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Facts
The assessee is engaged in the business of a travel agent and did not file his income tax return. Notices were issued, but he did not respond. The Assessing Officer made an addition of Rs. 49,19,982/- under section 144. The CIT(A) dismissed the appeal, and the assessee filed a further appeal before the ITAT, which was delayed by 129 days.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause and bonafide reasons presented by the assessee. The Tribunal held that the CIT(A) did not have the power to dismiss the appeal without discussing the merits. Therefore, the appeal was restored to the file of the CIT(A) for a fresh adjudication.
Key Issues
Whether the delay in filing the appeal before the ITAT is condonable, and whether the CIT(A) was justified in dismissing the appeal without adjudicating on merits.
Sections Cited
147, 144B, 148, 144, 151, 142(1), 234A, 234B, 234C, 250
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Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI
This appeal is filed by Khandelwal (the Kishore Rambilas assessee/appellant) for the assessment year 2015-16 against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] dated 12.6.2024 wherein the appeal filed by the assessee against the reassessment order passed u/s. 147 r.w.s. 144B of the Income-tax Act, 1961 [the Act] by the AO was dismissed.
2. The assessee is aggrieved and has raised the following grounds:-
“1. The order passed by the learned Commissioner of Income Tax (Appeals), NFAC, under section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
The appellant denies himself to be assessed at Rs. 49,19,982/- for the assessment year 2015-16 on the facts and circumstances of the case.
3. The learned CIT(A) failed to appreciate that the sanction under section 151 was unsigned and the reopening on the basis of a defective sanction, was required to be set aside as bad in law, on the facts and circumstances of the case.
4. The learned CIT(A) was not justified in failing to adjudicate the legal grounds and ought to have set aside the order of assessment, on the sole ground of the order passed under the new law, in so far as the provision of sections 147, 148, 149 and 151 has been substituted by the Finance Act, 2021 and there is no saving clause envisaged under the new provision to continue to the proceedings initiated under the erstwhile provisions of the Act, on the facts and circumstances of the case.
5. Grounds on reopening: a. Grounds on notice issued under section 148: i. The notice issues under section 148 of the Act is bad in law. ii. The order of assessment passed by the learned assessing officer under Section 144 r.w.s 147 of the Act is bad in law since the mandatory conditions as envisaged in the Act to assume jurisdiction under section 148 did not exist or having not been complied with and consequently, the reassessment requires to be cancelled on the facts and circumstances of the case. iii. The order of reassessment is further bad in law and void ab initio as the learned assessing officer had no reason to believe that the income of the appellant has escaped assessment and the said reasons amounted to merely reasons to suspect on the facts and circumstances of the Appellant s case.
6. Grounds on merits of the matter: a. The learned assessing officer was not justified in making additions of Rs. 28,10,000/- as unexplained deposits, when the same were the cash sales, fees for services, etc received during the year, on the facts and circumstances of the case. b. Without prejudice and not conceding that the cash deposits were out of business receipts, the withdrawals from the bank was also required to be considered as source of deposit, on the facts and circumstances of the case. c. The learned assessing officer was not justified in making additions of Rs. 16,00,000/- as unexplained income, when the same was the capital of the appellant and it could not be taxed as income, on the facts and circumstances of the case. d. The learned assessing officer was not justified in making additions of Rs.2,60,500/- and Rs.2,31,168/- as unexplained income, when the same was the gross receipts and the profit alone ought to have been added as income for the year, on the facts and circumstances of the case. e. Without prejudice, the receipts from contract and commission could not have been added as income and the assessing officer ought to have estimated the income based on similar assesses in the industry, on the facts and circumstances of the case. f. The learned assessing officer was not justified in making additions of Rs. 18,314/- as unexplained income, when the income of the appellant was below the taxable limits for the year, on the facts and circumstances of the case.
7. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case.
The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
9. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.”
The appeal filed by the assessee is delayed by 129 days. This delay is apparent in Form 36 at (3)(b) date of order is mentioned as 12.6.2024 and in (c) date of service of communication as 12.6.2024 wherein the appeal is filed on 7.1.2025. The assessee has filed an application for condonation of delay along with Affidavit.
The claim of the assessee is that at time of filing of return for AY 2024- 25 on 4.12.2024, where there is a refund, approached his tax practitioner for the status of the refund. When the tax practitioner logged into the e-filing portal, he informed that refund has already been adjusted against the outstanding demand for AY 2015-16. At that time, the assessee came to know that there is an order of ld. CIT(A) wherein the appeal of the assessee is dismissed. The assessee could not, through his tax practitioner, ascertain that the order of the ld. CIT(A) is already on the portal at the time of filing of return because the return was filed by using third party software which automatically uploads the return of income without navigating through the ITBA portal. Thus it was stated that after that assessee was advised to approach the present counsel, who filed the appeal on 7.1.2025. Thus the claim of assessee is that assessee could not file the appeal on or before 28.4.2024, but only filed
on 7.1.2025 which resulted in a delay of 129 days. The assessee also stated that the email id ‘kishore.khandelwal@yahoo.com’ was created by the tax practitioner at the time of fling of appeal and assessee has never used this email id. Thus, it is the submission that assessee came to know about the order only in the month of December, 2024. Therefore as soon as assessee came to know about the outstanding demand adjusted against the refund, filed the appeal, thus delay of 129 days is caused, which is for sufficient reason and therefore same should be condoned.
