Loading judgment…
Facts
The assessee's appeal was filed with a significant delay of 1445 days. The original assessment order was passed ex-parte by the AO and later confirmed by the CIT(A) ex-parte, primarily due to the assessee failing to respond to notices. The assessee claimed the delay was due to personal family issues and a wrong email address being used for communication by the tax authorities.
Held
The Tribunal condoned the delay, citing sufficient cause and the principle of natural justice. The ex-parte orders of the AO and CIT(A) were set aside, and the appeal was restored to the AO for a denovo assessment. The assessee was directed to provide all evidence regarding fresh capital introduction.
Key Issues
Whether the delay in filing the appeal is justifiable, and whether an ex-parte order should be set aside for providing an opportunity for a denovo assessment.
Sections Cited
143(2), 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI JAGADISH
आदेश / O R D E R MANU KUMAR GIRI (Judicial Member) The captioned appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)(NFAC) Delhi [CIT(A)] dated 26.07.2024 for Assessment Year 2016-2017. 2. The registry has noted delay of 439 days in filing the appeal. The assessee in his affidavit stated as under:- AFFIDAVIT OF KANGAYAM SUBRAMANIAM DHANABAL 1. Kangayam Subramaniam Dhanabal S/o Mr. Subramanium aged about 53 years, Residing at No. 256 Veeranampalayam, Kangayam, Veeranampalayam B.O. Kangeyam, Tiruppur, 638701, came down to Tirupur, do hereby solemnly affirm and sincerely state as follows:
‘’1. I am the Petitioner/Appellant in the Appeal and I am fully acquainted with the facts of the case.
I am the proprietor of M/s Rathna Oil Industries engaged in the Manufacturing and Trading of coconut, coconut shell, Coconut Oil, oil cakes. For the A.Y 2016-17, my Return of Income was picked up for Limited Scrutiny by issuance of notice u/s 143(2) on 11.07.2017. This was followed by various notices to which I attended to; But I could only provide partial details due to some personal family issues. The Assessing officer proceeded to pass an ex-parte order of assessment u/s.144 treating a sum of Rs.4,50,00,000/- as unexplained income without providing me sufficient opportunity.
3. Thereafter, I filed an appeal before the Commissioner of Income Tax (Appeals) on 06.02.2019 with a small delay. Despite the order of assessment was brought to my notice, I could not concentrate on this because of bereavement in my family. This was also brought to the notice of the CIT(A) and it reflects in my FORM 35.
The e-mail address for communicating the correspondences from CIT(A) was specifically requested to be addressed to rathnaoilindustries@gmail.com. This was due to the fact that this mail ID was under the supervision of the frontier who was entrusted with the job accessing email.
Thereafter, there were no email communications in this regard from the Income Tax Department. I was shocked to receive a call from the Tax Recovery officer in the month of November, 2024 who informed me that an outstanding demand is pending and informed me that recovery action will be initiated on failure to pay the sum. During such time, I was also unwell and was advised to take rest.
Thereafter, I informed the same to my accountant who verified my E-portal and found that the hearing notices were served to a different email address which was not the proper email address for communication of any correspondences / hearing notices in respect of the appeal filed before CIT(A) and that the CIT(A) has passed an ex-parte order without adverting to the factual aspects of the matter.
My accountant then informed me that this order has to be further challenged before this Hon'ble Tribunal and advised me to contact the present counsel Mr.G.Baskar. Immediately, I approached the present counsel who then prepared the relevant appeal documents and sent to me for signature.
This Appeal ought to have been filed on or before 24.09.2023 and is being filed with a delay. This delay is neither willful nor wanton but due to circumstances mentioned above. I would be put to irreparable loss and hardship if the delay is not condoned. On the other hand, no loss would be caused to the Department and thus the balance of convenience lies in my favour.
It is prayed that this Hon'ble Tribunal be pleased to: a. Condone the delay of 1445 days in filing the present appeal, b. Admit and adjudicate the appeal in accordance with Law and c. pass such other order as this Hon'ble Tribunal deems fit and proper in the circumstances of the case and thus render justice’’.
Considering the reasons stated in the affidavit by the Assessee, we condone the delay and treat the reasons as ‘sufficient cause’ and admit the appeal for adjudication.
Brief facts are as under: The assessee has filed his return of income on 18-07-2016 admitting total income of Rs.11,88,980/-. The case was selected for scrutiny under CASS with limited scope to examine the following issue:-1) whether the share capital is genuine and from disclosed sources. A notice u/s 143(2) of the Act dated 11-07- 2017 was issued and duly served on the assessee both by e-mail and by post, to produce any evidence/information which the assessee feels necessary in support of the said return of income on or before 26-07-2017. There being no response to the above notice u/s 143(2), notices u/s 142(1) dated 05-03-2018, 16-08-2018 and 16- 11-2018 were issued to the assessee and duly served. However there was no response from the assessee to any of the notices. The AO conveyed to the assessee to produce evidences/information regarding the source of cash deposits within four days of receipt of the letter, failing which the unexplained introduction of Capital of Rs.4,50,00,000/- will be determined as his unexplained income. The Assessing Officer came to a conclusion that the assessee has purchased goods to the extent of Rs.43,63,68,393/- and sold goods to the extent of Rs.41,52,14,814/-and fixed asset is also increased to the extent of Rs.1,72,44,074/- from Rs. 1,02,46,047/-. Closing stock was also substantially increased to Rs.4,83,00,613/-from Rs.1,54,95,269/- and the increase in capital to run the business is made as under:-
Opening Balance as on 01.04.2015 : Rs. 65,86,147/- Add:- 1. Net Profit : Rs. 13,38,981/- 2. Fresh capital introduction : Rs.4,50,00,000/- ------------------------- Rs.5,29,25,128/- ------------------------- Thus the capital increased to Rs.5,29,25,128/- from Rs.65,86,147 with fresh capital introduction of the assessee at Rs.4,50,00,000/- which is treated as unexplained income of the assessee and the same is added to the returned income of the assessee and accordingly the assessment was completed. Assessee further challenged the order of assessment u/s 144 of the Act before the ld.CIT(A) who proceeded ex-parte and confirmed the order of the AO on merits. Aggrieved, assessee is in appeal before us.
4. Before us, the ld. Counsel for assessee submitted that the CIT(A) has sent the notices at wrong email ID despite correct email ID provided in Form 35 hence the assessee was prevented from appearance on the purported dates. Therefore, he prayed that the assessee may be provided an adequate and proper representation time to file evidence and documents, if any, to substantiate his explanation regarding fresh capital introduction of Rs.4,50,00,000/-. The ld.DR stated that the assessee is habitual defaulter in appearing before the appellate authority hence no lenient view is to be taken in this case and prayed for dismissal of appeal.
5. Though we concur with the submissions of Ld. Sr. DR however, keeping in mind the principle of natural justice and grant another opportunity of hearing to the