SUNSOLAR RENEWABLE ENERGY PVT LTD,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX-3(3)(1), MUMBAI

The learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the addition of Rs. 26,77,21,000/- on account of revaluation of closing stock.

The learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the addition of Rs. 53,11,000/- on account of administrative expenses. 3. The learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the addition of Rs. 31,09,000/-on account of repairs & maintenance expenses. 3. At the outset, it was noted that the appeal is substantially delayed. In this regard, an application for condonation of the delay has been filed alongwith an affidavit of the Chairman of the assessee company Sri Kamal K. Singh who submitted that assessment was completed u/s. 143(3) of the Act at a loss of Rs. 7,42,22,739/-. The company filed an appeal before the CIT(A) who vide order dated 30.03.2023 dismissed its appeal. The company filed an appeal before the ITAT on 04.06.2024 and as such there is delay in filing the appeal by 371 days. This delay in filing the appeal was attributed to the fact that the company had stopped its business operations from the current financial year and there was no operations in the subsequent years as on today. It did not have any staff on its pay roll and as such there was nobody to download the appellate order from the e-proceedings account. The company came to know of passing of the appellate order only when the department started pressurising for payment of taxes due and P a g e | 3 A.Y. 2018-19 Sun Solar Renewable Energy Pvt. Ltd., Mumbai immediately thereafter, the appeal was filed. It is submitted that the CIT (A) has sustained the order of the AO and considerable hardships will be caused to the company, if the delay is not condoned. This is the first time a default has been committed in filing the appeal. A lenient view may be taken and the delay may be condoned.

On careful consideration of the submissions of the assessee, we are of the considered opinion that the delay in filing of the present appeal was not intentional but due to certain unavoidable reasons arising from inactivity and lull in the business operations although some element of negligence is discernible. Rejection of the request for condonation may cause genuine hardship to the assessee. In this connection, reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late……..Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated….Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient P a g e | 4 A.Y. 2018-19 Sun Solar Renewable Energy Pvt. Ltd., Mumbai cause for not preferring the appeal or making the application within such period…. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.”Accordingly, in the interest of justice, we condone the delay and proceed to adjudicate the grounds of appeal filed by the assessee.

Brief facts of the case are that the assessee filed its return of income declaring Nil income. During the year under consideration, there was no sale / income from operations and the assessee had claimed huge carried forward loss on account of large expenses debited to the P&L Account in comparison to the earlier year and revaluation of closing stock which was set off against Income from other sources. Details were called for by the AO by issuing notices on several occasions .However, they remained unresponded. Accordingly, various additions and disallowances were made by the AO passing the assessment order in ex parte manner due to non-compliance by the assessee. In the subsequent appellate proceedings also, the assessee did not make proper compliance as noted by the ld.CIT(A) which led to dismissal of its appeal on account of non prosecution.The assessment order was upheld.

The ld.AR has requested to remand the case back to the ld.CIT(A) for proper adjudication of the appeal. It is assured that the P a g e | 5 A.Y. 2018-19 Sun Solar Renewable Energy Pvt. Ltd., Mumbai assessee would comply with the notices without fail. On the other hand, the ld.DR has objected to this request claiming that the assessee is a habitual defaulter and non compliant.

We have heard the rival parties and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of non-prosecution. He failed to adjudicate the issues raised in the grounds of appeal and did not examine the materials available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear. However, it is equally important that it is a fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act and the income tax proceedings rely heavily on the cooperation and active participation of the taxpayer. In the present case, the assessee failed to demonstrate even a minimal level of responsibility in monitoring the e-filing portal for updates and notices related to its appeal. Despite the issuance of multiple notices under section 250 of the Act by the ld.CIT(A), no substantive response or explanation was submitted.

In view of the above, following the principles of natural justice and fair play, we set aside the ex-parte order of the ld.CIT(A) and restore the matter to his file for fresh adjudication. He is directed to decide the appeal on merits after providing a reasonable opportunity of being heard to the assessee who, in turn, would ensure due compliance.