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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
This appeal has been filed by the assessee against the order of the Ld. Pr. Commissioner of Income Tax, Jalandhar-1 dated 28.03.2022 in respect of Assessment Year 2017-18.
Dashmesh Cold Storage v. Pr. CIT 2. The assessee has raised the following grounds of appeal:
“1. That neither in facts nor on law, the Id. Pr.CIT was justified in exercising jurisdiction under section 263 of the Income Tax Act, 1961, in this case.
That the impugned order is liable to be set aside being arbitrary, illegal and in violation of the principles of natural justice, when none of the notices, issued by the Id. PCIT were received by assessee.
3. That without prejudice to above, the Id. Pr. CIT, grossly erred to hold that the AO accepted the credits in capital accounts of the partners, without verification, to justify her action under sec 263 of the Act ibid.
That all the partners having individually confirmed their respective capital accounts in the firm owing up the fresh credits from their own sources, the Id.AO took a possible view in law in accepting their confirmations in firm's case and the Id. PCIT was not competent to substitute her view by invoking powers u/s.263.
That the order under appeal is against law and facts of the case and hence liable to be quashed.”
The appellant assesse is a partnership firm running a cold storage at Village Bodhipur, Tehsil Nakodar, Distt Jalandhar. For Assessment Year 2017-18, a regular assessment was framed by the ITO Nakodar u/s.143(3) on 03.12.2019. However, the Id. Pr. CIT Jalandhar, by invoking powers u/s. 263, vide her order dated 28.03.2022, set aside the above assessment holding it to be erroneous and prejudicial to interest of revenue.
Dashmesh Cold Storage v. Pr. CIT 4. The present appeal is filed before the Bench only on 16.09.2022 which is late by 117 days. The Ld. AR submitted that the Ld. Pr.CIT has never served the show cause notice on the partners in time. Consequently, the said order was passed ex-parte qua the appellant and even the impugned order dated 28,03.2022 was received late which caused even the delay of 117 days in filing the appeal before the Hon'ble Bench on 16.09.2022. The ld. AR submitted that the cold storage is a seasonal work and it normally starts from March end and continues for about six months thereafter, for the storage of potatoes. During off season, the partners hardly even visit the cold storage and it is left under the control of security staff and a supervision who ensures upkeep of the stocks running of the cold store in normal conditions. He further submitted that the impugned order dated 28.03.2022 passed u/s 263 was in fact received by a security man who failed to deliver it to any of the partners, since during that period, none of the partners had been visiting the cold store. It was only in August end, and he suddenly came across this order lying with him which he handed over to the managing partners on 01.09.2022. Immediately thereafter, steps were initiated to take remedial action again the said order, by approaching its local counsel, who advised filing of appeal before the Tribunal, and thereupon, the present appeal came to be filed on Dashmesh Cold Storage v. Pr. CIT 16.09.2022. It is also added that the earlier counsel who had associated with the assessee during assessment proceedings before the AO in 2009, had been left and a new counsel had been engaged thereafter. Hence, if any communication was received at his end, that too remained undelivered to the partners.
4.1 In the above background, the delay of 117 days occurred in filing of the present appeal. It was humbly submitted that since the partners come from a rural background and are agriculturists, they are unaware of the intricacies of tax laws and the procedures involved and that non receipt of order in time, culminate in the aforesaid delay in filing the appeal. He stated that, there was no malafide or afterthought in not presenting the appeal in time. It was therefore prayed that the unintended delay of 117 days be kindly condoned for substantial cause of justice and the appeal of the assessee be kindly heard on merits.
4.2 In support of the bonafide and unintentional delay in filing the appeal, the appellant has produced an affidavit of Sh. Kuldeep Singh S/o Sh.
Navraj Sigh duly certified by Notary Public which reads as under:
Dashmesh Cold Storage v. Pr. CIT
Dashmesh Cold Storage v. Pr. CIT 5. The ld. DR has no objection to delay condonation request of the appellant assessee.
After hearing both the sides on delay of 117 days in filing the captioned appeal, we hold that the appellant has reasonable cause for the delay in filing the appeal. The bonafide and unintentional delay in filing of the appeal by the appellant duly supported with an affidavit of Sh. Kuldeep Singh S/o Sh. Navraj Sigh duly certified by Notary Public, which is not controverted by the Department. The ld. DR has no objection to delay condonation request of the appellant assessee. Therefore, the delay of 117 days in filing the captioned appeal is condoned and appeal is admitted on merits.
The Ld. Pr. CIT invoked powers u/s. 263, and passed an order dated 28.03.2022, ex-parte qua the assessee, set-asiding the assessment order holding it to be erroneous and prejudicial to interest of revenue by observing that in response to SCN u/s 263 issued on 21.1.2022, 9.2.2022 and 10.3.2011. no reply has been furnished by the assesse; that the assessment has been finalized by the Assessing Officer without carrying out the necessary enquiries and verifications on the issue of Large capital contribution during the year of incorporation for which the case had been flagged under CASS for scrutiny and therefore, it is prejudicial to the Dashmesh Cold Storage v. Pr. CIT interest of revenue in terms of the provisions contained in clause (a) of Explanation 2 below sub section (1) of section 263 of the I.T. Act, 1961.
The Ld. Counsel for the appellant challenged the impugned order being arbitrary, illegal and in violation of the principles of natural justice, as none of the notices, issued by the Id. PCIT were received by assesse and thus, he prayed that the impugned order may be set aside to the file of the Pr. CIT to pass a speaking order de novo after granting proper opportunity of being heard with valid service of notice in view of principles of natural justice.
The Ld. DR stands by the impugned order. However, he has no objection to the request of the Appellant on account of the principles of natural justice.
Heard. Admittedly, the Ld. Pr. CIT has mentioned the factum of issue of notices but he did not mention the factum of service of the notices and show cause notice up on the appellant. Merely mentioning that in response to SCN u/s 263 issued on 21.1.2022, 9.2.2022 and 10.3.2011, no reply has been furnished by the assesse is not sufficient in view of principles of natural justice. The appellant explains that the non- appearance on the dates of hearing has not been willful or deliberate, but due to non receipt of Dashmesh Cold Storage v. Pr. CIT notices. In our view, the finding of Ld. Pr. CIT in the order passed u/s. 263, dated 28.03.2022, set asiding the assessment order holding it to be erroneous and prejudicial to interest of revenue are mechanical, arbitrary and perverse to the facts on record in view of principles of natural justice.
Accordingly, we accept the grievance of the assessee as genuine and, we consider it deem fit to restore the matter back to the Ld. Pr. CIT with the direction to pass a speaking order after considering the written submission and evidences filed on record before him during the afresh proceedings, after granting sufficient opportunity of being heard to the assessee. No doubt, the assessee shall cooperate in the fresh proceedings.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 on 31.01.2023.