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Facts
The assessee filed an appeal with a significant delay of 536 days. The delay was attributed to the transfer of the appeal to NFAC and subsequent communication issues during the COVID-19 pandemic, with notices sent to an ex-employee's email address. The assessee became aware of the order only when faced with a notice for bank account attachment.
Held
The Tribunal condoned the delay, citing a reasonable cause that prevented the assessee from filing on time. On merits, the Tribunal admitted additional evidence and set aside the matter to the CIT(A) for fresh adjudication, partly allowing the appeal for statistical purposes.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the disallowance under Section 194C was justified given the additional evidence presented.
Sections Cited
226(3), 194C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ 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 dated 26/07/2023 in DIN No. ITBA/NFAC/S/ 250/2023-24/1054621221(1) for the assessment year 2014-15. The assessee has also filed Stay Petition.
At the outset, it is observed that there has been a delay of 536 days in filing the appeal by the assessee before the Tribunal. In this regard, the assessee has submitted an affidavit explaining the reasons for the delay.
2.1 It was explained that the appeal against the assessment order was originally filed in physical form on 18 January 2017. Later, due to Notification No. 76 of 2020 S.O. 3296 (E) dated 25 September 2020, the appeal was migrated to the National Faceless Appeal Centre (NFAC). Thereafter, the NFAC issued multiple notices on different dates to the assessee, informing him about the hearing dates. However, all such notices were issued during the COVID-19 period, except for one notice dated 1 March 2023.
2.2 The assessee was under the bona-fide belief that he would receive the notice regarding the date of hearing in physical form, and therefore, he did not pay attention to the notices sent via email by the NFAC.
2.3 Furthermore, the notices were sent to the email address of an employee who had already left the employment of the assessee during the COVID period. As a result, the assessee was completely unaware of the notices issued and the order passed by the NFAC on 26 July 2023.
2.4 The assessee only became aware of the order passed by the learned CIT(A) when he received a notice under section 226(3) of the Income Tax Act dated 7 February 2025, seeking to attach his bank . account. Immediately thereafter, the assessee filed the appeal before the Tribunal, which resulted in a delay of 536 days.
2.5 Based on the above submission, the learned Authorized Representative (AR) contended that the delay in filing the appeal before the Tribunal was neither deliberate nor intentional. Therefore, it was argued that the delay should be condoned.
On the other hand, the learned Departmental Representative (DR) opposed condonation of the delay, stating that the assessee had been negligent in pursuing the appeal.
We have heard the rival contentions of both parties and examined the materials available on record. The length of the delay is not material if there is sufficient cause that prevented the assessee from filing the appeal on time. In this case, the delay of 536 days is undoubtedly significant. However, upon analyzing the reasons cited for the delay, we observe that the employee whose email ID was used in Form 35 had left the assessee’s organization. Due to this, the assessee was unaware of the order passed by the learned CIT(A). This point raised by the AR was not disputed by the ld. DR.
Considering the above reason, we find that there is a reasonable cause that prevented the assessee from filing the appeal within the statutory time limit. Accordingly, we condone the delay in filing the appeal and proceed to adjudicate the matter on merits.
On the merits of the case:
We observe that the learned CIT(A) dismissed the appeal ex-parte as there was no representation from the assessee. While it is true that the assessee did not appear before the ld. CIT(A), it is also noted that all the notices from the CIT(A) were sent during the COVID period—except for one notice. In such a situation, it cannot be concluded that the assessee was negligent in responding to the notices.
6.1 Further, the disallowance made by the ld. CIT(A) was based on the reasoning that the assessee failed to deduct TDS under section 194C of the Act. However, the assessee contended that all the recipients of the payments had accounted for the income and filed their income tax returns. Therefore, the assessee argued that he should not be treated as an assessee-in-default. The learned CIT(A), however, rejected this argument due to the absence of supporting documentary evidence.
6.2 Now before us, the assessee has submitted additional evidence such as a Chartered Accountant's certificate, Form 26A with annexures, income tax returns, and Form 3CD, showing that the payments made by the assessee were duly considered as income by the recipients in their tax returns. These documents are relevant and necessary to decide the matter. Hence, under Rule 29 of the Income Tax (Appellate Tribunal) Rules, we admit these additional evidences as they were not examined by the lower authorities. Accordingly, we set aside the matter to the file of the learned CIT(A) for fresh adjudication, in accordance with law.
Therefore, the grounds of appeal are partly allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Regarding the Stay Petition filed by the assessee:
The assessee has already paid more than 20% of the outstanding demand. Additionally, the assessee appears to have a strong case on merits. Therefore, we are of the view that the balance of convenience lies in favour of the assessee. Accordingly, we grant a stay on the recovery of the remaining outstanding demand by the Revenue. Hence, we also direct the Revenue to lift the attachment on the assessee’s bank account. Hence, the stay petition filed by the assessee is allowed.
In the result, the stay petition filed by the assessee is allowed.
In the combined result, the appeal of the assessee is allowed for statistical purposes whereas the stay petition filed by the assessee is allowed. Order pronounced in court on 6th day of May, 2025