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Facts
The assessee company had a delay of 87 days in filing its appeals due to being defunct since 2013. They claimed a lack of operational framework and inability to receive notices, leading to ex-parte assessment and appellate proceedings. The Revenue argued the assessee was a habitual defaulter.
Held
The Tribunal condoned the 87-day delay, accepting the assessee's explanation of a bona fide and sufficient cause. The Tribunal set aside the impugned order and restored the matter to the CIT(A) for fresh adjudication.
Key Issues
Whether the delay in filing the appeal is attributable to a sufficient cause, and whether the ex-parte assessment order should be set aside and restored for fresh adjudication.
Sections Cited
144, 153C, 250, 253(5), 69C, 132
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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI OMKARESHWAR CHIDARA
This bunch of 6 appeals were filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals)-52, Mumbai [ for brevity, to 4232 /Mum/2025 Birla Pacific Medspa Limited ‘Ld.CIT(A)], order passed under section 250 of the Income-tax Act, 1961 [for brevity, the “Ld. AO”] for Assessment Years 2009-10 to 2014-15, date of order 02/01/2025. The impugned orders emanated from the order of the Learned Deputy Commissioner of Income-tax, Central Circle 4(1), Mumbai (in short, ‘Ld.AO’) passed under section 144 read with section 153C of the Act, date of order 18/03/2016.
The registry informed that all the appeals are filed with a delay of 87 days. The assesse filed a condonation petition praying for condonation of delay. The relevant paragraphs of the said condonation petition is extracted below: - “Reason for Delay: The appellant's delay arose from exceptional and uncontrollable circumstances- not from negligence or oversight: The appellant request that a delay in filing the present appeal deserves to be condoned on account of bona fide and unavoidable circumstances, constituting a sufficient cause under section 253(5) of the Income-tax Act, 1961. It is well settled in law that a "sufficient cause" must receive a liberal construction so as to advance substantial justice, and that procedural delays should not override the adjudication of genuine grievances. The appellant company has remained defunct since 2013. The last balance sheet was filed for FY 2012-13, and the final AGM was held on 28.09.2013. Since then, there has been a complete cessation of business activity, with no functioning directors, authorised signatories, or key managerial personnel available to discharge statutory duties or to respond to notices issued by the Department. The company, being an artificial juridical person, is incapable of independent action and depends entirely on natural persons to fulfil its obligations under law. It is submitted that the prolonged absence of executive control did not merely hinder timely compliance -it rendered such compliance legally and practically unfeasible. Owing to the appellant's defunct status, there was no operational administrative framework in place. Notices issued by the Department were dispatched to addresses no longer in use and to email IDs that to 4232 /Mum/2025 Birla Pacific Medspa Limited were inactive of inaccessible. Consequently, the appellant was unaware of the statutory proceedings initiated against it. In the absence of any authorised personnel or functioning communication channels, the appellant was unable to receive notices, appoint counsel, collate relevant records, or take any remedial steps. This administrative vacuum directly resulted in both the assessment and appellate proceedings being concluded ex parte, without any opportunity for representation or adjudication on merits. The resultant tax demands were raised without verification of the facts and legal claims set out in the ITR. The delay in filing the appeal is therefore not attributable to deliberate inaction, but to a complete breakdown of internal administrative processes-circumstances that were entirely beyond the appellant's control. The appellate authority decision underscores the importance of resolving disputes on their merits rather than domissing them based on procedural lapses. Therefore, considering the judgement of Hon'ble Supreme Court has held in Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (SC) it was held that "a litigant does not stand to benefit by lodging an appeal late" and courts must not adopt a pedantic approach to delay if the explanation is bona fide and not tainted with malafide or gross negligence." Similarly, in N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, it was clarified that a cause of delay which is bona fide and reasonable cannot be equated with an excuse. An excuse implies carelessness or indifference, while a sufficient cause implies an unavoidable and justified impediment, which is the case here.”
The Ld. DR had not made any strong objection against the submissions of the assessee. Accordingly, we condone the delay of 87 days in filing the appeals before the Tribunal and the appeals are taken up for adjudication. to 4232 /Mum/2025 Birla Pacific Medspa Limited 4. All the appeals are having identical facts and common issue, therefore, for the sake of convenience, all the appeals were heard together and are disposed of by this consolidated order. is taken as lead case.
We have heard the rival submissions and perused the documents available on record. We find that the assessment order was passed ex parte under section 153C read with section 144 of the Income-tax Act, 1961. Though the Ld. AR of the assessee appeared before the Ld. AO, no evidence was produced, and accordingly, the entire expenses claimed by the assessee in the Profit and Loss Account amounting to Rs.13,07,66,322/- were added back under section 69C of the Act. The assessee carried the matter in appeal before the Ld. CIT(A). However, despite being granted several opportunities of hearing, there was no compliance from the side of the assessee.
In the course of hearing before us, the Ld. AR submitted that the assessee company has been defunct since 2013, with its last balance sheet filed for A.Y. 2012-13 and the final AGM held on 28.09.2013. A search and seizure action under section 132 of the Act was carried out in the case of the Yeshovardhan Birla group on 07.01.2014 covering various business premises and bank lockers of the group and its concerns. The notice under section 153C dated 23.12.2015 was duly served upon the assessee. However, due to the absence of a managerial person to handle taxation matters, the assessee could not appear before the Ld. AO, leading to completion of the ex parte assessment. The same difficulty persisted before the Ld. CIT(A). It was thus prayed that the matter may be restored to the file of the Ld.
The Ld. DR, on the other hand, argued that the assessee has not filed any return of income for the relevant assessment years and is a habitual defaulter, having failed to comply with notices issued even before the Ld. CIT(A). He thus supported the orders of the revenue authorities.
We have given our thoughtful consideration to the rival submissions. In our considered view, the assessee has explained sufficient cause for its non-compliance before both the Ld. AO and the Ld. CIT(A). Having regard to the totality of facts and circumstances, we are of the opinion that the assessee has demonstrated a reasonable cause for non-submission of documents before the Ld. CIT(A). Accordingly, in the interest of substantial justice, we set aside the impugned order and restore the matter to the file of the Ld. CIT(A) for adjudication afresh. The Ld. CIT(A) shall consider all documents and evidence that may be filed by the assessee in accordance with law and shall pass a speaking order after granting reasonable opportunity of being heard to the assessee. We make it clear that we have not expressed any opinion on the merits of the case so as not to prejudice the proceedings before the appellate authority. It is further directed that the assessee shall be diligent and fully cooperative in the set-aside proceedings before the Ld. CIT(A), and the Ld. AR has assured such cooperation to ensure expeditious disposal of the appeal. is allowed for statistical purpose. ITAs 4227 to 4230 & 4232 /Mum/2025 10. The facts and circumstances in all other appeals are identical to the appeal decided above, . Therefore, the decision arrived at above shall apply mutatis mutandis to these appeals also.