MEHER GHANSHAM LALWANI,MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEALS) , DELHI

This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax/NFAC, Delhi dated 01.09.2021 for assessment year 2014-15.

At the outset, the Ld. AR of the assessee Ms. Bhargavi Raval drew our attention to the ground no. 1 of the appeal which reads as under: - “1. The Hon'ble CIT (A) has grossly erred in view of the facts and circumstances of the case in dismissing the appeal stating that the appellant has not responded to any notices and thus the appeal has been dismissed ex parte. The fact is that assessee had received notices dt 23/06/2021, 22/07/2021 and 02/08/2021 however as the new Income Tax Portal was not functioning properly, the appellant was unable to respond to the notices received. The appellant had, on 28/06/2021 sent an email in response to the notice received stating that on logging in to the 2 A.Y. 2014-15 Meher Ghansham Lalwani new income tax website she was not getting the option to file the response to the notice. Thus, the appellant was unable to file her response due to technical issues with the new income tax portal. On subsequent dates also the appellant was unable to file her response due to technical problems on the portal. The appellant prays that the appeal be restored or be considered on merits and the appellant be given opportunity to pursue her appeal.”

Explaining the aforesaid ground, the Ld. AR submitted that the assessee had received notices dated 23.06.2021, 22.07.2021 & 02.08.2021. But unfortunately the Income Tax Portal was not functioning properly and the appellant was unable to respond to the notices it received. It was also brought to my notice that the assessee on 28.06.2021 had send an email informing the office of Ld. CIT(A) that due to technical glitches with the new Income Tax Website [i.e. there was no option to file the response] it was unable to upload the reply to the notice. Thus, the Ld. AR brought to my notice that the assessee was unable to file her response due to the technical glitches in the new Income Tax Portal. Therefore, the Ld. AR pleads that the appeal be restored back to the file of the Ld. CIT(A). The Ld. DR does not want us to give second innings to the assessee.

Having heard both the parties and after perusal of the records, it is noted that the assessee had filed return of income disclosing income of Rs.5,61,700/-, after claiming deduction under Chapter VIA of Rs.60,000/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter “the Act”) wherein it was accepted. Later, the assessee’s case was re-opened on the reasons that the assessee had 3 A.Y. 2014-15 Meher Ghansham Lalwani earned Long Term Capital Gain (LTCG) through trading in the scrip of M/s. Kailash Auto. And thereafter, the AO made an addition u/s 68 of the Act to the tune of Rs.29,12,500/-. On appeal, the Ld. CIT(A) confirmed the action of AO, wherein at para no. 4 of the impugned order he notes that after migration to NFAC, notices on various dates i.e. 29.12.2020, 23.06.2021, 22.07.2021 & 02.08.2021 were issued to the assessee for furnishing of explanation/submissions in support of his contention in respect of the grounds raised in the Appeal. According to the Ld. CIT(A), the assessee has not furnished any information/responded to the said notices during the Appellate Proceedings. Therefore, according to the Ld. CIT(A), the assessee has not proved that the genuineness of claim of Long Term Capital Gain (LTCG) u/s 10(38) of the Act. Therefore, he was pleased to dismiss the appeal of the assessee without going into the merits of the case. From the ground no.1 (supra) raised by the assessee before this Tribunal, it is clear that the assessee tried to respond to the notice issued by the Ld. CIT(A). However, he could not upload the explanation/documents due to the technical glitches of the Income Tax Portal. To prove this fact, the assessee had also send an email on 28.06.2021 informing the office of Ld. CIT(A) that he tried to respond to the notice but not able to get the option for up-loading the same, and thus failed to respond to the notices of Ld. CIT(A). In the light of the aforesaid facts, the assessee cannot be faulted for not uploading the replies/explanation/documents before the First Appellate Authority. Therefore, the impugned order of the Ld. CIT(A) which is an exparte order having been passed without going into the merits of the case is held to be in violation of the natural justice. Therefore, the impugned 4 A.Y. 2014-15 Meher Ghansham Lalwani order is order to be set aside and restore the appeal back to his file and direct him to give proper opportunity to the assessee before deciding the appeal in accordance to law. For that I rely on the decision of the Hon’ble Supreme Court in the case of ITO Vs. M. Pirai Choda (2011) 334 ITR 262 which was followed by Hon’ble Delhi High Court in the case of CIT Vs. PC Chemicals (Delhi High Court) dated 13.09.2012 wherein their Lordship has held that if there were procedural lapses on the part of the AO while making the assessment, the proper course would be not to invalid the assessment or delete the additions, but to remand the assessment to the AO so that the procedural lapses which had prejudicially affected the assessee can be set right and the assessment be completed after duly complying with the rules of natural justice which was followed also in the case of Sonal Construction (2012) 211 Taxman 167 (Del). On the ratio of the aforesaid judicial precedence, the impugned order is set aside and the appeal restored back to Ld CIT(A)’s file and direct him to give proper opportunity to the assessee before deciding the appeal and the Ld CIT(A) to pass a speaking order in accordance to law