SRI THIRUVA AGENCY,TRICHY vs. ITO, WARD-1(1), TRICHY

At the outset, it is noticed that the present appeal has been preferred by the assessee with a delay of 1032 days beyond the period of limitation prescribed under the provisions of the Act. The assessee has filed a petition seeking condonation of the said delay supported by an affidavit explaining the circumstances which, according to it, constituted sufficient cause for not presenting the appeal within the prescribed statutory period.

In the affidavit so filed, the assessee has averred that the notices issued by the Ld.CIT(A) in connection with the appellate proceedings, as well as the impugned appellate order, were served on an e-mail address pertaining to the uncle of the partners of the assessee-firm. It has been further explained that the partners of the assessee-firm were not maintaining cordial relations with the said person and were not in communication with him during the relevant period. Consequently, the notices issued by the appellate authority and the appellate order passed by the Ld.CIT(A) were not brought to the knowledge of the partners of the assessee-firm. It is the specific stand of the assessee that since the order had not come to its notice, it was genuinely unaware of the disposal of the first appellate proceedings and, therefore, was prevented from taking timely steps for preferring the present appeal before the Tribunal.

The assessee has further submitted that immediately upon coming to know about the passing of the impugned appellate order, it acted with promptitude and took necessary steps for collecting the relevant records, obtaining professional advice and filing the present appeal before this Tribunal. It has been contended that the delay was occasioned due to circumstances beyond the control of the assessee and that there was neither any wilful negligence nor any deliberate inaction on its part. The assessee has thus pleaded that the delay deserves to be condoned in the interest of substantial

Per contra, the Ld.DR strongly opposed the petition for condonation of delay. It was submitted that the delay involved is inordinate in nature and that the assessee has failed to establish sufficient cause for such prolonged delay. According to the Ld.DR, the explanation advanced by the assessee cannot be accepted as constituting a valid and satisfactory reason warranting condonation of delay, and therefore, the appeal deserves to be dismissed in limine as being barred by limitation.

We have given our thoughtful consideration to the rival submissions and have carefully perused the petition for condonation of delay, the affidavit filed in support thereof and the material available on record. The issue that arises for our consideration is whether the assessee has demonstrated sufficient cause so as to justify condonation of the delay of 1032 days in preferring the present appeal.

At this juncture, it would be apposite to note that the expression "sufficient cause" employed in the provisions relating to condonation of delay is required to receive a liberal and justice-oriented interpretation so as to advance the cause of substantial justice. The Hon'ble Supreme Court in catena of judgements has held that a pragmatic and liberal approach should be adopted while considering applications for condonation of delay and that substantial justice should prevail over technical considerations. The Hon'ble Apex Court in various judgements have observed that ordinarily a litigant does not stand to benefit by lodging an appeal belatedly and refusal to condone delay may result in a meritorious matter being thrown out at the threshold.

The Hon'ble Courts have held that the length of delay is not decisive and that the acceptability of the explanation offered for the delay is the primary consideration. It was further observed therein that unless mala fides or

Keeping in view the aforesaid settled principles, we find that there is no material available on record to indicate that the assessee had intentionally refrained from filing the appeal within the period prescribed under law. The explanation tendered by the assessee that the notices and the impugned appellate order were served upon an e-mail address belonging to a person who was not in communication with the partners of the assessee-firm appears to be plausible and has not been rebutted by the Revenue by bringing any cogent material on record. The affidavit filed by the assessee remains uncontroverted and there is nothing to suggest that the explanation offered is either concocted or lacking in bona fides.

It is also pertinent to note that no prejudice of an irreversible nature would be caused to the Revenue if the delay is condoned and the appeal is heard on merits. On the contrary, refusal to condone the delay would result in shutting the doors of justice upon the assessee and denying it an opportunity to canvass its case on merits. The object of the judicial process is to adjudicate disputes on merits rather than to non-suit a litigant on technical grounds, unless the conduct of such litigant demonstrates a conscious disregard of legal obligations. Having regard to the totality of the facts and circumstances of the case, the explanation furnished by the assessee, the affidavit placed on record and the settled legal principles governing condonation of delay, we are of the considered view that the assessee was prevented by sufficient and bona fide cause from filing the appeal within the prescribed period. We are satisfied that the delay was neither deliberate nor attributable to any mala fide intention and that the ends of substantial justice would be better served by affording the assessee an opportunity to prosecute the appeal on merits.

Coming to the merits of the case, the brief facts are that the assessee is a partnership firm engaged in the business of money lending. No return of income was filed by the assessee for the impugned assessment year. Based on information received regarding cash deposits made in the bank account during the demonetisation period, the AO issued a notice u/s.142(1) of the Act dated 14.02.2018, to which no compliance was made by the assessee. It is observed that the assessee also failed to respond to the subsequent notices issued during the course of the assessment proceedings.

