AMBRAI CLUB SANGLI,SANGLI vs. ITO, WARD-5, SANGLI, SANGLI

Briefly stated, the facts of the case are that the assessee is a social club, not carrying on any business activity. For the AY. 2020-21, the assessee filed its return of income on 30-12-2020, declaring total income of Rs. NIL. The return of the assessee was initially processed u/s. 143(1)(a) of the Act by the CPC on 01-04-2021. Subsequently, the case of the assessee was selected for limited scrutiny under CASS for the reason “Large Deductions Claimed u/s.57”. Accordingly, statutory notices u/s. 143(2) and 142(1) of the Act along with questionnaire were issued and served upon the assessee. In response there to the assessee submitted certain details before the Ld. Assessing Officer (“AO”) which are reproduced in para 3.2.2 of his impugned assessment order. After considering the details submitted by the assessee, the Ld.AO drew the following inferences:

Accordingly, show cause notice was issued to the assessee on 02-09- 2022, proposing that income from other sources be adopted as Rs. 1,10,46,568/- and disallowance of 25% of the expenses i.e., 13,41,134/- from the total expenses of Rs. 53,64,537/- claimed u/s. 57 of the Act, in the absence of evidences supporting the claim of the assessee as made in the return of income. As the assessee failed to respond to the show cause notice and other notices issued by the Ld.AO from time to time, the Ld.AO proceeded to complete the assessment, determining the total income of the 3 assessee at Rs. 70,23,165/- u/s. 143(3) r.w.s. 144B of the Act, vide his order dt. 17-09-2022, computing the income of the assessee as under:

The appeal before the Ld.CIT(A)/NFAC was filed with a delay. In Form No.35, the assessee stated that “The assessee trust was not aware about the assessment order passed by the Ld.AO and hence, delay of 133 days”. The said reason provided by the assessee for delay in filing of the appeal was not found to be constituting “sufficient/reasonable cause” by the Ld.CIT(A)/NFAC for condoning the delay in filing of the appeal. He, therefore, dismissed the appeal of the assessee in limine.

Aggrieved, the assessee is in appeal before the Tribunal, raising the following grounds of appeal:

The Ld.AR submitted that the delay in filing of the appeal before the Ld.CIT(A)/NFAC was not intentional. During the relevant time, management of the assessee-club had changed and the new management came to know about the passing of the assessment order only after the demand was raised and penalty was imposed on the assessee.

The Ld.DR, on the other hand, supported the order of the Ld.CIT(A)/NFAC.

We have heard the Ld. representatives of the parties and perused the material available on record. We find that the Ld.AO has completed the assessment ex-parte qua the assessee due to non-compliance of notices of hearing issued by him. The Ld.CIT(A)/NFAC has dismissed the appeal of the assessee in limine on account of delay in filing of the appeal, without considering the assessee‟s case on merits. Before us, Ld.AR has submitted that the delay in filing of the appeal was not intentional, but resulted owing to the reasons cited in the preceding paragraphs. He has therefore, humbly prayed that since the assessee has a strong case on merits, in the interest of justice, the Ld.CIT(A)/NFAC may be directed to decide the assessee‟s appeal afresh on merits, after condoning the delay in filing of the appeal.

We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest

We find recently the Hon'ble Supreme Court in the case of Inder has held as under:

There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation."

In the light of the decision(s) of the Hon'ble Supreme Court (supra), we hereby set aside the impugned order of the Ld. CIT(A)/NFAC and restore the matter back to his file with a direction to condone the delay in filing of the appeal by the assessee before him and decide the appeal on merits as per fact and law after giving due opportunity of being heard to the parties. Needless to say, the assessee shall comply with the notices issued by the Ld. CIT(A)/NFAC and make its submissions before him on the appointed date without seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld. CIT(A)/NFAC shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The effective grounds raised by the assessee are accordingly allowed for statistical purposes.

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

The concerned Pr.CIT, Pune

DR, ITAT, „A‟ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, ////