DHARMAPURI DISTRICT CONSUMERS COOP WHOLE SALES STORES LTD.,DHARMAPURI vs. ACIT, CIRCLE-1(1), SALEM

This appeal by the assessee is arising out of the order dated 19.12.2023, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short “ld.CIT(A)”) for the assessment year (A.Y) 2017-18 against the order u/s.144 of the Income Tax Act, 1961 (hereinafter the ‘Act’) passed by the AO dated 20.12.2019.

At the outset, we find that there is a delay of 566 days before us in the appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that the husband of the authorized signatory passed away and could not concentrate day to day activities of the society effectively and also shortage of staff in society and periodical changes in the post of General Manager. The assessee was unaware of the order of the ld.CIT(A) uploaded in the Income-Tax e-filing portal and the assessee became aware of the impugned order only on commencement of recovery proceedings by the Income Tax Department. Hence, there was a delay in filing the appeal by the assessee. After considering the Affidavit filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeals and admit the appeals filed by the assessee for adjudication.

Brief facts of the case are that the assessee is a Co-operative Society engaged in the business of sale of essentials as mandated by the state of Tamilnadu and has filed its return of income on 06.11.2017 for AY 2017-18, declaring a loss of Rs.31,66,200/-. The case was selected for scrutiny assessment under CASS. The Assessing Officer issued statutory notices to the assessee to furnish the details of bank accounts and also the details of cash deposits made in the bank accounts, both during non-demonetization period as well as during the demonetization period, and the assessee was also asked to explain the nature and source of the deposits. Further, the Assessing Officer issued notice to the bank u/s.133(6) of the Act and obtained details of the cash deposits made during demonetization period. The assessee did not participate in assessment proceedings and hence the AO made an addition of Rs.27,23,125/- treated the cash deposit made during the demonetization period as unexplained income u/s.69A r.w.s 115BBE of the Act as per material available on record and passed an order u/s.144 of the Act dated 20.12.2019.

Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC, Delhi on 26.02.2020.

At the outset, we observed that ld.CIT(A) has provided four opportunities for the assessee to appear for hearings as detailed in paragraph 4 of the ld.CIT(A) order to support the appeal of the assessee. However, the assessee chose to be silent and did not respond to any of the notices and hence, the ld. CIT(A) confirmed the order of Assessing Officer with available details by passing an order dated 19.12.2023.

The ld.AR submitted that notices were issued during the assessment and appellate proceedings by the AO as well as ld.CIT(A) to the Email ID and through portal and the assessee could not see its portal, since the husband of the authorized signatory passed away and could not concentrate day to day activities of the society effectively and also shortage of staff in society and periodical changes in the post of General Manager. Hence, the appeal was not prosecuted before the ld.CIT(A) even the assessment order was passed exparte u/s.144 of the Act by the AO. Therefore, ld.AR prayed for one more opportunity may be provided to the assessee to represent his case before the AO in the interest of natural justice. Further, the ld.AR assured the bench that he will undertake to represent on behalf of the assessee before the AO, in case one more opportunity is provided.

Per contra, the ld.DR submitted that both the Assessing Officer and the ld.CIT(A) provided sufficient opportunity to appear before them. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A).

We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the Assessing Officer has passed an exparte order by considering the information available with the department and the same has been dismissed by the ld.CIT(A), NFAC, Delhi due to non-participation of the assessee both the before Assessing Officer as well as the first appellate authority. Since the assessee has failed to participate both before the Assessing Officer as well as the appellate authority, we levy the cost of Rs.5,000/- to State Legal Aid Authority, Hon’ble High Court of Madras and produce proof of payment of cost to the Registry within 30 days from the date of receipt of this order.

In view of the above and to meet the ends of justice we set aside the order of ld.CIT(A) and remit the matter back to the file of AO and direct the AO to de novo frame the assessment order in accordance to law, after providing reasonable opportunity to the assessee. Needless to say, the assessee to be diligent and file written submissions and relevant documents if advised so.

In the result, appeal filed by the assessee is allowed for statistical purposes.