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Facts
The appellant, an individual partner, filed an appeal against an assessment order for AY 2017-18 passed under Section 144 against a partnership firm, Golden Transport Corporation. The assessment was based on cash deposits in the firm's bank account, which the firm failed to explain. The CIT(A) dismissed the appeal citing non-compliance and lack of locus standi, as the appeal was filed by an individual against a firm's assessment. There was also a 53-day delay in filing the appeal to the ITAT.
Held
The ITAT first condoned the 53-day delay in filing the appeal, accepting the assessee's explanation. However, it upheld the CIT(A)'s decision, ruling that the appeal filed by the individual partner against an assessment order issued to a partnership firm was not maintainable due to lack of locus standi. The Tribunal affirmed that only the firm against which the assessment was made could have filed such an appeal.
Key Issues
1. Whether an appeal filed by an individual partner against an assessment order passed on a partnership firm is maintainable. 2. Whether the delay in filing the appeal should be condoned.
Sections Cited
250, 144, 142(1), 253(3)
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Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 11.12.2024, which has been passed against the order u/s 144 of the Act, dated 27.12.2019. 1. 1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 53 days. An application seeking condonation of delay has been filed by the assessee stating as under: I.T.A. No.: 839/KOL/2025 Assessment Year: 2017-18 Md. Parwez Khan. “The undersigned would like to state that the order under Section 250 of the Income Tax Act, 1961 dated 11.12.2024 for the AY 2017-18 was passed by the Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC). As per the provision of Section 253(3) of the Income Tax Act, 1961, appeal before this Hon'ble Tribunal against the said order needs to be filed within sixty days from the date of service of the notice of demand. In this connection, we would like to submit as follows:
That the aforesaid order under section 250 was issued through the email of the appellant.
That After getting the order in appeal the appellant immediately sent the order to his tax consultant and entrusted him to take appropriate steps against such order. The Tax Consultant of the petitioner said that he requires some time to draft the appeal petition and he will share the draft by next month.
That After passing a month's time on January 10, 2025 the appellant asked his tax consultant about the status of the case and then the Tax Consultant of the appellant said that his draft is almost ready and he needs a time of another 7 days to prepare for filing the instant appeal.
That on February 10, 2025 when the appellant did not get any favourable response from his tax consultant after repeated follow ups and reminders then he lost faith on his erstwhile tax consultant and decided to change his tax consultant.
That on February 18, 2025 the appellant consulted an advocate who suggested the appellant to file a writ petition challenging such notices and orders. As the appellant was not very impressed and also got confused on the opinion of this advocate he consulted a Ld. Senior advocate.
That on February 26, 2025 the appellant made a conference with the Ld. Senior Advocate who advised the appellant to challenge the order in Appeal before the Hon'ble Income Tax Appellate Tribunal. The Ld. Senior advocate also directed the appellant to consult one of his juniors who can file the appeal.
That on March 03, 2025 the appellant shared all the relevant documents to his Ld. Advocate and on March 21, 2025 the petitioner received the draft appeal petition for confirmation.
That on March 28, 2025 the appellant confirmed the draft appeal petition after making necessary changes and on April 04, 2025 the appellant made the payment of appeal fees.
That from the above-mentioned facts, it is abundantly clear that the delay is neither intentional nor deliberate and there are no latches on the part of the appellant for such delay. The appellant has taken diligent efforts for filing the appeal in time but all his efforts went in vain.
That your good self has the power to condone the delay, which needs to be exercised liberally. The matter relating to condonation of delay has to be judged broadly and not in a pedantic manner, and the provisions limiting I.T.A. No.: 839/KOL/2025 Assessment Year: 2017-18 Md. Parwez Khan. the time must be liberally interpreted. The word "sufficient cause" needs to be given liberal construction so as to advance substantial justice Under such juncture you are therefore requested to entertain the instant appeal condoning the delay in filing the appeal.”
The assessee has also filed an affidavit in this regard, containing similar facts. Considering the application/affidavit seeking condonation of delay and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.
