PRIYANKA SANTOSH PURO,MUMBAI vs. ASSESSMENT UNIT INCOME TAX DEPARTMENT, NFAC

Through ground no. 2, assessee is contesting that the first appeal has been dismissed for the reasons of delay in its filing and the explanations given by the assessee are vague not acceptable for the purpose of condoning the same. In this regard, it is noted that there is delay of 145 days in filing the first appeal. Assessee is an employee of Lilavati Kirtilal Mehta Medical Trust, working there since 1998. No return of income was filed for the year under consideration. Case of the assessee was taken up by initiating proceedings under section 147 read with section 148 of the Act, seeking explanation regarding transaction of purchase of an immovable property. Notice under section 148 of the Act was issued on 28.03.2023, in response to which the assessee filed her return on 12.04.2023, reporting total income at Rs. 3,26,420/-.

The explanation given by the assessee in respect of transaction of purchase of immovable property is that the residential property was purchased for total consideration of Rs. 86,23,000/- jointly with her husband Mr. Santosh Jaywant Puro. The total amount of Rs. 22,36,701/- was paid against the said agreed total consideration. Her husband had paid Rs. 9,29,059/-. The amount of Rs. 12,58,171/- was paid by obtaining housing loan from Punjab National Bank. Assessee had paid only Rs. 49,471/- out of her savings. Subsequently, owing to financial difficulties arising from loss of employment of her husband, the remaining amount could not be paid and thus, purchase of transaction of property was cancelled and the assessee could never acquire the same. According to her, since the said transaction was cancelled, it was not reported in the return of income. Since there was no capital asset, which was transferred unto the assessee, there could not be any capital gain thereon.

At the first appellate stage, on account of several traumatic events including loss of job of her spouse and death of her sister and father, hospitalization of mother and several other medical issues, the delay of 145 days occurred in filing the said appeal. Ld. CIT(A) has dismissed the appeal in limine as not maintainable on account of delay in filing the first appeal since assessee could not demonstrate “sufficient cause” in terms of section 249(3) of the Act.

To address the issue in hand before us, we need to delve into the understanding of the expression "sufficient cause". Sub-section 3 of Section 249 contemplates that ld. CIT(A) may admit an appeal after expiry of relevant period, if he is satisfied that there was a "sufficient cause" for not presenting it within that period. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally.

We have considered the submissions made before us. Ld. Sr. DR objected on the submissions made by the assessee by contending that the assessee has defaulted before the authorities below in complying with the requirements. We have perused the material placed on record and gone through the orders of the authorities below. The facts of the case have already been narrated in the above paragraph.

Considering the submissions made by the assessee before the ld. CIT(A) as well as contentions raised through ground no. 2 in the present appeal, we do take note of the fact that faceless regime is a new technological phenomenon going through teething phase. Hence, it requires lenient and pragmatic approach to handle certain lapses which are unintended. Transition to a faceless and digital appellate regime is intended to enhance efficiency, but it must not become a barrier to justice for those who lack the technical proficiency to navigate such systems. Reiterating Hon'ble Supreme Court's repeated emphasis on the view that "substantial justice" must prevail over technical lapses, we emphasize that the merits should not be stifled due to a failure to respond to electronic notices, provided such failure is not mala fide.

In the light of the above, if we examine the facts, then it would reveal that there is delay of 145 days in filing of first appeal. For the just decision of the controversy, considering the explanation furnished by 5 the assessee, we find it appropriate to condone the delay in filing the appeal before ld. CIT(A).

Having condoned the delay, in the given set of facts and circumstances, we find it appropriate to remit the matter back to the file of ld. Assessing Officer with a direction to decide the issue afresh and in accordance with law after affording due and effective opportunity of hearing to the assessee. Needless to say, assessee be given reasonable opportunity of being heard and to make all the relevant submissions as required to substantiate the claim made by him. We also direct the assessee to be diligent in making all its submissions so as to comply with the notices issued for fixing the date of hearing for effective and expeditious disposal of the proceedings. Accordingly, grounds raised by the assessee in this regard is allowed for statistical purposes.

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