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Facts
The assessee, a civil contractor, failed to file its income tax return for AY 2015-16. The Assessing Officer (AO) re-opened the case under Section 147/148 and made an addition based on contract receipts as the sources were not verifiable. The CIT(A) dismissed the appeal due to non-participation.
Held
The Tribunal condoned the delay in filing the appeal, noting a reasonable cause due to business losses and SARFAESI proceedings. The Tribunal set aside the order of the CIT(A) and remitted the matter back to the AO for de novo assessment.
Key Issues
Whether the delay in filing the appeal can be condoned and if the ex-parte assessment order passed without proper opportunity is sustainable.
Sections Cited
147, 148, 143(3), 144
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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
This appeal of the assessee is filed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2022-23, vide order dated 05.11.2024.
At the outset, we find that there is a delay of 117 days in appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that the assessee was unaware of the receipt of the order
:-2-: ITA. No:1537/Chny/2025 of the ld.CIT(A) dated 05.11.2024 since the partners of the assessee firm could not face the public because of the losses and of the SARFAESI proceedings against their assets. 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 appeal and admit the appeal filed by the assessee for adjudication.
Brief facts of the case are that the assessee is a firm as a civil contractor, had not filed its return of income for the A.Y.2015-16. As per the information available with the department, the assessee had TDS return for A.Y.2015-16, having income from other sources of Rs.40,358/- and contract receipt of Rs.3,59,25,386/-. Since the assessee had not filed its return of income, the sources of these deposits were not found verifiable. The notice u/s.148 of the Act dated 30.03.2021 was issued and the case has been re-opened u/s.147 of the Act. Since the assessee did not participate in the assessment proceedings by not responding to the statutory notices, the AO made an addition of 8% of gross contract receipts of Rs.3,59,25,386/- as income from business, based on the material evidence available on records by passing an order u/s.147 r.w.s.144 of the Act dated 30.03.2022.
Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC.
:-3-: ITA. No:1537/Chny/2025 5. At the outset, we observed that ld.CIT(A) has provided four opportunities for the assessee to appear for hearings as detailed in paragraph 3.1 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), NFAC dismissed the assessee’s appeal as deficient by confirming the order of the AO by passing an order dated 18.12.2023. The ld.AR submitted that the assessee had become an NPA and also faced proceedings under the SARFAESI Act, which proves that the assessee firm had suffered huge loss. Due to that the assessee had not concentrated on of the business activities and hence could not respond to the notices issued by the authorities. In view of the above, the ld.AR prayed for one more opportunity before the AO, since the exparte order has been passed by the AO u/s.144 of the Act. Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the AO to complete the assessment proceedings effectively.
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 AO has passed an ex-parte order by considering the information available with the department and the same has been dismissed by the ld.CIT(A) - NFAC due to non-participation of the assessee before the first appellate authority.
:-4-: ITA. No:1537/Chny/2025 8. 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 denovo 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.
26th August, 2025 at Chennai. Order pronounced in the court on