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Facts
The assessee's appeals were dismissed by the Ld. CIT(A) due to delay in filing. The assessee had received unsecured loans, and the entire amount was added back under section 68 of the Income Tax Act. Penalties were also imposed under sections 271AAC(1) and 272A(1)(d).
Held
The Tribunal held that the Ld. CIT(A) should have condoned the delay in filing the appeal, as the assessee had provided sufficient cause. The penalty proceedings were deemed premature. The matter was remanded to the Ld. CIT(A) for a decision on merits.
Key Issues
Whether the delay in filing the appeal before the Ld. CIT(A) was to be condoned, and whether the penalty proceedings were premature.
Sections Cited
250, 144, 144B, 272A(1)(d), 271AAC(1), 249(2), 142(1), 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
to 2387/Mum/2025 Rajesh Babulal Shah from the order of the National e-Assessment Centre, Delhi *for brevity, the “Ld. AO”+ passed under section 144 read with section 144B of the Act, dated 11/05/2021,order passed U/s 272A(1)(d) , date of order 03/09/2021 and order passed under section 271AAC(1) of the Act, date of order 03/02/2022.
When the appeal was called for hearing, there was no representation on behalf of the assessee, nor was any adjournment petition filed. Considering the merits and quantum involved in the case, we have decided to proceed with the hearing ex parte with respect to the assessee, after hearing the Ld. DR.
All the appeals were dismissed by the Ld.CIT(A) on the common ground of delay in filing the appeals belatedly and for contravening the section 249(2) of the Act. The details of delay in filing appeals before the Ld.CIT(A) are appearing as follows:- Sr.No. in number of days 1 2385/Mum/2025 682 days 2 2386/Mum/2025 568 days 3 2387/Mum/2025 416 days Considering this, all the appeals were taken for hearing together and are disposed of by this common order; is taken as lead case.
3. The case of the assessee was taken for limited scrutiny under e-Assessment Scheme, 2019 for the reasons of unsecured loan and the export and import data. During the proceedings, the Ld.AO found that the assessee had received unsecured loan amount to Rs.1,26,61,834/-. The assessee was asked to explain to 2387/Mum/2025 Rajesh Babulal Shah the source of the alleged borrowing during the assessment proceedings but no compliance was made by the assessee in pursuance of the notice issued under section 142(1) of the Act. Finally, the order was passed exparte and the entire unsecured loan amount was added back under section 68 of the Act as unexplained cash credit amount to Rs.1,26,61,834/- and the tax was computed under section 115BBE of the Act. Accordingly, the penalty under section 271AAC(1) was imposed on assessee in relation to alleged addition. The aggrieved assessee filed appeal before the Ld. CIT(A), who dismissed the appeal on the point of limitation of appeal for contravening provisions of section 249(2) of the Act. Still aggrieved, the assessee filed appeal before us.
We have heard the submissions of the Ld. DR and perused the documents available on record. The assessee has challenged both the quantum addition and the penalties imposed under Sections 272A(1)(d) and 271AAC(1) of the Act. As the quantum appeal remains pending and is yet to be adjudicated, the penalty proceedings are deemed premature at this stage. It is observed that the assessee has duly explained the reasons for the delay in filing the appeal before the Ld. CIT(A). In this regard, we draw reference to the decision of the Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Ors. [(1987) 167 ITR 471 (SC)], wherein it was held as follows: “6. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the "State" which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality to 2387/Mum/2025 Rajesh Babulal Shah before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the "State" is the applicant praying for condonation of delay. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file-pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant non grata status. The courts, therefore, have to be informed of the spirit and philosophy of the provision in the course of the interpretation of the expression "sufficient cause". So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits. Turning to the facts of the matter giving rise to the present appeal, we are satisfied that sufficient cause exists for the delay. The order of the High Court dismissing the appeal before it as time-barred, is therefore, set aside. Delay is condoned. And the matter is remitted to the High Court. The High Court will now dispose of the appeal on merits after affording reasonable opportunity of hearing to both the sides.”
Relying on the principle laid down by the Hon’ble Apex Court in the aforementioned case, we are of the view that the delay in filing the appeal ought to have been condoned. The assessee has adequately explained the delay, which appears to have been occasioned by the intention to mitigate tax liability and avail of appellate remedies. However, the Ld. CIT(A) summarily dismissed the condonation application on a mere technical ground, without appreciating the factual matrix or affording proper opportunity of hearing. We find that the assessee was denied reasonable opportunity to present his case and adduce supporting evidence in the appellate proceedings. Accordingly, in the interest of justice and fair play, we remand the matter to the file of the Ld. CIT(A) to 2387/Mum/2025 Rajesh Babulal Shah with a direction to condone the delay and adjudicate the appeal afresh by passing a reasoned and speaking order. We make it clear that we are not expressing any opinion on the merits of the case, so as to preserve the sanctity of the proceedings to be conducted by the Ld. CIT(A). Needless to say, the assessee shall be granted reasonable opportunity of being heard during the remanded proceedings. At the same time, the assessee is expected to act diligently and cooperate fully for the expeditious disposal of the appeal. & 2387/Mum/2025 5. These appeals pertain to the imposition of penalties under Sections 272A(1)(d) and 271AAC(1) of the Act, which emanate from the quantum addition. As the quantum addition has already been addressed and the matter has been restored to the file of the Ld. CIT(A), the present penalty appeals are consequential in nature. Accordingly, since the quantum appeal stands remanded to the file of the Ld. CIT(A), the same treatment shall apply to these penalty appeals, mutatis mutandis.