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Facts
The assessee's first appeal against a Section 143(3) assessment, involving an unexplained cash deposit of Rs. 4,49,000, was dismissed by the CIT(A) for non-prosecution. The assessee then incurred a 478-day delay in filing the second appeal before the ITAT, attributed to the negligence of a previous advocate.
Held
The ITAT condoned the 478-day delay, finding sufficient cause due to the advocate's failure to file the appeal despite receiving fees. The tribunal held that the CIT(A) cannot dismiss an appeal merely for non-prosecution and is duty-bound to decide it on merits, thus remanding the case back to the CIT(A).
Key Issues
1. Condonation of delay in filing the appeal. 2. Whether CIT(A) has the power to dismiss an appeal for non-prosecution without deciding on merits.
Sections Cited
143(3), 271AAC(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI
1. This appeal is filed by Sri Pathanna Thippe Swamy (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] dated 27.7.2023 wherein the appeal filed by the assessee against the assessment order passed u/s. 143(3) of the Income- tax Act, 1961 [the Act] dated 25.12.2019 by the ITO, Ward 6(2)(2), Bengaluru was dismissed.
The assessee is aggrieved with the same and is in appeal before us.
The assessee has submitted an Affidavit stating that the appellate order against which appeal should have been filed on or before 26.9.2023, however same could be filed only on 20.1.2025 which has caused a delay of 478 days. It was the claim of assessee that after the receipt of the appellate order, he contacted one Mr. Vishwanath to file the second appeal and also made two payments to him of Rs.5,000 on 10.8.2023 and Rs.10,000 on 20.11.2023. This payment was stated to be made for payment of filing fees and other incidental expenses. Later on, Mr Vishwanath informed the assessee that appeal has already been filed and case would be taken up for hearing shortly. The necessary Vakalatnama was also submitted to him. Meanwhile on 1.1.2025 the assessee received a letter by Registered Post which is a show-cause notice for levy of penalty u/s. 271AAC(1) of the Act. On receipt of the notice, the assessee contacted Mr. Vishwanath for preparing a reply. However, Mr. Vishwanath was not giving time to the assessee and therefore assessee opted another CA, Sri Mananda, who advised the assessee to approach another Advocate for filing reply. When the assessee approached Mr. V. Srinivasan, who on verification of the papers and portal of the ITAT, found that there is no such appeal filed before the ITAT till date and immediately advised to file the appeal. Thus the appeal got filed on 20.1.2025 which has caused delay of 478 days. The ld. AR reiterated the same facts and prayed for condonation of delay,
4. The ld. DR submitted that there is no sufficient cause for filing the appeal late by 478 days and therefore the appeal cannot be condoned.
5. After hearing both the parties, the Bench directed the ld. AR to show the contents of email id and telephone no. furnished in Form 35 and also to show that the person to whom the payment is made is an Advocate or not. In response to that, the assessee made the written submissions as under:-
“I, SUNAIANA BHATIA Chartered Accountant and Authorized Representative of the above appellant beg to submit the following for the kind consideration and gracious favourable orders of the Hon'ble Bench as under:-
1.
The aforesaid appeal filed by the above appellant was last posted for hearing before the Hon'ble "SMC" Bench on 03/06/2025 and the same was taken as heard. During the course of hearing, the Hon'ble Bench directed the undersigned to file written submissions covering certain queries posed in course of hearing with regard to the delay in filing the appeal before the Hon'ble ITAT, Bangalore Bench, Bangalore. Under the instructions from the above appellant, the following factual position relating to delay in filing the appeal before the Hon'ble Bench is being submitted as directed by the Hon'ble Bench.
2. In course of hearing, the Hon'ble Bench desired to know details relating to the email ID and phone number mentioned in Form 35 filed. It was specifically queried as to whom the Mobile Number 8073941116 as reflected in Serial Number 17 of Form No.35 belongs to. It is submitted that the said Mobile Number also belongs to the appellant. Similarly, it was queried as to whom the e-mail Id - pthippeswamy71®gmail.com as reflected in Serial Number 17 of Form 35 belongs to. It is submitted that the aforesaid e-mail Id also belongs to the appellant.
3. With regard to the query raised on whom the address No.49/2, 2nd Main Road, Yeshwanthapur, BANGALORE as reflected in Serial Number 17 of Form No.35 belongs to, it is submitted that the appellant is not aware as to whom the aforesaid address belongs to.
Having set-out the answers to the specific queries raised, it is submitted that the assessment proceedings of the appellant were being handled by one Mr. Satish, Tax Consultant, Bangalore. Thereafter, upon the receipt of the assessment order, the appellant was advised by one of his friends to approach Mr. Bargeshappa, Chartered Accountant, Bangalore to assist him in appellate proceedings. After receipt of the ex-parte order passed by the learned Commissioner of Income-tax[Appeals], National Faceless Appeal Centre, Delhi dated 27/07/2023, the appellant realized that Mr. Bargeshappa had not attended to the appellate proceedings and sought to change his counsel.
Thereafter, an associate of the appellant suggested that the appellant approach Mr. Vishwanath, Advocate [Mob No.9845307491] to prepare and file the appeal before the Hon'ble ITAT, Bangalore Bench, Bangalore. Accordingly, the appellant contacted Mr. Vishwanath and in connection with his appellate proceedings, the appellant had made two payments of Rs. 5,000/- on 10/08/2023 and Rs. 10,000/- on 20/11/2023 through UPI to Mr. Vishwanath, Advocate for filing the appeal. Proof in support of the aforesaid payments made to Mr. Vishwanath has been filed before the Hon'ble Bench vide memo dated 02/06/2025.
