ASAD HUSSAIN SHAIKH,MUMBAI vs. ITO -30(1)(1), MUMBAI

Brief facts of the case are that the Assessee has filed his return of income for AY 2013-14 on 28.03.2015 declaring total income at Rs. 9,04,580/-. The return was processed u/s 143(1) subsequently the case was selected for scrutiny under CASS. Statutory notices u/s 142(1) and 143(2) dated 28-08-2015 were issued and served upon the assessee.

In compliance to the notices assessee himself attended the proceedings and furnished the details/explanations as called for. The assessee is an individual and engaged in the business of hiring of cars and servicing of computers etc. The assessee also derives income from house property. 4. From the AIR details received it is found that the assessee deposited cash of Rs 67,90,400/-. Considering the cash withdrawals and net cash business receipt, A.O. worked out a peak credit amounting to Rs 29,09,578/- and made an addition of Rs 29.08/- lacs u/s 69A of the act. 5. During the year assessee received unsecured loans from his relatives amounting to Rs 54,58,390/- and Rs 18,15,000/- from various individuals ranging from Rs 10,000/- to Rs 15000/-. Assessee furnished certain details like ITR of the lender, bank statement etc to substantiate his claim about identity, credit worthiness and genuineness of the unsecured loans taken. But the same were not acceptable to the A.O. and he made an addition of Rs 73,08,390/-. 6. Assessee has total 13 properties out of these assessee declare rental income only on 3 properties amounting to Rs 3,93,000/- balance 10 properties he claimed to be vacant and not let out during the year. A.O. worked out a deemed rental value on these 10 properties based on their cost at the rate of 8%, i.e. Rs 6,90,903/- After giving standard deduction at the rate of 30% the net deemed rental value of Rs 4,83,623/- was added to the income of the assessee under the head Income from House Property.

Against this assessment order dated 31-03-2016, assessee preferred an appeal before the Ld. CIT(A)-39, Mumbai on 21st April 2016 manually. As the income tax portal to file the appeal electronically was not updated at that time and it was not practically possible to file the return electronically. Copy of appeal filed manually dated 21-04-2016 is filed before us and apparently it appears that the copy of the same in form no 35 was filed before the Ld. CIT(A)(NFAC) also. Thereafter before passing the order u/s 250 on 27-04-2021, assessee out of sheer precaution filed the same appeal electronically also as an when system was updated and available to the assessee vide acknowledgement no. 611552830200418 dated 20th April 2018.

All the facts mentioned above are self-explanatory and demonstrates the bonafide of the assessee appellant. However, despite the fact that all the facts are on record and were in the knowledge of Ld. CIT(A) no mention of these essential facts he acknowledged and rather the appeal e-filed in form no. 35 on 20-04-2018 was only recognised.

We further noticed that electronic filing of the appeals was introduced for the first time vide rule -45 of the IT Rules, 1962 mandating compulsory e-filing of appeals before Ld. CIT(A) in form no. 35 w.e.f. 01-03-2016. We further noticed that in this respect, there is no corresponding amendment in any of the provisions of the main substantive law i.e., Income Tax Act, 1961. In addition to this this fact is in public domain that initially system was not geared up enough to handle digital filing and other allied issues.

It emanates from the record that assessee had already filed the appeal in paper form because of system glitch. It is not expected from an officer at the rank of commissioner (appeals) to take an adversarial view on such technical glitch/ignorance of the assessee, as it will lead to miscarriage of justice.

The Hon’ble apex court in its judgement reported as AIR 2005(SC) 3304 in the case of “Rani kusum vs Kanchan Devi,” reiterated that, a procedural law should not ordinarily be construed as mandatory, as it is always subservient to and is in aid of Justice. Any interpretation, which eludes or frustrates the recipients of Justice, is not to be followed. If in a given circumstances, the technical consideration and substantial justice are pitted against each other, then in that eventuality the cause substantial justice deserves to be preferred and can’t be over shadowed on negatived by such technical considerations.

Under the identical circumstances we respectfully followed Gurinder Singh Dhillon vs ITO (ITA no. 6595/ Del./2016). Keeping in view the facts and circumstances as well as the case laws relied upon, we are of the considered view that Ld. CIT(A) ought not to have dismissed the appeal solely on the ground that the assessee had not filed the appeal electronically although file the same well in time in manual form. To serve the cause of justice we set aside the order of Ld. CIT(A) and restore the matter back to the Ld. CIT(A) with a direction to consider the appeal filed by the assessee after condoning the delay on merits and after giving proper opportunity to the assessee as per law.

In the result, appeal filed by the assessee is fully allowed for statistical purposes as per terms indicated (supra). (A.Y. 2013-14) 14. This appeal by the Assessee is directed against the order of Ld. CIT (A), National Faceless Appeal Centre (NFAC), Dated: 27th April, 2021, vide DIN & Order No. ITBA/NFAC/S/250/2021-22/1032694019(1). 15. This appeal emanates from the assessment order u/s 143(3) for A.Y. 2013-14. As the merits of the quantum of the appeal discussed (supra) were not considered as per law by the office of Ld. CIT(A), fate of this penalty appeal also can’t be sealed in absence of proper adjudication of quantum by Ld. CIT(A). The relevant facts and merits of the matter has already been discussed as mentioned (supra), vide assessee own appeal ITA No. 1007/Mum/2021 (A.Y.2013-14). 16. In our considered view it will not be appropriate to adjudicate the matter of penalty-imposed u/s 271(1)(c) in consequence to the additions made during the assessment proceedings u/s 143(3). As the merits of additions made has not got the finality in terms of merit at the stage of Ld. CIT(A) without quantum addition is ascertained as per law no penalty u/s 271(1)(c) can be finalised. 17. Keeping in view the procedure prescribed for penalty imposition and substantive law, we set aside the order of penalty passed by A.O. and further confirmed by the Ld. CIT(A). this relief to the assessee appellant is subject to and restricted up to the outcome of the order of Ld. CIT(A) keeping in view the directions of this tribunal vide (A.Y.2013-14).

In the result, appeal filed by the assessee is fully allowed for statistical purposes as per terms indicated (supra). Order pronounced in the open court on 27th day of July, 2022.