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Facts
The assessee's assessment order under Section 143(3) included additions for unexplained cash credit (Section 68), commission expenses (Section 69C), and interest expenses. The CIT(A) dismissed the assessee's appeal due to non-response. The assessee subsequently filed an appeal with the Tribunal, incurring a delay of 692 days, which she sought to condone citing email issues and a dispute with her former Chartered Accountant.
Held
The Tribunal condoned the 692-day delay, acknowledging that substantial justice should prevail over technical considerations and that the assessee was prevented by sufficient cause. However, it refrained from adjudicating on the merits and set aside the CIT(A)'s order, remanding the case back to the CIT(A) for fresh adjudication on merits after providing the assessee a reasonable opportunity of being heard and filing necessary documents.
Key Issues
Whether the delay in filing the appeal before the Tribunal should be condoned; whether the additions made by the Assessing Officer for unexplained cash credit, commission expenses, and interest expenses are sustainable on merits.
Sections Cited
143(3), 250, 68, 69C, 253(5), 251(1)(a), 250(4), Rule 46A, Section 5 of the Limitation Act, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
order : 28.05.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 29/12/2022, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 28/03/2016, passed under Section 143(3) of the Act for the Assessment Year 2012-2013.
2. The Assessee has raised following grounds of appeal : “1. Under the facts and in law, the learned CIT(A)-National Faceless Appeal Centre (hereinafter referred to as CIT(A)), erred in upholding the addition of Rs. 96,00,000/- on account Assessment Year 2013-2014 of unexplained cash credit under section 68 of the Income Tax Act, 1961 ('the Act'). 1.1 Under the facts and in circumstances, the learned CIT(A) erred in considering the transaction of the unsecured loan availed by the appellant from M/s Surya Diam as a bogus accommodation entry.
2. Under the facts and in law, the learned CIT(A) erred in disallowing Rs. 2,30,400/-on account of commission expenses u/s 69C of the Act.
3. Under the facts and in law, the learned CIT(A) erred in disallowing Rs. 8,59,266/-on account of Interest on Loan taken from the unsecured loan of Rs. 96,00,000/- during the impugned assessment year.
4. All the aforesaid grounds are without prejudice to each other, independent and in the alternative.”
3. The relevant facts in brief are that for the Assessment Year 2012-2013, the Assessee, a resident individual, filed return of income on 26/08/2013 declaring total income of INR.23,10,110/-. The case of the Assessee was selected for regular scrutiny and assessment under Section 143(3) of the Act was completed vide Assessment Order dated, 28/03/2016, whereby the Assessing Officer made following additions in the hands of the Assessee:
SNo Particulars Amount (INR.) 1 Additions u/s.68 as discussed above 96,00,000/- 2: Disallowance of commission expenses 2,30,400/- 3: Disallowance of interest expenses 8,59,266/- Thus, the total income of the Assessee was assessed at INR.1,29,99,778/-
4. Being aggrieved, the Assessee preferred appeal before CIT(A). During the appellate proceedings five notices of hearing were issued to the Assessee between 05/01/2021 to 14/01/2022 through Income Tax Business Application Portal. Since, no response was received from the Assessee, the CIT(A) dismissed the appeal vide Order, 2 Assessment Year 2013-2014 dated 29/12/2022.
Being aggrieved, the Assessee has preferred the present appeal before the Tribunal on the grounds reproduced in Paragraph 2 above.
The registry has marked delay of 692 days in filing the present appeal. When the appeal was taken up for hearing Learned Authorized Representative for the Assessee appearing before us submitted that the delay in filing the present appeal be condoned and in this regard reliance was placed upon the affidavit filed by the Assessee along with application seeking condonation of delay in filing the appeal which reads as under:
“1. That I am the Appellant in the present appeal and am well conversant with the facts of the case.
That an assessment order under section 250 of the Income Tax Act, 1961 was passed against me on 29.12.2022 by the National Faceless Appeal Centre (NFAC).
That as per law, the appeal against the said order was required to be filed within 60 days from the date of receipt of the order passed by the CIT(A).
