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Facts
The assessee did not file an income tax return for AY 2016-17, leading to reassessment proceedings and an assessment order under Sections 147, 144, and 144B with various additions. The assessee's appeal to the CIT(A) was dismissed solely due to a 98-day delay in filing, without condoning the delay or considering the merits of the case.
Held
The Tribunal found that the CIT(A) erred by dismissing the appeal on grounds of limitation without granting a reasonable opportunity to explain the delay or addressing the merits. It condoned the 98-day delay, deeming the explanation bona fide and sufficient, and remanded the case to the CIT(A) for fresh adjudication on merits, providing the assessee a reasonable opportunity of being heard.
Key Issues
Whether the CIT(A) was justified in dismissing an appeal solely due to a 98-day delay without condoning it or considering the merits, and if the delay should be condoned for a fresh adjudication on merits.
Sections Cited
147, 144B, 45, 69A, 69C, 144, 192, 69
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
order : 14.10.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 28/03/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 15/02/2024, passed under Section 147 read with Section 144B of the Income Tax Act, 1961 for the Assessment Year 2016-2017.
2. The Assessee has raised following grounds of appeal : “1. The Ld. A.O. has erred in law and facts by making Assessment of Salary at Rs.8,28,410 which is in excess of actual salary income of Rs.5,49,901 by Rs.2,78,509. Form 16 and Form 26 are attached. Assessment Year 2016-2017
2. The Ld. A.O. has erred in law and facts by making addition of Rs.67,00,000 as Capital gain under Sec. 45 of Income Tax Act. The Appellant has sold jointly owned flat at Kharghar for Rs.67,00,000 where the primary owner of the flat was appellants husband. All sale proceeds were received in the bank account of Mr. Jayraj Kuttappan. Computation of Mr.Jayraj Kuttappan is enclosed. There is no capital gain on sale of property as the indexed cost of acquisition exceeded sale consideration.
3. The Ld. A.O. has erred in law and facts by making addition of Rs.55,00,000 under sec 69A of income tax Act. Rs.55,00,000 Mira Road flat was pruchase out of Kharghar flat sale proceeds and out of Bank loan taken in the name of Mr. Jayraj Kuttappan (Husband) and Ruby Tiwari.
4. The Learned Assessing Officer has erred in law and facts making addition of Rs.3,72,455 under sec 69C as unexplained Expenditure. Rs.372455 payment made to credit card through the bank account out of taxable income earned by the Appellant.
5. The Ld. A.O. has erred in law and facts by making Assessment of other income of Rs.1,17,44,910. It appears that the addition has been made twice of the same amount (55,00,000+55,00,000 (Unexplained Investment) + 3,72,455 + 3,72,455 (Credit Card Bills)).
6. The Ld. A.O. has erred in law and facts by reopening of Assessment under sec 147 of the Income tax where there is no escapement of taxable income.”
3. The relevant facts in brief are that the Assessee, a resident, individual did not filed return of income for the Assessment Year 2016-2017. On the basis of information uploaded through ‘Insight Portal’, the reassessment proceedings were initiated in the case of the Assessee while the Assessee participated in the reassessment proceedings, only a partial reply was filed by the Assessee on 31/10/2023. The Assessing Officer completed the assessment vide Assessment Order, dated 15/02/2024 under Section 147 read with Section 144 and 144B of the Act assessing total income of the Assessee at INR.1,34,00,865/- after making following additions/disallowance:
2 Assessment Year 2016-2017 S. Description Amount No. 03 Variation in respect of u/s. 69A 55,00,000/- 04 Capital Gain on sale of the property u/s.45 67,00,000/- 05 Un-reported salary u/s.192 8,28,410 06 Credit card payment unexplained expenditure u/s.69C 3,72,455/- 4. Being aggrieved, Assessee preferred appeal before the Ld. CIT(A) which was dismissed vide order, dated 28/03/2025, as being barred by limitation.
Being aggrieved, the Assessee has preferred the present appeal before the Tribunal.
The Learned Authorized Representative for the Assessee submitted that there was a delay of 98 days in filing the appeal before the Ld. CIT(A) which was not condoned. It was submitted that while in Memorandum of Appeal Form 35 filed before the Ld. CIT(A), the Assessee had stated that there was delay in filing the appeal and such delay was attributable to lack of understanding of income tax proceedings and lack of proper legal advice having been received by the Assessee in relation to tax proceedings. It was submitted that Ld.CIT(A) dismissed the appeal preferred by the Assessee on the ground that no separate application for condonation of delay filed by the Assessee without granting any opportunity to the Assessee for the same.
