The Tribunal dismissed the appeal on the ground of delay of 968 days.
  • The assessee contended that:
    • The delay occurred because the case file was handled by an accountant who left the organization.
    • The order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 01.12.2015, though received on 18.01.2016, remained within the knowledge of the accountant and was brought to management’s notice only in July 2018.
  • Consequently, the appeal was filed before the Tribunal in September 2018 

Issues Involved

  1. Whether the delay of 968 days in filing the appeal before the ITAT could be condoned.
  2. Whether the assessee demonstrated “sufficient cause” for such delay.
  3. Whether any substantial question of law arose for consideration by the High Court 

Petitioner’s (Assessee’s) Arguments

  • The delay was unintentional and caused due to internal administrative lapse, specifically due to the departure of the accountant handling the matter.
  • On merits:
    • The disallowance related to hiring charges of machinery and equipment.
    • The Assessing Officer (AO) disallowed expenses on the ground of non-deduction of TDS.
    • The assessee argued that:
      • TDS provisions became applicable only from 16.07.2007.
      • For AY 2006–07, no TDS obligation existed.
  • The assessee relied on the earlier CIT(A) order (dated 27.05.2013), which had:
    • Partially allowed relief.
    • Remanded part of the matter to the AO.

Respondent’s (Revenue’s) Arguments

  • The delay was inordinate and unexplained, and no sufficient cause was shown.
  • In the second round of assessment:
    • The AO found that the assessee failed to prove the genuineness of hiring expenses.
    • Despite producing bills and bank transactions:
      • No supporting documentary evidence was provided to prove actual hiring of machinery.
      • Notices issued under Section 133(6) of the Income Tax Act, 1961 received no response.
      • No confirmation or verification of suppliers’ addresses was furnished.
  • Therefore, the transactions were considered non-genuine.

Court’s Findings / Order

  • The Court held:
    • The assessee failed to show reasonable cause for condonation of delay.
    • Internal mismanagement (accountant leaving) cannot justify such prolonged delay.
    • Even after discovering the CIT(A) order, the assessee took additional time (approx. 3 months) to file appeal.
  • The Court emphasized:
    • A litigant must act with due diligence and promptness.
  • Accordingly:
    • No interference was warranted with the ITAT’s order.
    • No substantial question of law arose.
  • Appeal dismissed.

Important Clarifications

  • Mere administrative lapses within an organization do not constitute “sufficient cause” for condonation of delay.
  • Even where a case may have merit on facts, procedural delay can be fatal.
  • Proof of expenditure requires:
    • Substantive documentary evidence, not merely bank transactions.
    • Verification of counterparties and compliance with statutory notices.

Sections Involved

  • Section 133(6), Income Tax Act, 1961 – Power to call for information.
  • Relevant provisions relating to TDS applicability (as argued) under the Income Tax Act, 1961.
  • Principles governing condonation of delay under procedural law.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS23082023ITA4752023_151221.pdf

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