The ld. AR reiterated the same facts as stated in the Affidavit and submitted that delay of 129 days is for sufficient cause and therefore should be condoned and the appeal of the assessee be admitted.
The ld. DR vehemently submitted that assessee does not have any sufficient cause for not filing the appeal in time and therefore the appeal is not for sufficient cause, cannot be condoned. He specifically referred to the decision of the Hon’ble Supreme Court.
We have carefully considered the rival contentions and perused the orders of ld. lower authorities as well as the facts stated in the request for condonation of delay. Admittedly in this case the order of the ld. CIT(A) was passed on 12.6.2024, The assessee should have filed appeal within 60 days from the date of that order, which the assessee failed to file. Therefore, there is a delay in filing of the appeal of 129 days.
8. The ld. AR states that assessee did not use the email at which the order of the ld. CIT(A) was sent i.e., ‘kishore.khandelwal@yahoo.com’ which was stated to be created for the ITBA portal. The assessee submits that he does not use that email and therefore even if the order of the ld. CIT(A) is sent by email on 12.6.2024, assessee could not attend that. Assessee came to know about the order only when he enquired about the refund arising out of the return of income filed for AY 2024-25, that was somewhere in the month of December, 2024 wherein the assessee came to know that his refund for AY 2024-25 is adjusted against outstanding demand. This outstanding demand has been confirmed because of the order of the ld. CIT(A) dated 12.6.2024. Thus it is a fact that assessee was not aware about the appellate order till Dec. 2024. As soon as the assessee came to know about that order and was advised to file appeal before the ITAT, such appeal was filed on 7.1.2025. Here the length of delay is 129 days. In this sufficient cause pleaded is that email id at which the appellate order is received was not operated by the assessee so in fact assessee was not aware of the appellate order. Further the moment assessee came to know about the appellate order where it came knowledge of the assessee that there is adjustment of refund because of the impugned appellate order, immediately appeal was filed. Therefore there is a “sufficient cause” for delay in filing of appeal.
No doubt section 3 & 5 of the Limitation Act creates a time line and if such time lines are crossed, the courts have taken a liberal approach in construing the phrase ‘sufficient cause’ as mentioned in section 5 of the Limitation Act to condone the delay to render substantial justice. The source of such judicial lineage is also stated the decision of Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Ors., (1987) 2 SCC 107. It was also to be seen that if the delay is not deliberate and is not out of dilatory tactics, then the same may be condoned. The power of condoning the delay naturally should be exercised as a discretion to condone in a systematic and informed manner, there is no scope for liberal approach and justice oriented approach, etc. The authorities must also look at the bonafides of the explanation offered by the party seeking the condonation. In the present case, on the facts stated, we find that the delay is less than 365 days and the reasons shown for the delay also appears to be bonafide and also because of ‘sufficient cause’, hence I condone the delay in filing the appeal.
Coming to the facts of the case, it is apparent that assessee is engaged in the business of travel agent and deriving income from business. Further he has not filed any return of income, therefore notice u/s. 148 was issued on 24.3.2021 which remained unresponded. Subsequently 4 different notices u/s. 142(1) were also issued which were not responded to. Information was available that assessee has made a cash deposit of Rs.28,10,000 in his SB A/c and also FD of Rs.16 lakhs. During the year, the assessee has earned interest income of Rs.18,314, contract receipt of Rs.2,60,500 and commission of Rs.2,31,168. Despite this, assessee has not filed return of income. Necessary show cause notice was also issued to the assessee wherein it was noted that assessee has made total transaction of Rs.49,19,982, but has not filed any return of income, therefore why the above sum should not be added to the income of the assessee. Assessee did not reply and therefore it resulted into assessment order u/s. 144 of the Act wherein the addition of Rs.49,19,982 was made.
The assessee preferred appeal before the ld. CIT(Appeals). In Form 35, address of the assessee is mentioned and the address to which the notices are to be different. Email address is mentioned as ‘kishore.khandelwal@yahoo.com’ and assessee opted for receiving notices through email. The ld. CIT(A) has mentioned that assessee was issued various notices in 2022 as well as till 2024 (3 notices) which remained uncomplied with and therefore assessee is not interested in prosecuting the appeal and without discussing the merits the appeal of the assessee was dismissed. We find that the ld. CIT(A) does not have the power to decide the appeal of assessee and dismiss it holding that assessee does not want to prosecute the appeal. Even an ex parte order to be passed by the ld. CIT(A) has to be on merits of the case. In the present case, the order of the ld. CIT(A) is not on the merits of the case. Therefore, in the interest of justice, without discussing the merits as well as the legal issues raised by the assessee, we restore the whole appeal to the file of the ld. CIT(A) with a direction to the assessee to raise all legal contentions which are raised before us in the grounds before the ld. CIT(A). The ld. CIT(A) is directed to pass the order after granting opportunity of being heard. Assessee is directed to submit the correct email id and the address to which the notices must be sent.
Accordingly the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 10th day of June, 2025.