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Facts
The assessee company's appeals were dismissed by the Ld.CIT(A) for being filed with a significant delay, which the Ld.CIT(A) refused to condone. The delay was attributed to the Managing Director's wife suffering from cancer, leading to the company being closed and the MD being unable to attend to company affairs. The assessee became aware of the assessment order only when recovery proceedings were initiated.
Held
The Tribunal held that the Ld.CIT(A) erred in not condoning the delay in filing the appeals, considering the medical emergency and other circumstances explained by the assessee. The Tribunal relied on a Supreme Court decision where a similar large delay was condoned.
Key Issues
Whether the delay in filing appeals before the Ld.CIT(A) due to a medical emergency and company closure should be condoned to allow adjudication on merits.
Sections Cited
148, 144, 271(1)(c), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R PER ABY T. VARKEY, JM: These are four (4) appeals preferred by the assessee company against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short "the Ld.CIT(A)”), Delhi, dated 20.05.2024 for the Assessment Years (hereinafter in short "AY”) (quantum appeal & penalty appeal) 2013-14 & 2014-15.
& 2225, 2226 & 2227/Chny/2024 (AY 2013-14 & 2014-15) M/s.Prince Logistics Services Pvt. Ltd.
At the outset, the Ld.AR of the assessee pointed out that the impugned orders of the Ld.CIT(A) passed by the Ld.CIT(A)/NFAC are ex- parte orders; and also brought to our notice that the Ld.CIT(A) didn’t look into the merits of the grounds of appeal raised by the assessee in all four appeals because he didn’t condone the delay of ‘582’ days in filing of the quantum appeal; and the delay of ‘450’ days in filing of penalty appeal. According to Ld AR, the Ld.CIT(A) was apprised about the unfortunate facts which caused the delay in filing of the appeals (before him). The wife of the Managing Director [M.D of the assessee company] was detected with cancer; and therefore, the M.D was taking care of her, which unfortunate incident led to the Managing Director not looking after the affairs of the company; and ultimately, the company had to be closed down for the last 4 to 5 years. The Ld.AR submitted that these appeals are pertaining to AYs 2013-14 & 2014-15 and the AO had re-opened the assessment by issuing notice u/s.148 of the Income Tax Act, 1961 (hereinafter in short ‘the Act’) on 29.03.2021 for AYs 2013-14 & 2014-15. According to the Ld.AR, since the assessee company was closed down, the Managing Director/Director was not aware of such notice or proceedings going on and therefore, couldn’t participate in the assessment proceedings which led to passing of ex parte/best judgment assessment u/s.144 of the Act, wherein, the AO was pleased to add the entire credit in the accounts to the tune of Rs.10,56,02,927/- for AY & 2225, 2226 & 2227/Chny/2024 (AY 2013-14 & 2014-15) M/s.Prince Logistics Services Pvt. Ltd. 2013-14; and likewise, for AY 2014-15 to the tune of Rs.4,91,56,188/-. According to the Ld.AR, the assessee came to know about the assessment order at the fag end of year 2023, when recovery steps were initiated by the AO, whereby delay of ‘582’ days had occurred; and immediately appeals were filed on 02.12.2023 against the assessment order on 30.03.2022 for both the years. Similarly, the AO had initiated penalty proceedings u/s.271(1)(c) of the Act and passed penalty orders for both the assessment years on 08.09.2022, which was also appealed by the assessee on 02.12.2023, in both the cases with a delay of ‘450’ days. According to Ld AR, even after explaining the aforesaid facts which caused the delay, the Ld.CIT(A) didn’t condone the delay, and refused to admit the appeal and consequently, didn’t adjudicate the grounds of appeal raised by the assessee. Therefore, the Ld.AR prayed that one more opportunity be granted to the assessee since huge demands have been raised against the assessee. In order to support the aforesaid averments that the Managing Director’s wife was critically ill and suffering from cancer and is still undergoing treatment, affidavits have been filed along with relevant Medical Certificates. Therefore, the Ld.AR prayed that the delay may be condoned by this Tribunal and the appeal be restored back to the file of the Ld.CIT(A) for adjudication on merits.
& 2225, 2226 & 2227/Chny/2024 (AY 2013-14 & 2014-15) M/s.Prince Logistics Services Pvt. Ltd. 3. Per contra, the Ld.DR doesn’t want us to give one more innings to the assessee.
We have heard both the parties and perused the material available on record. We note that the assessee-company didn’t file its RoI for both the assessment years; and according to the assessee, since the wife of assessee’s Managing Director was critically ill due to detection of cancer, assessee company had to be closed down which led to the assessee not receiving the notice issued by the AO u/s.148 of the Act on 29.03.2021 for both the assessment years. The assessee has filed medical certificate, etc., to support the aforesaid contention of the assessee. Since the assessee was not aware of the proceedings going on before the AO, the AO passed ex parte/best judgment assessment adding the entire credits in the bank account of the assessee and made huge additions. And it is noted that the assessee came to know about ex parte order passed by the AO only when recovery proceedings were initiated by the Department and thereafter, assessee immediately filed appeal before Ld CIT(A) which caused delay of ‘582’ days (in filing of appeal against quantum appeal) and ‘450’ days (in filing of appeal against the penalty order). Even though, the aforesaid facts were brought to the notice of the Ld.CIT(A), still he refused to condone the delay in filing of the appeals before him and was pleased to dismiss the appeals as not maintainable. We don’t countenance the impugned action of the Ld.CIT(A) and note that the & 2225, 2226 & 2227/Chny/2024 (AY 2013-14 & 2014-15) M/s.Prince Logistics Services Pvt. Ltd. assessment orders in these cases for AYs 2013-14 & 2014-15 have been passed on 30.03.2022 u/s.147 r.w.s.144 of the Act; and the assessee was not aware of such assessment orders and came to know only when recovery proceedings were initiated against the assessee; and the assessee has filed affidavit as well as Medical Certificates to support these facts as well as the fact that the assessee was not functioning/close down during the period when the notices were issued to the assessee company in 2020-21. Therefore, unless the aforesaid facts have been refuted/contradicted by the department, the question of disbelieving the said assertion/stand taken by the assessee on the strength of affidavit can’t arise; and in such circumstances, we are of the view that the Ld.CIT(A) erred in not condoning the delay in filing the appeals before him. Therefore, we are inclined to condone the delay of ‘582’ days and ‘450’ days in filing of the respective appeals as noted supra, and for such a decision, we rely on the decision of the Hon’ble Supreme Court in the case of Senior Bhosale Estate (HUF) v. ACIT reported in [2019] 419 ITR 732 (SC), wherein the Hon’ble Supreme Court condoned the delay of ‘1754’ days by reversing the order of the Hon’ble Madras High Court in similar circumstance. Hence, we condone the delay of ‘582’ days (quantum appeal) and ‘450’ days (penalty appeal) and restore the appeals back to the file of the Ld.CIT(A) with a direction to adjudicate the grounds of appeal raised by the assessee in accordance with sub-section & 2225, 2226 & 2227/Chny/2024 (AY 2013-14 & 2014-15) M/s.Prince Logistics Services Pvt. Ltd. 6 of sec.250 of the Act, and if found necessary call for Remand Report from the AO; and thus, all the four appeals are restored back to the file of the Ld.CIT(A) for de novo adjudication on merits after hearing the assessee. The assessee is directed to be diligent and file written submissions/relevant documents to support its ground of appeal.
In the result, four appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on the 15th day of January, 2025, in Chennai.