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Facts
The assessee, a hotel business, filed its return declaring a loss. The AO made additions under sections 43B and 41 for outstanding expenses. The assessee's appeal to the CIT(A) was delayed by 32 days.
Held
The Tribunal held that the delay in filing the appeal was caused by genuine reasons including the company's financial situation, staff shortage, and the Covid-19 pandemic. The Tribunal condoned the delay and restored the matter to the CIT(A) for adjudication on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was for a reasonable cause and if the CIT(A) erred in not condoning the delay.
Sections Cited
143(2), 43B, 41
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 28/02/2025 in DIN No. ITBA/APL/S/250/2024-25/1073845159(1) for the assessment year 2017- 18.
The issue raised by the assessee is that the ld. CIT-A erred in not condoning the delay in filing the appeal and without adjudicating the appeal on merit.
The facts in brief are that the assessee is a private company and engaged in hotel business. For the year under consideration, the assessee filed return of income declaring total income at loss of Rs. 10,40,926/- only. The return was selected for scrutiny assessment and therefore the notice under section 143(2) of the Act was issued.
The AO during the assessment proceeding found that the assessee has outstanding expenses payable on account of service tax, luxury tax, VAT, TDS, PF-Employee, PF-Employer, professional tax etc aggregating to Rs. 13,29,416/- only. Accordingly, the AO invoked the provisions of section 43B of the Act and added the same to the total income of the assessee.
4.1 The AO also noticed that there were amounts carried forwarded from earlier year in above stated outstanding expenses payable aggregating to Rs. 17,79,307/- only. Hence, the AO by invoking the provisions of section 41 of the Act added the same to the total income of the assessee. Accordingly, the AO completed the assessment vide order dated 23rd December 2019 assessing the total income at Rs. 20,67,797/- against returned loss. The assessment order was served on 24th December 2019.
The aggrieved assessee preferred an appeal before the learned CIT(A) as on 26th February 2020. Hence, the appeal was delayed by 32 days. The learned CIT(A) did not condone the delay and dismissed the assessee’s appeal by holding that the assessee has not adduced reasonable cause for delay in filing of appeal.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before the us.
The learned AR before us filed a paper book running from pages 1 to 276. The learned AR among other contentions submitted that the assessee company was loss making and lacking proper staff. The director of the assessee company solely managing the entire affair of the business due to which not attended the assessment related proceeding. It is further explained that the onset covid-19 pandemic and uncertainty around the pandemic also contributed to delay filing of appeal. Accordingly, the learned AR contended there was genuine and reasonable cause which prevented the assessee in filing the appeal in timely manner. However, the learned CIT(A) without considering the reasonable cause for delay and examining the issue on merit dismissed the appeal. Hence, the learned AR prayed before us to condone the delay in filing of appeal before the learned CIT(A).
On the other hand, the learned DR did not raise any objection with respect to condonation of delay.
We have heard the rival contentions of both the parties and perused the materials available on record. The facts are not in dispute that the assessee’s appeal before the learned CIT(A) was delayed by 32 days. The explanation placed on record shows that the assessee company was incurring losses, did not have adequate staff, and the director was single-handedly managing the affairs. Further, the Covid-19 situation prevailing at the relevant time also contributed to the delay. In . our considered view, these constitute a reasonable cause for not filing the appeal within the prescribed period. The Hon’ble Supreme Court and various High Courts have repeatedly held that when there is reasonable cause, the delay in filing appeal should be condoned so that substantial justice is not defeated on technical grounds.
9.1 It is also seen that the learned CIT(A) has dismissed the appeal solely on limitation without entering into the merits of the case. We are of the considered view that in the interest of justice, the assessee should be afforded one more opportunity to present its case on merits before the first appellate authority. Accordingly, the delay of 32 days in filing of appeal before the learned CIT(A) stands condoned. The impugned order is set aside and the matter is restored to the file of the learned CIT(A) for fresh adjudication on merits, after giving proper opportunity of being heard to the assessee. Hence, the grounds of appeal of the assessee is hereby allowed for statistical purposes.
In the result, the appeal of the assessee is thus allowed for statistical purposes.