Consequently, the AO invoked the provisions of section 133(6) of the Act and obtained the bank statement of the assessee from Axis Bank, Trichy. On verification of the said bank account, it was noticed that the assessee had deposited cash aggregating to Rs.55,38,000/- during the relevant previous year. The assessee was, therefore, called upon to explain the nature and source of the said cash deposits. However, in the absence of any response or supporting evidence from the assessee despite sufficient opportunities having been afforded, the AO proceeded to complete the assessment ex parte u/s.144 of the Act vide order dated 27.11.2019 and determined the total income at Rs.55,38,000/- by treating the cash deposits of Rs.55,38,000/- as unexplained money u/s.69A r.w.s 115BBE of the Act.

Aggrieved by the assessment order passed by the AO, the assessee preferred an appeal before the Ld.CIT(A). The Ld.CIT(A), vide order dated 05.04.2023, dismissed the appeal ex parte on the ground that the assessee had failed to respond to the notices issued during the course of the appellate

Aggrieved of the above order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.

We have heard the rival submissions, perused the orders of the lower authorities and carefully examined the material available on record. The facts borne out from the records reveal that the assessee, a partnership firm engaged in the business of money lending, had not filed its return of income for the impugned assessment year. Based on information received with regard to substantial cash deposits made in the bank account of the assessee during the demonetisation period, the AO initiated proceedings by issuing notice u/s.142(1) of the Act dated 14.02.2018 calling upon the assessee to furnish the requisite particulars and explain the source of such deposits. However, the assessee failed to comply with the said notice. It is further evident from the assessment order that even the subsequent notices issued during the course of assessment proceedings remained uncomplied with.

In view of the continued non-compliance on the part of the assessee, the AO invoked the provisions of section 133(6) of the Act and obtained the bank statement maintained by the assessee with Axis Bank, Trichy. Upon verification of the said bank account, it was noticed that the assessee had deposited cash aggregating to Rs.55,38,000/- during the relevant previous year. The assessee was called upon to explain the nature and source of the said cash deposits and to substantiate its claim with supporting documentary evidence. However, despite sufficient opportunities having been afforded, no explanation whatsoever was forthcoming from the assessee. In the absence of any cooperation or supporting evidence, the AO proceeded to complete the assessment ex parte u/s.144 of the Act vide order dated 27.11.2019 and treated the cash deposits amounting to Rs.55,38,000/- as unexplained money u/s.69A r.w.s 115BBE of the Act.

The assessee carried the matter in appeal before the Ld.CIT(A). However, it is noticed that even during the appellate proceedings, the assessee failed to avail the opportunities granted by the first appellate authority. The Ld.CIT(A), finding no effective representation from the assessee despite issuance of notices, proceeded to dismiss the appeal ex parte vide order dated 05.04.2023 and confirmed the addition made by the AO.

Before us, the Ld.DR submitted that the assessee was prevented by sufficient cause from effectively participating in the proceedings before the lower authorities and prayed for one more opportunity to place the relevant materials on record so as to explain the nature and source of the impugned cash deposits. It was contended that the assessee is engaged in the business of money lending. The Ld.DR, on the other hand, supported the orders of the authorities below and submitted that the assessee had repeatedly failed to comply with the statutory notices issued both during the assessment proceedings as well as the appellate proceedings and, therefore, no indulgence was warranted.

We have given our thoughtful consideration to the rival submissions. It is a settled proposition of law that the principles of natural justice require that a reasonable and effective opportunity of hearing should be afforded to an assessee before an adverse view is taken against it. Equally, it is also well- settled that an assessee cannot be permitted to take the statutory proceedings lightly and remain indifferent to the notices issued by the authorities vested with quasi-judicial functions. The records clearly demonstrate that the assessee had not only failed to participate in the assessment proceedings culminating in an ex parte assessment u/s.144 of the Act but had also remained absent before the Ld.CIT(A), resulting in dismissal of the appeal for non-prosecution. Such conduct on the part of the assessee cannot be appreciated and deserves to be strongly deprecated.

Accordingly, in the peculiar facts and circumstances of the case, and in the interest of justice, we deem it appropriate to set aside the impugned order of the Ld. CIT(A) as well as the assessment order passed by the AO and restore the entire matter to the file of the AO for fresh adjudication. The AO shall examine the claim of the assessee afresh, consider the explanations and evidences that may be furnished and thereafter pass a speaking order in accordance with law after affording adequate and effective opportunity of being heard to the assessee.

However, while granting such opportunity, we cannot lose sight of the fact that the assessee's own conduct has contributed substantially to the present situation. The assessee failed to respond to notices issued during the assessment proceedings and thereafter remained non-responsive even before the first appellate authority, thereby causing avoidable litigation and unnecessary expenditure of judicial time. Therefore, in order to balance the equities and to ensure that the assessee approaches the proceedings with due diligence and responsibility, we deem it fit to impose costs.

Accordingly, the restoration of the matter to the file of the AO is made subject to the condition that the assessee shall pay costs of Rs.5,000/- (Rupees Five Thousand only) to the Tamil Nadu State Legal Services Authority, Madras High Court, within a period of thirty days from the date of receipt of this

In the result, the appeal of the assessee is treated as allowed for statistical purposes.