SUNIL NAMDEO JAGTAP,MUMBAI vs. AO, MUMBAI

This appeal filed by the assessee is directed against the order dated 18.10.2024 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], under section 250 of the Income-tax Act, 1961 (“the Act”) for the assessment year 2017-18, arising from the penalty order dated 06.09.2021 passed under section 271B of the Act.

The effective grievance of the assessee is that the learned CIT(A) erred in refusing to condone the delay of 649 days in filing the appeal and, consequently, dismissing the appeal in limine without adjudicating the levy of penalty under section 271B of the Act on merits.

Brief facts are that the assessee is an individual engaged in the wholesale trading of milk in the name and style of M/s Ankita Milk Centre. The assessee filed his return of income on 29.03.2018 declaring total income of ₹3,34,580. The assessment was completed under section 143(3) of the Act on 17.12.2019 accepting the returned income. However, the Assessing Officer noticed that the assessee had shown total turnover of ₹2,46,48,416 and had not obtained the audit report prescribed under section 44AB of the Act. Accordingly, the Assessing Officer levied a penalty of ₹1,23,242 under section 271B of the Act. The appeal filed against the said penalty order was delayed by 649 days. Since the assessee had not stated any reason for the delay in Form No. 35, the learned CIT(A) declined to condone the delay and dismissed the appeal in limine without expressing any opinion on the merits of the penalty.

When the appeal was called for hearing, none appeared on behalf of the assessee. We, therefore, proceeded to dispose of the appeal after hearing the learned Departmental Representative and on the basis of the material available on record. In the paper book, the assessee has filed a petition explaining that his income-tax and compliance matters were being handled by an accountant, who abruptly left the service without handing over the records and pending matters. Consequently, the assessee remained unaware of the penalty order and the appeal could not be filed within the prescribed period. It was submitted in the petition

The learned Departmental Representative, with his able assistance, took us through the impugned order and submitted that no reason whatsoever was furnished by the assessee in Form No. 35 explaining the substantial delay. The learned CIT(A), therefore, was justified in refusing to condone the delay and dismissing the appeal as barred by limitation.

We have considered the submissions of the learned Departmental Representative and perused the material available on record. It is evident that the learned CIT(A) declined to condone the delay principally because no reason for the delay was furnished by the assessee in Form No. 35. Before us, however, the assessee has placed on record a petition explaining that the accountant entrusted with the income-tax matters had abruptly left the service without handing over the records and pending matters, due to which the assessee remained unaware of the penalty order. This explanation was not available for consideration before the learned CIT(A). In our considered view, the explanation now furnished constitutes a sufficient cause, and no deliberate or mala fide inaction can be attributed to the assessee. The lis should ordinarily be decided on merits instead of being terminated on a technical ground of limitation. We, therefore, condone the delay of 649 days in filing the appeal before the learned CIT(A) and set aside the impugned order. The matter is restored to the file of the learned CIT(A) with a direction to admit the appeal and adjudicate the grounds raised by the assessee on merits, after affording reasonable opportunity of being heard to both sides. The assessee is also directed to cooperate in the appellate proceedings and furnish the requisite details without seeking unnecessary adjournments.

In the result, the appeal filed by the assessee is allowed for statistical purposes.