That the CIT(A) order was sent to my registered email ID. However, it unfortunately ended up in the spam folder of my email account. As I do not regularly check this email address and primarily use other email IDs, I was unaware of its receipt 5. That the CIT(A) Notices and order were also sent on email ID of my Chartered Accountant. However, due to certain disputes with my Chartered Accountant, the notices and orders were not communicated to me.
6. That I remained under the bona fide belief that no CIT(A) order had been received.
7. That recently, while verifying the Income Tax e-filing portal, I observed the said CIT(A) order and immediately took necessary steps to file the appeal.
3 Assessment Year 2013-2014
8. That due to the above circumstances beyond my control, I failed to file the appeal within the prescribed time limit, and the delay of 692 days has occurred in filing the present appeal.
9. That the delay was neither intentional nor due to negligence but was caused due to bona fide reasons beyond my knowledge and control. 10. That I respectfully submit that the Hon’ble Tribunal may be pleased to condone the delay in filing the appeal in the interest of justice.” It was submitted that the delay was caused on account of reasons explained in the affidavit and for the reasons beyond the control of the Assessee. The Assessee was dependent upon the Chartered Accountant and however, on account of disputes with the Chartered Accountant appropriate representation could not be made before the CIT(A) and hearing before the CIT(A) could not be attended to. On account of dispute with the Chartered Accountant the notices and the order of the CIT(A) were never communicated to the Assessee. Therefore, the Assessee did not have the knowledge of the impugned order having been passed. Only while accessing the e- filing portal, the Assessee got to know that the impugned order has been passed and took steps to file the appeal. The Learned Authorized Representative for the Assessee further submitted that the CIT(A) had dismissed the appeal without examining merits. Since the Assessee had now filed all relevant documents/details before the Tribunal to establish merits of the contention raised by the Assessee, the claim of the Assessee be adjudicated on merits.
Per contra, the Learned Departmental Representative vehemently opposed the submissions made by the Authorized Representative for the Assessee and submitted that the Assessee was grossly negligent in her conduct and had failed to act with diligence. Relying upon the decision in the case of Interscape Vs. Commissioner of Central Excise, Mumbai -1 [2006 (198) ELT 275 (T-Mum)] dated 4 Assessment Year 2013-2014 13/09/2005, it has submitted that bonafide belief is not blind belief and a belief can be said to be bonafide belief only when it is formed after all reasonable considerations are taken into account. The Assessee has not established that she was entitled to hold such a belief. There was a delay of almost two years in filing the present appeal. The Assessee was sleeping over her rights and had failed to show sufficient cause warranting condonation of delay in filing the appeal before this Tribunal. It was submitted that the Assessee was required to explain the delay of each day showing sufficient cause for not filing the appeal within the time. It was further, submitted that the order of the CIT(A) was, admittedly sent to her registered email address and over a period of two years, the Assessee neglected to access the same. The Learned Departmental Representative vehemently contended that the attempt made by the Assessee to explain the delay in filing the present appeal was an afterthought and therefore, application seeking condonation of delay should be dismissed. She also placed reliance upon the judgments wherein applications filed for seeking of condonation of delay under Section 5 of the Limitation Act, 1963 were dismissed. The Learned Departmental Representative supplemented her oral submissions by way of written submissions, dated 08/04/2025.
We have given thoughtful consideration to the rival submissions.
