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Facts
The assessee deposited cash during the demonetization period but failed to file an Income Tax Return despite notices. The Assessing Officer completed an ex-parte assessment under Section 144, making additions for unexplained cash deposits and levying interest. The Commissioner of Income Tax (Appeals) subsequently dismissed the assessee's appeal ex-parte due to consistent non-compliance and non-prosecution.
Held
The Tribunal condoned the delay in filing the appeal, accepting the reason of the CA's mother-in-law's serious illness as sufficient cause, aligning with the principle of substantial justice. It set aside the ex-parte order of the CIT(A) and remitted the entire matter back to the Assessing Officer for a fresh assessment (de-novo) to be decided on merits, as the case had not been adjudicated on merits by the lower authorities.
Key Issues
Whether the ex-parte assessment and ex-parte appeal dismissal were valid without a proper opportunity of being heard, and whether the delay in filing the appeal before the ITAT should be condoned based on sufficient cause.
Sections Cited
144, 250(6), 69A, 115BBE, 234A, 234B, 142(1), 133(6), 254
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA
ORDER
PER AVDHESH KUMAR MISHRA, AM
The appeal for the Assessment Year (‘AY’) 2017-18 filed by the assessee is directed against the order dated 06.06.2024 of the Commissioner of Income Tax (Appeals), NFAC, New Delhi [In Short ‘the CIT(A)’].
The assessee has raised following grounds: “1. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has grossly erred both in law and, on facts in upholding the determination of income made by the learned Income Tax Officer, Ward-36(7), Delhi of the appellant at Rs. 55,25,315/- in an order of assessment dated 30.11.2019 u/s 144 of the Act.
Bhawna Pal 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in disposing off the appeal ex-parte without granting any fair opportunity of being heard to the appellant. 2.1. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was reasonable cause for the appellant for not causing appearance on the dates fixed for hearing and as such disposal of the appeal without granting fair, meaningful and proper opportunity is untenable. 2.2. That even otherwise, an order passed in limini without effectively disposing of the grounds raised by the appellant is in infraction of section 250(6) of the Act and as such, order so made is otherwise too illegal, invalid and a vitiated order.
3. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding an addition of Rs. 55,25.315/- representing alleged unexplained cash deposits in the bank account of the appellant during the period of demonetization and brought to tax under section 69.A of the Act read with section 115BBE of the Act
4. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the levy of interest of Rs. 11,95,124/-u/s 234A of the Act, interest of Rs. 13,65,856/- u/s 234B of the Act which are not leviable on the facts of the appellant.” It is therefore prayed that, it be held that order disposing of the appeal expartee by the learned Commissioner of Income Tax (Appeals) be set aside It is therefore, prayed that, the addition made and upheld by the learned Commissioner of Income Tax (Appeals) alongwith interest levied be deleted and appeal of the appellant be allowed.
3. The relevant facts giving rise to this appeal are that the appellant assessee who deposited Rs.31,93,000/- in his bank account(s) during the demonetization period (8th November, 16 to 30th December, 2016) had not filed Income Tax Return of the relevant year. Hence, the Assessing Officer (‘AO’) issued a notice under section 142(1) of the Income Tax Act, 1961 (‘Act’)
Bhawna Pal for filing the ITR. The said notice under section 142(1) of the Act was got served to the assessee through the e-mail. But the same was not complied with. The assessee did not file any ITR. During the course of assessment proceedings, statement of bank account of the assessee was obtained under section 133(6) of the Act as under:
Name of Bank & Cash deposit during Total cash deposit Other credit A/c No. demonetization in bank account in FY 2016- period of FY 2016-17 during FY 2016-17 17 Union Bank of 11,98,000/- 18,73,000/- 36,52,315/- India A/c. 685301010050142 Total 11,98,000/- 18,73,000/- 36,52,315/- During the course of assessment proceedings, the assessee was show-caused to explain the source of cash deposits along with other credits in the bank account. During the assessment proceedings, the assessee failed to ensure any compliance of statutory notices; therefore, the AO had no option except to complete the assessment ex parte under section 144A of the Act. Aggrieved, the assessee filed appeal before the CIT(A), who dismissed the appeal due to non-prosecution holding as under:
“7.3. As mentioned in above para, the appellant during the Course of appellate proceedings has not complied with several notices issued calling for ground-wise written submission along with supporting documentary evidence(s), in support of Grounds of appeal. Further, since the appellant had not furnished cogent documentary evidences/proof in support of ground of appeal and also, during the course of assessment proceedings the appellant didn't bother to file any submission/explanation. It is Bhawna Pal presumed that the appellant is no longer interested to continue the appeal for proceedings. Also, mere facts mentioned in the Form 35 cannot be considered in the absence of any supporting documents and submissions. The AO has passed a very reasoned and speaking order considering all the facts and the circumstances of the case and hence, no interference with the order of the AO is called for.
8. In the result, the appeal is dismissed.”
The Ld. Counsel of the assessee prayed for remanding the matter to the AO. To which, the Ld. Sr. DR seemed in agreement.
The condonation of delay in filing this appeal is on the record. It had been stated that the CA of the assessee, due to serious illness of his mother- in-law, missed to file the appeal. An affidavit of the CA filed before us is on the record. So, the delay was not due to any negligence or lack of due diligence and took longer time to file this appeal. There is no dispute that under section 254 of the Act, the Tribunal may pass such orders as it thinks fit. We are of the considered view that there was no malafide or deliberate delay in filing this appeal. In the interest of substantial justice, the delay in filing this appeal deserves to be condoned and this appeal be decided on merit. We do not see any prejudice which will be caused to the Revenue in deciding this appeal on merit. In case of HL Malhotra & Company Pvt. Ltd. Vs DCIT, Circle-12, New Delhi (ITA No. 211/2020 & CM Appeals 32045- 32047/2020 dated 22nd December, 2020), the Hon’ble Delhi High Court has held that in absence of anything malafide or deliberate delay as a dilatory tactic, the Court should normally condone the delay as the intent is always Bhawna Pal to promote substantial justice following the Hon’ble Supreme Court decisions in the case of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107 and N. Balakrishnan Vs M. Krishnamurthy 1998 (7) SCC 123.
The explanation of the appellant assessee therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on her part in not presenting this appeal within the prescribed time. In case of Collector, Land Acquisition vs MST Katiji (Supra), the Hon'ble Supreme Court has held that the expression ‘Sufficient Cause’ employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life- purpose of the existence of the institution of Courts. It was further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Another principle laid down by the Hon’ble Supreme Court is that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It was also held by the Hon’ble Supreme Court that Bhawna Pal there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of this appeal and she does not stand to benefit by resorting to such delay. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing this appeal as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred.
In light of aforesaid discussions, in exercise of powers under section 254 of the Act, we hereby condone the delay in filing this appeal as we are satisfied that there was sufficient cause for not presenting this appeal within the prescribed time.
We have heard both parties and have perused the material available on the record. We take note of the fact that the Authorities below have completed the assessment and appeal ex-parte. The case has never tested on the merit. The Ld. CIT(A) has dismissed the appeal ex-parte due to non- prosecution and has not adjudicated the case on merits. We also take note of the fact that orders of the Authorities below have been passed due to consistent non-compliance on the part of the assessee. Hence, considering Bhawna Pal the facts of the case in entirety and in the interest of justice, we deem it fit to set aside the impugned order and remit the matter back to the file of the Ld. AO for deciding the case afresh/de-novo. We are refraining from making any comment on merit of the case. The appellant assessee, no doubt, shall cooperate in remitted assessment proceedings.
In the result, the assessee’s appeal is allowed for statistical purposes.