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Facts
The assessee's appeal was dismissed by the CIT(A) due to non-compliance with hearing notices. The assessee claimed to have been prevented by reasonable cause, citing a misunderstanding with their tax consultant which led to ex-parte proceedings before the Assessing Officer and CIT(A). A significant delay of 276 days occurred in filing the appeal before the Tribunal.
Held
The Tribunal condoned the delay of 276 days, emphasizing that substantial justice should prevail over technical considerations. The CIT(A)'s order was set aside, and the appeal was restored to the CIT(A) for a fresh adjudication, with directions for the appellant to ensure proper communication and compliance.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the ex-parte order passed by the CIT(A) was in violation of natural justice principles.
Sections Cited
147, 144, 144B, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, C” BENCH, MUMBAI
order : 28.01.2025 O R D E R Per Rahul Chaudhary, Judicial Member:
1. 1. By way of the present appeal the Assessee has challenged the order, dated 22/11/2023, passed by the National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as the ‘CIT(A)’], whereby the Ld. CIT(A) had dismissed the appeal of the Assessee against the Assessment Order, dated 26/03/2022, passed under Section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year 2017-2018.
2. The Assessee has raised following grounds of appeal : The order dated 26.03.2022 passed by the NFAC is in breach of the principles of natural justice. “1. The National Faceless Appeal Centre, New Delhi [hereinafter referred to as “NFAC”] erred in passing the ex-parte order dated 26.032022 without providing the Appellant a reasonable opportunity of being heard. Hence, the order Assessment Year: 2017-2018 passed by the NFAC is in violation of the principles of natural justice and the same may be set aside. Reopening under section 147 of the Act is bad in law.
2. The reopening made under section 147 of the Act merely placing reliance on the declaration made under the Income Declaration Scheme, 2016 is bad in law as there is no ‘reason to believe’ that any income chargeable to tax has escaped assessment. Hence, the notice issued under section 147 of the Act is unlawful, unsustainable and bad in law. Addition of Rs.1,29,60,107/- made under section 69 of the Act is not justified.
3. The NFAC erred in upholding the addition of Rs.1,29,60,107/- made by the Ld. A.O. under section 69 of the Act without appreciating the facts and circumstances of the case. The said addition made by the Ld. A.O. and confirmed by the NFAC is not justified and the same may be deleted.”
3. The relevant facts are brief are that the assessment under Section 147 read with Section 144 and 144B of the Act was framed on the Assessee vide Assessment Order, dated 26/03/2022, after making an addition of INR.1,37,76,640/- in the hands of the Appellant under Section 69 of the Act.
Being aggrieved, the Appellant preferred appeal against the CIT(A) challenging the initiation of reassessment proceedings under Section 147 of the Act as well as the addition made under Section 69 of the Act on merits. Since, the notice of hearing issued by the CIT(A) were not complied with, the CIT(A) decided the appeal on the basis of material on record. Vide order dated 22/11/2022 the CIT(A) (a) condoned the delay for in filing the appeal (b) upheld the validity of reassessment proceedings and (c) upheld addition of INR.1,37,76,640/- made by the Assessing Officer.
Now the Appellant has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above alongwith application for seeking condonation of delay of 276 2 Assessment Year: 2017-2018 days in filing the present appeal.