The assessee is in appeal before the Bench raising the following grounds of appeal:
“1. For that the Respondent has initiated assessment proceedings against a wrong assessee. i.e. when the bank account being account Number 34653104244 of The State Bank of India Khidderpore Dockyard Branch, Kolkata is in question then the proceedings should have been initiated against the appellant who is the holder of that account. After receiving the notice under section 142(1) of the Act the appellant has also indicated the same to the respondent but without taking into account any such reply the Respondent Assessing officers passed the order of assessment adding an amount of Rs.2,36,59,350/- and raising a huge demand on such income.
For that the Respondent Assessing officer in his order has mentioned that he had deputed inspector to rove an enquiry as regard the existance of firm at 48/C, Karl Marx Sarani, Babubazar, Kolkata 700023. The Respondent Assessing officer also mentioned that there was no other address of the firm available where further enquiry could be conducted. But the respondent assessing officer had sent the notice under section 142(1) of the Act and also the assessment order in the address "51/1/1, Karl Marx Sarani, Kolkata - 700043". Therefore, it is clear from these facts that the primary investigation has not been properly conducted, which vitiates the whole proceedings.
For that it is evident from the bank statement and the cheque leaf of the bank account being account number 34653104244 that the appellant is operating the account as a proprietor of the company "Golden Transport Corporation". Therefore, the appellant has enough locus standi to challenge the order dated December 27, 2019 whereby some transaction in his account has been questioned. I.T.A. No.: 839/KOL/2025 Assessment Year: 2017-18 Md. Parwez Khan.
For that the appellant has already disclosed the said bank account in his return of income and paid appropriate taxes on the transactions. Therefore, the alleged cash deposits are not unexplained money as the appellant has recorded those deposits in his books of accounts
For that accounting same transactions in the books of account of the appellant and also in the books of accounts of the firm will become double taxation which is not maintainable in the eyes of law.
For that after the dissolution of the firm the PAN being AAIFG1379C has become inoperative and the firm has no existence. Sending notice and/or orders to such non-existent assessee is not valid and therefore the order dated December 27, 2019 along with the notice of demand and any other penalty proceedings in this regard should be quashed.
For that the appellant craves leave to add, adduce, alter, amend ground or Grounds of appeal before or at the time of appeal if necessary.”
Brief facts of the case are that the assessee is an individual and was also a partner in a firm by the name of Golden Transport Corporation, which was reported to have deposited large amount of cash of ₹20,00,500/- during the demonetization period in the bank account with the State Bank of India, Kidderpore Dockyard Branch, Kolkata in the name of Golden Transport Corporation, Kolkata, which is a partnership firm. Notice u/s 142(1) of the Act was issued to the firm to file the return of income. In compliance to the notice, the firm did not file any return of income. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the firm had deposited an amount of ₹2,36,59,352/- in cash and other deposits throughout the year in the bank account and had no opening balance. As the firm did not file any satisfactory explanation, the entire deposits were added to the total income which was assessed at ₹2,36,59,350/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who vide order dated 11.12.2024 dismissed the appeal due to non- compliance by the assessee and also for the reason of lack of locus standi in filing the appeal by the individual when the assessment related I.T.A. No.: 839/KOL/2025 Assessment Year: 2017-18 Md. Parwez Khan. to the firm. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal.
During the course of the appeal though the assessee sought adjournment, however, the same was rejected as there was no sufficient justification for the judgement and the appeal was heard. Rival contentions were heard and the submissions made have been examined. At the outset, the Ld. AR requested that the matter may be remitted to the Ld. AO. Contrary to that, the Ld. DR submitted that no submissions were made either before the Ld. AO or before the Ld. CIT(A) and requested that the order of the Ld. CIT(A) may be confirmed.
