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Facts
The assessee filed its return and was selected for scrutiny. The Assessing Officer made an addition of Rs. 75,65,492/- and initiated penalty proceedings. The assessee appealed to the CIT(A) against the addition and penalty, but the appeal was dismissed on grounds of delay.
Held
The Tribunal held that there was a 'sufficient cause' for the delay in filing the appeal before the first appellate authority, considering a liberal approach towards procedural defects. The case was remanded to the CIT(A) for de novo adjudication on merits after condoning the delay.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was condonable and if the substantial issues of the case should be decided on merits.
Sections Cited
143(3), 143(2), 142(1), 40(a)(ia), 270A, 250
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: AND SHRI PRABHASH SHANKAR, AM
O R D E R Per Kavitha Rajagopal, J M: These appeals have been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) 47, Mumbai (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2019-20. 2. As the facts are identical in both these appeals, we hereby pass a consolidated order by taking as a lead case.
The assessee has raised the following grounds of appeal:
1. 1. On the facts and circumstances of the case and the law on the subject, the Ld. Assessing Officer has passed the Assessment Order u/s 143(3) of the Income Tax & 2088Mum/2025 (A.Y. 2019-20) Hydroair Tectonics PCD Ltd. Act without giving adequate opportunity to the appellant and without considering the Covid-19 situation, the restriction imposed by the Government and the age of both the directors of the company who are senior citizen, the order passed is bad in law and assessment order so passed need to be scraped, cancelled and to be treated as null and void.
2. On the facts and circumstances of the case and the law on the subject, the Ld. CIT(A), wrongly and erroneously not considered the genuinity of the reason in delay in filing of appeal and has without giving any opportunity of being heard on the particular subject of delay in filing of appeal, the appellate order has been passed without considering the merit of the case and the appeal has been dismissed on the grounds of delay in filing of the appeal without appreciating the reason for delay and also without giving any opportunity to the appellant of being heard.
3. By dismissing the appeal by Ld. CIT(A) on the ground of delay in filing of appeal, equity and justice has been denied to the appellant.
4. By making the wrongful addition without appreciating the facts and circumstances of the payment made to the litigating party under the supervision of Hon'ble Session Court, Mumbai. Based on consent term filed before the Hon'ble Session Court, equity and justice has been denied to the appellant.
5. That the penalty order passed in connection with such assessment order u/s 270A also need to be cancelled and scraped.”
Brief facts of the case are that the assessee is a closely held public company and engaged in the business of implementation and acquisition of affluent treatment plants and sewage treatment plants and municipal solid waste processing projects. The assessee had filed its return of income dated 30.10.2019 declaring total income at Rs. 9,44,890/- The assessee’s case was selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The learned Assessing Officer ('ld. A.O.' for short) had passed the assessment order u/s. 143(3) of the Act dated 28.09.2021, determining total income at Rs. 85,10,380/- after making an addition of Rs. 75,65,492/- towards disallowance u/s. 40(a)(ia) of the Act. The ld. AO also initiated penalty proceeding u/s. 270A of the Act and vide order dated 23.03.2022 levied a & 2088Mum/2025 (A.Y. 2019-20) Hydroair Tectonics PCD Ltd. penalty of Rs. 11,68,868/- being 50% of the tax sought to be evaded on the addition of Rs. 75,65,492/-.
Aggrieved the assessee was in appeal before the first appellate authority, challenging both the addition as well as the penalty levied by the ld. AO and the ld. CIT(A) vide order dated 11.02.2025 dismissed the appeals filed by the assessee for the reason that there has been a delay of 775 days or rather 650 days as computed by the assessee in filing the appeal before the first appellate authority where the assessee has failed to extend that there was ‘sufficient cause’ for the said delay.
The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged both the addition as well as the penalty levied by the ld. AO before the ld. CIT(A) which was filed belatedly after the period of limitation specified by the Act. It is further observed that the assessee has failed to explain that there was no negligence on the part of the assessee in belatedly filing the appeal and also has failed to explain that there was ‘sufficient cause’ for the delay in filing the appeal along with cogent documentary evidences. The ld. CIT(A) had dismissed the appeal in limine without getting into the merits of the case for the above said reason.
Before us, the learned Authorised Representative (ld. AR for short) for the assessee prayed that the assessee be given one more opportunity to present its case before the ld. CIT(A) and that the assessee has got a good case on the merits. Further, the ld. AR contended that the delay was not want on or intentional.
& 2088Mum/2025 (A.Y. 2019-20) Hydroair Tectonics PCD Ltd.
The learned Departmental Representative ('ld. DR' for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee has not substantiated the delay caused in filing the appeal before the first appellate authority. The ld. DR relied on the order of the ld. CIT(A).
On the above facts of the case and on perusal of the contentions of the assessee, we deem it fit to hold that there was ‘sufficient cause’ for the delay in filing the appeal before the first appellate authority and also considering the liberal approach that has been taken by the Hon'ble Apex Court and the various High Courts in condoning the delay in filing the appeal which is a mere procedural defect and rather to decide the issue on the substantial issues, we are of the considered view that the assessee may be given one more opportunity to present its case before the first appellate authority by adhering to the principles of natural justice and in the interest of justice dispensation. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication after duly condoning the delay and the assessee is directed to strictly comply with the proceedings without any undue delay on its side and the ld. CIT(A) is also directed to decide the issue on the merits of the case based upon the submission of the assessee and in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
(Assessment Year: 2019-20) 12. The findings recorded in will apply mutatis mutandis to this appeal also.
& 2088Mum/2025 (A.Y. 2019-20) Hydroair Tectonics PCD Ltd. 13. In the result, both these appeals filed by the assessee are hereby allowed for statistical purpose. Order pronounced in the open court on 31.07.2025 Sd/- Sd/- (PRABHASH SHANKAR) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 31.07.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,