The learned Authorised Representative for the Appellant appearing before us, at the outset, pleaded for (a) condonation of delay and (b) for setting aside of the order passed by the CIT(A) and restoring the appeal back to the file of CIT(A). Taking us through the affidavit for condonation of delay filed in support of application seeking condonation of delay, the Learned Authorised Representative for the Appellant submitted that the Appellant was prevented by reasonable cause in not filing the appeal before the Tribunal within the prescribed time. It was submitted that the Appellant had made declaration of income under Income Declaration Scheme, 2016. However, since the Appellant had failed to pay tax liability on the income disclosed, the declaration was cancelled. On the basis of the aforesaid information the reassessment proceedings were initiated under Section 147 of the Act in the case of the Appellant. The Assessee was not represented before the authorities below on account of lack of communication and misunderstanding between the Appellant and tax consultant. Since, the Appellant was proceeded ex-parte during the assessment as well as the appellate proceedings before the CIT(A), no submission or material could be placed for consideration of authorities below. The Learned Authorized Representative for the Appellant also placed reliance upon the decision of the Tribunal passed in ITA.No.5536/Mum/2024 [Assessment Year 2015-2016] on 13/12/2024 in the case of Vilas Raghunath Patil (husband of the Assessee) and submitted that in identical facts and circumstances, the Tribunal was pleased to condone the delay; set aside order passed by the CIT(A); and restored the appeal back to the file of CIT(A) for denovo adjudication. The learned Authorised Representative pleaded that in the interest of justice an opportunity of be granted to the Appellant to make proper representative before the CIT(A).
3 Assessment Year: 2017-2018 7. Per contra the Learned Departmental Representative submitted that the Appellant has been noncompliant throughout the assessment as well as appellate proceedings and therefore, does not deserve any further indulgence.
We have heard the rival submissions and perused the material on record. On perusal of the affidavit filed by the Appellant explaining the reasons for delay in filing the appeal before the Tribunal we find that the case set out by the Appellant is that the Appellant had appointed tax consultant for filing return of income and for undertaking statutory compliance. The email address of the tax consultant was provided on the ITBA portal for the purpose of receiving communication. While the Appellant was of the bonafide belief that tax consultant would attend scrutiny assessment as well as appellant proceedings, the tax consultant was of the view that the scope of tax consultant was limited to undertaking tax compliance. As a result no representation was made before the Assessing Officer and re-assessment order was passed under Section 147 read with Section 144 and 144B of the Act on 26/03/2022 whereby an addition of INR.1,37,76,640/- was made in the hands of the Appellant under Section 69 of the Act. While the Appellant got appeal filled before the CIT(A) with the help of another tax consultant, it is stated that Email address registered with ITBA Portal continued to be of the earlier consultant and therefore, the notice of hearing sent by the CIT(A) went not complied with. In the aforesaid facts, the CIT(A) dismissed the appeal. Since the Appellant got delayed knowledge of the dismissal order, there was a delay of 276 days in filing the appeal.
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 4 Assessment Year: 2017-2018 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. 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 highest that can happen is that a cause would be decided on merits after hearing the parties. We have not reason to doubt the explanation offered by the Appellant in the present case. When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred. Accordingly, we condone the delay of 276 days in filing appeal before the Tribunal.
Keeping in view the fact that the Appellant was proceeded ex- parte before the Assessing Officer and the CIT(A), we are of the view an opportunity should be granted to the Appellant to present his case before the CIT(A). Therefore, we set aside the order, dated 22/11/2013, passed by the CIT(A). However, in order to ensure compliance and co-operation by the Appellant during the appellate proceedings before the CIT(A), we direct the Appellant to take steps to get the correct email address and postal/communication address on record before the CIT(A) and at the ITBA Portal without any further delay. The Appellant is directed to be vigilant and track the appellate proceedings through ITBA Portal. The Appellant is also directed to file all relevant details, documents and submission before the CIT(A) forthwith on receiving notice of hearing. The CIT(A) is directed to adjudicate the grounds raised
in appeal afresh as per law after granting the appellant a reasonable opportunity of being heard. It is clarified that in case the Appellant fails to act as per the aforesaid directions and/or fails to appear before the CIT(A) or 5. Assessment Year: 2017-2018 fails of file details/documents/submissions before the CIT(A), the CIT(A) would be at liberty to proceed with the adjudication of the appeal based upon material on record. In terms of the aforesaid Ground No. 1 raised by the Appellant is treated to be allowed for statistical purposes while Ground No. 2 & 3 are dismissed as having been rendered infructuous.
In result, the present appeal is treated as partly allowed for statistical purposes.