Since there was no proper compliance before both the Ld. AO as well as the Ld. CIT(A), the addition made by the Ld. AO was confirmed by the Ld. CIT(A). A perusal of the assessment order shows that the assessment was made in the name of the firm under section 144 of the Act. Before the Ld. CIT(A), the firm did not file the appeal but the individual Md. Pawez Khan preferred the appeal. the Ld. CIT(A) issued several notices to the assessee and as there was no compliance, decided the appeal on merits by observing as under: “4.7 Due to the non-compliant attitude of the appellant, the appeal has to be decided on merits and facts available on record. I have carefully perused the grounds. of appeal, statement of facts and the assessment order to look for any fact which may be helpful in furthering the cause of the appellant, but could not find any. during the present appellate proceedings, the appellant failed to give any submission /evidence whatsoever and chose to remain non-compliant. In the statement of facts in Form No. 35, the appellant has claimed to be the proprietor of proprietary concern by the same name as the appellant firm, namely 'Golden Transport Corporation' carrying business on transport. It is claimed by the appellant, without providing any substantiating evidencing at all that the above cash transactions, which are the subject matter of this appeal, were actually undertaken by his proprietary concern and not by the firm in the name of which the assessment has been made. He further stated that the A/c No. 34653104244 was duly disclosed in his personal return of income filed on 31.10.2017 whereas assessment order was passed in the name of 'Golden I.T.A. No.: 839/KOL/2025 Assessment Year: 2017-18 Md. Parwez Khan. Transport Corporation' which is another partnership firm where the appellant was a partner. However, it is also noted that the appellant has furnished any documentary evidence in support of his claim neither in assessment proceedings nor in the ongoing appellate proceedings, in absence of any corroborative evidences, to substantiate his claim and also because of the fact that the assessment was made in the hands of M/s Golden transport Corporation (PAN: AAIFG1379C), the only entity entitled to file this appeal against the said assessment order could have been the firm itself. Notwithstanding the fact that the appellant claims to be a partner of the firm on which the assessment has been made and claims to own up all the transactions in his individual capacity (albeit without any supporting evidence at all) and appeal filed by an entity (individual) other than the entity on which assessment was made (firm) cannot be entertained on lack of locus standi also. Notwithstanding the fact that the transactions are owned up by the individual who has filed this appeal, nevertheless the only person who could have raised this plea and filed this appeal could have been the firm on in whose hands the addition was made. In view of the same, the appeal is dismissed both on the ground on non-appearance and as well as lack of locus standi for filing the present appeal.”
At the time of hearing, the Bench was inclined to remand the matter to the Ld. CIT(A)/the Ld. AO; however, on appraisal of the facts of the case, it is evident that since the assessment was made in the hands of the firm, it was the firm, which should have filed an appeal against the assessment order before the Ld. CIT(A), but it was Md. Parwez Khan, individual, who has a different status than that of the firm, who had filed the appeal and which was rightly treated as non- maintainable as no assessment order was passed in the case of the individual. Although the assessee claims that the entire transactions have been disclosed in his proprietorship concern, however, the fact remains that the assessment order in the case of the firm was required to be appeal against before the Ld. CIT(A), which has not been done. Therefore, there is no justification for interfering with the order of the Ld. CIT(A) as the appeal filed by the individual, in whose case no assessment order had been passed, was not maintainable and it was the firm, which alone could have filed the appeal. Hence the appeal filed by I.T.A. No.: 839/KOL/2025 Assessment Year: 2017-18 Md. Parwez Khan. the assessee, who is an individual is hereby dismissed as being non- maintainable. The assessee shall be at liberty to file an appeal in the name of the firm through the partners before the Ld. CIT(A) and place all facts before him and raise all contentions, including disclosure of the account in the name of the proprietor, so that the relief claimed could be allowed in relation to the assessment made in the case of the firm.
In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open Court on 22nd July, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 22.07.2025 Bidhan (Sr. P.S.) I.T.A. No.: 839/KOL/2025 Assessment Year: 2017-18 Md. Parwez Khan. Copy of the order forwarded to:
Md. Parwez Khan, 54/1/1/, Circular Garden Reach Road, Khiderpore, Kolkata, West Bengal, 700043. 2. ITO, Ward-40(3), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order