The power of condone delay in filing the appeal is vested in the Tribunal by virtue of Section 253(5) of the Act. Tribunal can condone the delay provided the Assessee can show sufficient cause for not presenting the appeal within prescribed time. On perusal of record we find that the appeal before the CIT(A) was instituted on 04/06/2016. In the Memorandum of Appeal filed by the Assessee in Form No. 35 the address of the chartered accountant was stated as email address for communication of the notices/orders electronically. It has been stated that the Assessee did not check her registered 5 Assessment Year 2013-2014 email regularly. The Assessee has stated that the email was filtered into spam folder of the Assessee and therefore, it had gone unnoticed. On perusal of the Assessment Order we find that during the assessment proceedings statement of the Assessee was recorded and she had stated that her husband was taking care of all her all the financial transactions and maintenance of books of account. [Please refer to paragraph 3.2 of the Assessment Order]. This supports the contention of the Assessee that she was not taking case of her tax matters independently and was dependent upon her husband/chartered accountant. It has been stated by the Assessee that on account of dispute with the Chartered Accountant neither the notices nor the order passed by the CIT(A) got communicated to her. While in case of a dispute with the Chartered Accountant the Assessee was expected to be vigilant in tracking the appeal, taking into account the overall facts and circumstances of the case, we are of the view that the delay in filing the appeal cannot be attributed to malafides on the part of the Assessee. In any case, the Assessee did not set to gain from delay in filing the present appeal before the Tribunal. While the conduct of the Assessee was far from ideal, we are of the view that she cannot be considered as grossly negligent having sought professional help in perusing the matter. In the case of Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 (SC) the Hon’ble Supreme Court has, while dealing with the issue of condonation of delay, emphasized that substantial justice should prevail over technical considerations. Every day’s delay must be explained does not mean that a pedantic approach should be taken and that the aforesaid doctrine must be applied in a rational common sense and pragmatic manner, more so in circumstances where a litigant does not stand to benefit by lodging the appeal late (as is the case in appeal before us). Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold. As against this, when delay is condoned, the 6 Assessment Year 2013-2014 highest that can happen is that a cause would be decided on merits after hearing the parties. Accepting the explanation given by the Assessee to be reasonable, we hold that in the present case the Assessee was prevented by the sufficient cause from filing the present appeal before the Tribunal within the prescribed time. Accordingly, we condone the delay of 692 days in filing the present appeal.
During the course of hearing it was contended that the CIT(A) has dismissed the appeal without examining the merits. On perusal of the impugned order passed by the CIT(A) we find that the CIT(A) has not merely dismissed the appeal on the ground of non- prosecution and has applied his mind to the facts of the case. Since no representation was made on behalf of the Assessee the addition made by the Assessing Officer was confirmed. Now it has been contended on behalf of the Assessee that the Assessee has a good case and therefore, an opportunity be granted to the Assessee to make out a case on merits. In our view, the Assessee has to make out a case on merits before the CIT(A). The Assessee cannot be permitted to take advantage of the present facts situation to skip adjudication on merits by the first appellate authority and carry the issue in appeal before the Tribunal without effectively exhausting the remedy of statutory appeal before the CIT(A). More so, in a case where the issue consideration would require examining/verification of fact relating to the alleged bogus transactions undertaken by the Assessee and/or admission of additional evidence. It would be pertinent to point while the CIT(A) has power of enhancement under Section 251(1)(a) of the Act, the Assessee can also move application for admission of additional evidence to substantiate claims in terms of Section 250(4) of the Act read with Rule 46A of the Income Tax Rules, 1963. Accordingly, we deem it appropriate and in the interest of justice, to restore the issue back to the file of the CIT(A). The 7 Assessment Year 2013-2014 Order, dated 29/12/2022, passed by the CIT(A) is set aside with the directions to adjudicate the appeal afresh after granting the Assessee a reasonable opportunity of being heard. The Assessee is also directed to co-operate in the appellate proceedings and forthwith file details, documents & submission in support of its claims/contentions before the CIT(A). The CIT(A) would be at liberty to admit/consider the same as per law. It is, however, clarified that in case the Assessee fails to enter appearance and/or fails to file details/documents/submission in response to notice of hearing issued by the CIT(A), the CIT(A) shall be at liberty to decide the issues on merits on the basis of material on record. The Assessee is directed to be vigilant and track the appellate proceedings through Income Tax Business Application Portal. The Assessee is also directed to take necessary steps to change the email address provided in Form 35 for communication of order/notices. In terms of the aforesaid, and without returning any findings on merits, the grounds raised by the Assessee are treated as allowed for statistical purposes. Thus, the appeal preferred by the Assessee is treated as allowed for statistical purposes.