It is submitted that subsequently, Mr. Vishwanath, Advocate informed the appellant that the second appeal was already filed and the case would be taken up for hearing shortly, which has been explained by the appellant in his Affidavit for condonation of delay filed before the Hon'ble Bench.
7. That, recently, the appellant received a show-cause notice for penalty U/s 271AAC(1) of the Act dated 01/01/2025 by registered post and immediately, the appellant attempted to contact Mr. Vishwanath, Advocate to help prepare a reply, however, Mr. Vishwanath kept putting off the meeting on one pretext or the other.
Under the above circumstances, the appellant approached Sri P M Ananda, Chartered Accountant, Bangalore, through one of his mutual contacts for further advise in the matter and thereafter, Sri P M Ananda advised the appellant to approach Sri V Srinivasan, Advocate, Bangalore to help prepare the reply to the notice U/s 271AAC(1) of the Act.
It is submitted that the appellant, who was unable to get proper advice and support from Mr. Vishwanath has requested and obtained a No-Objection Endorsement on a blank vakalath from Mr. Vishwanath, Advocate [Copy enclosed as ANNEXURE - 1] so as to enable some other counsel to take up the matter of the appellant.
Based on the advice of Sri P M Ananda, the appellant approached Sri V Srinivasan, Advocate, Bangalore to seek further advise in the matter, who upon going through the papers and the e-filing portal of the Hon'ble ITAT informed the appellant that no appeal was filed before the Hon'ble ITAT till date and thereafter, the appellant was advised to file the second appeal immediately by seeking condonation of delay.
11. Accordingly, the appeal papers were immediately prepared and filed before the Hon'ble ITAT, Bangalore Bench, Bangalore without any further delay.
Hence, it is prayed that the delay of 478 days in filing the appeal may kindly be condoned.”
On careful consideration of the facts stated, we find that originally the assessee hired one Advocate and also paid him fees for filing the appeal before the ITAT. The details of payment are also produced before us. However, subsequently it was found that the Advocate to whom the work was entrusted, did not file the appeal in time. When the notice for penalty proceedings were issued to the assessee on 1.1.2025, the assessee contacted the same Advocate, who did not respond and therefore the assessee had to hire another Advocate. Another Advocate after examination of the fact that whether appeal is filed nor not, informed the assessee that no such appeal is filed.
Therefore soon thereafter, the appeal got filed before the ITAT. This resulted in a delay of 478 days. We find that because the assessee has also paid the requisite fee to one Advocate, who did not file the appeal and also did not inform the assessee. The assessee came to know only after the issuance of notice for penalty. Thus for the negligence of the Advocate, the assessee should not suffer. When the assessee came to know about the non-performance of the duties by the Advocate, he immediately contacted other Advocate and got the appeals filed. The conduct of the assessee shows that he is an agile assessee and delay is caused because of the bonafide belief that the Advocate to whom fees is paid has already filed the appeal. In view of this, we condone the delay of 478 days caused because of the sufficient cause and appeal is admitted.
Coming to the facts and circumstances it is apparent that assessee is an individual, deriving income from house property, business and other sources, filed his return of income on 14.11.2017 at a total income of Rs.4,17,570. The case of the assessee was taken up for complete scrutiny for verification of the cash deposit during the demonetisation period. It was found that assessee has deposited cash of Rs.18,99,000 during the FY 2016-17 and could furnish proof of source of cash deposit to the extent of Rs.14,50,000. For balance sum of Rs.4,49,000 no details were furnished and therefore same was added to total income and assessment order u/s. 143(3) of the Act was passed on 25.12.2019 at a total income of Rs.8,16,570.
8. The assessee aggrieved with the above assessment order preferred an appeal before the ld. CIT(A). The ld. CIT(A) issued 5 notices to the assessee, but in absence of any response, the appeal of the assessee was decided holding that assessee does not want to prosecute the same. Thus the appeal was not decided on the merits of the case, but because of non-compliance of the assessee. The ld. AR vehemently stated that notice sent by the ld. CIT(A) could not be tracked by the assessee as it might have gone to spam folder and assessee is also not aware about those emails. Even otherwise, it was submitted that the ld. CIT(A) has decided the appeal not on the merits, but holding that assessee does not want to prosecute the appeal. Accordingly one more opportunity may be granted to the assessee so that the appeal could be decided on merits.
9. The ld. DR vehemently opposed the above submission and submitted that assessee did not comply with the email notices sent by the CIT(A), therefore no further opportunity should be granted to the assessee, as 5 opportunities had been granted by the CIT(A), but assessee failed to respond to any of them.
10. We have carefully considered the rival contentions and perused the orders of ld. lower authorities. In this case, we find that the ld. CIT(A) though issued notices to the assessee which were not complied with by the assessee, he decided the appeal relying on the decision of the Hon’ble Supreme Court in the case of CIT v. B.N. Bhattacharjee holding that merely filing of the appeal without effectively pursuing the same cannot be adjudicated. Thus, the ld. CIT(A) held that assessee does not want to prosecute the appeal. He did not decide the merits of the appeal. On looking at the powers of CIT(A), he is duty bound to dispose of the appeal on its merits. But he does not have any power to dismiss the appeal of the assessee for non-prosecution. Therefore, in the interest of justice, we restore the whole appeal on its merits back to the file of ld. CIT(A) with a direction to the assessee to submit the necessary details, which may be considered by the ld. CIT(A) and after giving opportunity of hearing, decide the issue on its merits.
In the result, the appeal by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 18th day of June, 2025.