GULAMABBAS MOHAMMEDHUSAIN MUKHI,MUMBAI vs. ITO WARD 17(3)(1), MUMBAI

Briefly stated, the assessment in the present case was completed ex parte under section 144 of the Act wherein commission expenditure of ₹7,75,26,000 was disallowed on the ground that there was no compliance to the notices issued during the course of assessment proceedings. Against the said assessment order, the assessee preferred an appeal before the learned CIT(A). However, there was a delay of about fifteen months in filing the first appeal. The learned CIT(A), not being satisfied with the explanation furnished by the assessee, declined to condone the delay and dismissed the appeal in limine without adjudicating the issues on merits. Aggrieved by the said action, the assessee is now in appeal before us.

In support of the prayer for condonation of delay, the assessee has filed a detailed affidavit explaining the circumstances leading to the delay. The substance of the explanation is that the assessee was throughout under the bona fide belief that the assessment and appellate proceedings were being duly attended to by the tax consultant

The affidavit further explains that the erstwhile consultant, who had been handling the matter from its inception, abruptly discontinued his services without adequately informing the assessee or making any alternative arrangements. As a consequence, the assessee was left without proper professional guidance during the relevant period. Being a layman and not conversant with the intricacies of income tax proceedings, the assessee was unable to independently appreciate the legal consequences arising from the assessment order and the limitation prescribed for filing the appeal. It has also been stated that after discovering the lapse, the assessee made sincere efforts to identify and engage a new consultant, collect the relevant records and documents, understand the factual and legal

We have carefully considered the rival submissions and perused the material available on record. We find that the explanation furnished by the assessee is plausible and supported by the affidavit placed before us. Significantly, the assessment itself has been framed ex parte under section 144 of the Act due to non-compliance of notices. Thus, the sequence of events narrated by the assessee demonstrates that the matter was not effectively pursued at any stage and the assessee had remained under the bona fide belief that the proceedings were being attended to by the professional engaged by him. The explanation does not reveal any deliberate negligence or mala fide intention but rather reflects circumstances which prevented the assessee from effectively pursuing the matter within time.

It is a settled principle of law that while considering an application for condonation of delay, a liberal and justice oriented approach should ordinarily be adopted where the explanation furnished is bona fide and does not indicate any deliberate inaction or lack of diligence. Procedural provisions

Accordingly, the delay in filing the first appeal before the learned CIT(A) is condoned. We further note that the assessment itself has been framed ex parte under section 144 of the Act and the learned CIT(A) has dismissed the appeal solely on the ground of delay without adjudicating any of the issues raised on merits. Thus, the assessee has effectively been deprived of an opportunity to place his case before both the authorities below. Considering the entirety of the facts and circumstances, and also taking note of the fair agreement of both the parties that the matter may be restored to the Assessing Officer, we deem it fit and proper to set aside the orders of the learned CIT(A) as well as the Assessing Officer and restore the entire matter to the file of the Assessing Officer for adjudication afresh in accordance with law. The Assessing Officer shall provide adequate and effective

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