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Facts
The assessee, a partnership firm, had cash deposits in its bank account which the Assessing Officer added as unexplained investments under Section 69A and passed an ex parte order under Section 144 due to non-compliance. The CIT(A) upheld this decision. The assessee filed an appeal to the ITAT with a 424-day delay, attributing the non-compliance to prolonged partner disputes and business cessation.
Held
The Tribunal condoned the delay, finding the reasons for the delay to be bona fide. It remanded the matter back to the Assessing Officer for fresh adjudication, conditional on the assessee paying ₹5,000/- to the State Legal Aid Authority within 30 days, to provide an opportunity for the assessee to present all relevant details and evidence.
Key Issues
The key issues were the condonation of a significant delay in filing the appeal, and whether the ex parte assessment by the Assessing Officer and its confirmation by the CIT(A) should be set aside and remanded for de novo consideration, given the assessee's stated inability to represent due to internal disputes.
Sections Cited
142(1), 144, 69A
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Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 31.10.2023 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2017-18.
We find that this appeal is filed with a delay of 424 days. The assessee filed an affidavit along with petition for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said petition, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
The assessee raised 3 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the assessment order exparte of the assessee.
4. At the outset, we note that the assessee is a partnership firm deriving income from business of hardwares. The Assessing Officer found cash deposits in assessee’s bank account. Under scrutiny, notice under section 142(1) of the Income Tax Act, 1961 [“Act” in short] was issued and also issued notice to the bank seeking explanation. The Assessing Officer issued show-cause notice to the assessee seeking details of credits in bank account as per the details supplied by the banks and there was no explanation to that effect by the assessee. Since there is no explanation from the assessee, the Assessing Officer added the entire credits to the income of the assessee and passed order under section 144 of the Act. As not satisfied with the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A)/NFAC, Delhi. Para 3 of the impugned order clearly shows that 3 there is no response from the assessee in compliance to the notices issued by the ld. CIT(A). Having no explanation in support of the ground raised by the assessee, the ld. CIT(A) confirmed the order of the Assessing Officer exparte of the assessee.
5. Before us, the ld. AR Shri Vishwa Padmanabhan, CA submits that the assessee is ready to file all relevant details in support of the contention involved in the addition made by the Assessing Officer. He submits that the assessee could not represent before both the authorities below for the only reason that there is serious and prolonged disputes between the partners and the business of the assessee was completely shut down since past few years. Due to cessation of business and ongoing disputes between the partners, the firm’s financial and administrative affairs were severely affected. The ld. AR submits that now the assessee’s one of the partners Shri Sudallaimani is ready to prosecute the case before the Assessing Officer and prayed to afford an opportunity to the assessee.
The ld. DR Shri M.P. Guru Prasad, Addl. CIT objected the same and submits that if at all this Tribunal intends to afford one more opportunity to the assessee, that should be by way of cost as the 4 assessee totally failed to prosecute its case before the Assessing Officer and the ld. CIT(A) inspite of ample opportunities afforded to the assessee.
Having considered the submissions of the ld. AR and ld. DR , we note that the Assessing Officer added entire credits in the bank accounts of the assessee without there being any benefit to the expenditure. We find that there is no assistance from the assessee before the Assessing Officer and the ld. CIT(A) and the addition involved therein is under section 69A of the Act on account of unexplained investments. As there is no assistance from the assessee, taking into account the undertaking given by the ld. AR that the assessee is ready to file every evidence and in the interest of justice, we remand the matter to the file of the Assessing Officer subject to the condition of payment of ₹.5,000/- in favour of the State Legal Aid Authority, Hon’ble Madras High Court within 30 days from the date of receipt of this order and the Assessing Officer shall satisfy the payment of cost and decide the issue afresh after considering the written submissions/ documentary evidences as may be filed by the assessee to substantiate its claim. Thus, the grounds raised by the assessee are allowed for statistical purposes.