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Facts
The assessee filed a return of income declaring 'Nil' income. The case was selected for scrutiny, and despite notices, the assessee failed to comply. The Assessing Officer (AO) estimated profit at 8% of the turnover, making an addition of Rs. 27,72,990. The CIT(A) confirmed the addition.
Held
The Tribunal condoned the delay in filing the appeal, citing miscommunication as the reason, and referred to the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji. The Tribunal decided to remand the case back to the AO for de novo assessment, emphasizing the principles of natural justice.
Key Issues
Whether the delay in filing the appeal is to be condoned and if the case should be remanded for de novo assessment due to lack of proper compliance and adherence to principles of natural justice.
Sections Cited
144, 143(2), 142(1), 44AB
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Before: Ms. KAVITHA RAJAGOPAL & SHRI PRABHASH SHANKAR
Date of Hearing 04.08.2025 Date of Pronouncement 15.09.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 144 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 13.12.2017 as passed by the Income Tax Officer, Ward-25(1)(1), Mumbai for the Assessment Year [A.Y.] 2015-16.
A.Y. 2015-16 Sakshi Agencies 2. The grounds of appeal are as under:
1. Under the Facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in law and on factsin confirming the addition of Rs. 27,72,990 made by the Assessing Officer by estimating profit at 8% of turnover without appreciating the fact that the appellant had maintained proper books of account which were duly audited under section 44AB of the Act and filed and reported thereon.
2. Under the Facts and circumstances of the case and in law, The learned CIT(A) has erred in law and in facts in upholding the action of the AO without appreciating the facts that the appellant books of accounts were maintained and audited under section 44AB and that the same should be deleted.
3. Under the Facts and circumstances of the case and in law, The learned Commissioner of Income Tax (Appeals) has erred in not considering the details and documents produced before him vide submission dated 28/02/2024 and 01/04/2024 and that the order of the CIT (A) to that extent should be set aside.
3. At the outset, it may be stated herethat the appeal is delayed by 312 days. In an affidavit and application for condonation, it is contented by Sri A.S Malhotra, Partner that the delay is attributable to certain lack of communication .It is submitted that the company suffered huge losses and its bank account was declared NPA by the bank which took over all its assets and liabilities. The assessee did not receive any mail though it is admitted that SMS messages were indeed received by him. Although the CA concerned uploaded certain details, the appeal was not followed leading to the CIT(A) dismissing the grounds. It is contented that there was no wilful negligence in the delay which may be condoned.
A.Y. 2015-16 Sakshi Agencies 4. 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 miscommunication. 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 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.” We therefore, condone the delay.
Brief fact of the case is that the assessee filed the return of income declaring a total income of Rs Nil. The case was selected for scrutiny. During the course of assessment proceedings, the AO issued notices u/s 143(2) and u/s 142(1) of the Act on various dates. But there was no compliance. Therefore, the AO issued a show cause notice on 30.1.2017. But, again the appellant did not comply. During the course of assessment proceedings, the AO found that the assessee had declared a turnover of Rs. 3,46,62,379/-. As no details were furnished, the AO A.Y. 2015-16 Sakshi Agencies rejected the books of accounts and estimated profit @ 8% of turnover of Rs. 3,46,62,379/- which amounted to Rs. 27,72,990/- as business income of the assessee in ex parte assessment order.
5.1 In the subsequent appeal filed before the ld.CIT(A), once again the assessee did not make proper compliance. The ld.CIT(A) observed that the appellant had not submitted any documentary evidences in support of its claims before the AO as well as in appeal proceedings. It needed to prove with supporting evidences that the figures reflected in the audited accounts were true and correct. Merely submitting the copy of audited financials along with audit report would not suffice. Sufficient opportunities were given to it during the course of appeal proceedings, but it failed to submit necessary satisfactory explanation and evidences. Consequently, the addition made by the AO was confirmed.
Before us, the ld.AR pleaded to remand the case back to the AO for de novo assessment with the assurance that the assessee would duly comply with the notices in this regard. The ld.DR however, objected to the request citing repeated non compliance.
Taking into consideration all relevant facts of the case, we are of the opinion that the scales of justice demand that the matter should A.Y. 2015-16 Sakshi Agencies be verified and revisited at the level of AO and accordingly, we are of the considered view that the matter should be remanded back to the file of AO for de novo assessment by him while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee.
In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 15/09/2025.