Per contra the Learned Departmental Representative supported the order passed by the Ld. CIT(A) and submitted that the Assessee had failed to furnish/upload material evidence to establish what circumstances prevented the Assessee to file appeal before the Ld.CIT(A) within the prescribed time and in this regard Learned Departmental Representative placed reliance upon the Paragraph 5.3 of the impugned order.
We have considered the rival submissions and have perused the 3 Assessment Year 2016-2017 material on record.
It is admitted position that there was delay for 98 days in filing the appeal before the Ld. CIT(A). It is also admitted position that Assessee had sought condonation of delay in filing the appeal by stating the reasons for delay in filing appeal in memorandum of appeal in Form No.35 filed before the Ld. CIT(A). However, no separate application/documents were filed in this regard along with the appeal memorandum filed before the CIT(A). On perusal of record we find that without granting opportunity to the Assessee to furnish any application/documents supporting cause of delay, the Ld.CIT(A) dismissed the appeal preferred by the Assessee observing that the onus was on the Assessee to substantiate day to day delay of 98 days. According to the Ld. CIT(A), the Assessee had merely stated that she had lack of knowledge of how to respond to income tax notice and was not properly advised initially, however, the Assessee had failed to produce material evidence in support of the same. We note that the Ld. CIT(A) had referred to the judgment of the Hon’ble Supreme Court in the case of Vedabai alias Vaijayantabai Naburao Patil vs. Shantaram Baburao Patil 125 STC 375 SC wherein it was held that the expression ‘sufficient cause’ should receive liberal construction. However, the said judgment differentiated on facts by the Ld. CIT(A) observing that the Hon’ble Supreme Court was dealing with the case where delay was 7 days whereas in the present case there was extraordinary delay in filing of appeal of 98 days and the Assessee had failed to show sufficient cause. We note that the Ld. CIT(A) had, in Paragraph 4 of the order impugned, stated that the Assessee had filed submissions, dated 19/02/2025. However, the impugned order does not deal with the same. Further, the Ld.CIT(A) had recorded an appeal having merit should not be thrown away merely on account of delay and Assessee may be allowed to proceed its case on merits for the cause of justice. However, in the present 4 Assessment Year 2016-2017 case the Ld. CIT(A) dismissed the appeal holding the delay of 98 days to be inordinate without considering the merits. In our view the aforesaid approach adopted by the Ld. CIT(A) cannot be countenanced. In our view the Ld. CIT(A) erred in concluding the delay of 98 days in filing the appeal was extraordinary delay without granting Assessee an reasonable opportunity to explain the reason of delay and to support the same by filing relevant documents/details. Further, the Ld.CIT(A) failed to consider the merits despite observing that cause of justice required an appeal having merit should not be thrown out on account of limitation. On merits we find that the Assessing Officer had made addition of INR.55,00,000/- under Section 69 of the Act observing that the Assessee had failed to show the source of funds utilized for purchase of assets while at the same time bring to tax consideration of INR.67,00,000/- allegedly received by the Assessee on sale of property as capital gains (without granting benefit of cost of acquisition of such asset). This lead to addition of INR.1,22,00,000/- in the hands of Assessee claiming that sale proceeds received by the Assessee (brought to tax by the Assessing Officer) were utilized for the purchase of asset. Therefore, given the facts and circumstances of the present case, we accept the explanation offered by the Assessee for delay in filing appeal before the CIT(A) as bonafide and sufficient and therefore, condone delay of 98 days in filing the present appeal. The Assessee is granted another opportunity to make out the case on merits before the Ld.CIT(A). Accordingly, the Order, dated 15/02/2024, passed by the Ld.CIT(A) is set aside with the directions to adjudicate the appeal afresh on merits after granting the Assessee a reasonable opportunity of being heard. The Assessee is also directed to co-operate in the appellate proceedings and forthwith file details, documents & submission in support of its claims/contentions before the Ld. CIT(A). It is clarified that in case the Assessee fails to enter appearance and/or fails to file details/documents/submission in response to notice of hearing issued 5 Assessment Year 2016-2017 by the Ld. CIT(A), the Ld. CIT(A) shall be at liberty to decide the appeal on merits on the basis of material on record. The Assessee is directed to be vigilant and track the appellate proceedings through Income Tax Business Application Portal. In terms of the aforesaid, and without returning any findings on merits, the Ground No. 1 to 5 raised by the Assessee are treated as allowed for statistical purposes, and Ground No.5 is dismissed as having been rendered infructuous. Liberty is granted to the Assessee to raise all rights and contentions before the Ld.CIT(A).
In terms of above, the present appeal is treated as allowed for statistical purposes.