GANPAT AMRARAMJI PRAJAPATI ,MUMBAI vs. INCOME TAX OFFICER WARD 19(1)(3), MUMBAI

This appeal filed by the assessee is directed against the order dated 29.07.2019 passed by the learned Commissioner of Income Tax (Appeals)-30, Mumbai [hereinafter referred to as “the learned CIT(A)”], under section 250 of the Income-tax Act, 1961 (“the Act”), arising out of the assessment order dated 29.02.2016 passed under section 143(3) read with section 147 of the Act for the assessment year 2010-11.

The assessee has raised the following grounds of appeal:

There is a delay of 2,306 days in filing the present appeal. The assessee has filed a petition for condonation of delay supported by a duly sworn affidavit. It is stated that the assessee has studied only up to the fifth standard, is not conversant with the intricacies of direct and indirect tax laws and had entrusted his tax compliances to his tax consultant, late Shri Anand Pandey. The assessee was under the bona fide belief that the necessary steps had been taken in his case and that no demand was outstanding. It is submitted that the delay occurred due to his limited education, lack of legal awareness and bona fide reliance on professional advice and was neither intentional nor with a view to derive any benefit.

The learned Authorised Representative submitted that the assessee had sufficient cause for not filing the appeal within the prescribed period. He relied upon the affidavit and submitted that refusal to condone the delay would cause grave prejudice, whereas no corresponding prejudice would be caused to the Revenue if the matter were heard on merits. Reliance was placed on the decision of the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji and Others [1987] 167 ITR 471 (SC). The learned Authorised Representative further submitted that the learned CIT(A) passed the impugned order without effective hearing and enhanced the disallowance from 12.5% of the disputed purchases to 100%. He prayed that the delay be condoned and the matter be restored to the learned CIT(A) for fresh adjudication.

The learned Departmental Representative opposed the condonation of the inordinate delay and supported the impugned order. He submitted that sufficient opportunities had been granted by the learned CIT(A) and, therefore, no interference was called for. Without prejudice, he submitted that, if the matter is restored, the assessee should be directed to cooperate and not seek unnecessary adjournments.

We have heard the rival submissions and perused the material available on record. The explanation for the delay is supported by an affidavit. The material placed before us indicates that the assessee, having limited education, had entrusted the tax proceedings to a professional and remained under a bona fide belief that the necessary steps had been taken. There is nothing on record to suggest that the delay was deliberate or that the assessee stood to gain by filing the appeal belatedly. In Collector, Land Acquisition v. Mst. Katiji and Others (supra), the Hon’ble Supreme Court has held, inter alia, that the expression “sufficient cause” is adequately elastic to enable the courts 3 to apply the law in a meaningful manner which subserves the ends of justice; that ordinarily a litigant does not stand to benefit by lodging an appeal late; and that, when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. Considering the totality of the facts and the principles laid down by the Hon’ble Supreme Court, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within time. Accordingly, the delay of 2,306 days is condoned and the appeal is admitted for adjudication.

On merits, the assessment was reopened on the basis of information relating to purchases aggregating to Rs.1,46,18,559 from six parties. The Assessing Officer treated the purchases as non-genuine and made an addition of Rs.18,27,320, being 12.5% of such purchases. In the appellate proceedings, the learned CIT(A) issued an enhancement notice and, recording that there was no compliance, enhanced the addition to Rs.1,46,18,559, being 100% of the disputed purchases, and dismissed the appeal.

It is evident from paragraph 5.4.10 of the impugned order that the assessee did not comply with the notices issued during the appellate proceedings and did not avail the opportunity of being heard. The learned CIT(A) consequently decided the appeal and enhanced the income in the absence of effective representation by the assessee. Having regard to the substantial enhancement made and the explanation placed before us, we are of the considered view that one more opportunity should be granted to the assessee to present his case and supporting evidence before the learned CIT(A).

We, therefore, set aside the impugned order and restore the entire appeal to the file of the learned CIT(A) for fresh adjudication on merits, 4 in accordance with law, after affording adequate opportunity of being heard to the assessee. The learned CIT(A) shall consider the evidence and submissions filed by the assessee and pass a speaking order in terms of section 250(6) of the Act. The assessee is directed to appear before the learned CIT(A), furnish all necessary evidence and extend full cooperation without seeking unnecessary adjournments. We clarify that we have not expressed any opinion on the merits of the grounds raised by the assessee and all issues are left open.

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