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Facts
The AO CPC made an adjustment of Rs. 15,00,000/- by disallowing a deduction under Section 40(b), thereby reducing the refund due to the assessee. The CIT(A) dismissed the assessee's appeal against this adjustment solely due to a delay of over two years, without adjudicating the merits of the case. The assessee contended that the delay was caused by a pending rectification application under Section 154.
Held
The Income Tax Appellate Tribunal (ITAT) condoned the delay in filing the appeal before the CIT(A), acknowledging the principle of substantive justice. The ITAT remanded the matter back to the CIT(A) for fresh adjudication on merits, setting aside the previous impugned order.
Key Issues
Whether the CIT(A) was justified in dismissing an appeal solely on grounds of delay without considering the merits, especially when the assessee had a rectification application pending, and whether the adjustment made by the AO CPC under Section 143(1) was permissible.
Sections Cited
250, 40(b), 143(1), 143(1)(a)(i), 143(1)(a)(vi), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Appearances by: Assessee represented by : Siddarth Agarwal, Advocate Department represented by : Raja Sengupta, CIT(DR) Date of concluding the hearing : 18.06.2025 Date of pronouncing the order : 30.06.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
This appeal arises from an order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 05.08.2024, u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”).
1.1 In this case, the AO CPC made an adjustment of Rs. 15,00,000/- and reduced the amount of refund due in the case of this assessee. The said adjustment was made by disallowing the deduction claimed u/s 40(b) of the Act. At first appellate stage, it is seen that there was a delay of more than two years, which was not condoned and the appeal was dismissed without any adjudication on merits.
“1. That under the facts and circumstances of the case and in law the order passed by the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A), Vadodara on 05/08/2024 vide DIN & Order No: ITBA/APL/S/250 /2024-25/1067302630(1) for the assessment year 2020-21 is bad-in-law, arbitrary, perverse, unsustainable and against the principles of natural justice.
2. That under the facts and circumstances of the case the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A), Vadodara has grievously erred in sustaining the assessed total income at Rs.60,99,890 as against the returned income of Rs.45,99,890.
3. That under the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A), Vadodara has grossly erred in not considering the case on merit.
4. That under the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A). Vadodara has grievously erred in sustaining the disallowance of partner's remuneration of Rs. 15,00,000 even though the same is an allowable deduction under Section 40(b) of the Income Tax Act, 1961.
That under the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A). Vadodara has grievously erred in sustaining the adjustment/disallowance of Rs. 15,00,000 which is not permissible as it is not covered by any of the situations mentioned in Section 143(1)(a)(i) to 143(1)(a)(vi) resulting in an adjustment which is ultra vires.
That under the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A), Vadodara has grossly erred both on facts and in law in upholding the adjustment/disallowance made by the Asst. Director of Income Tax, CPC Bengaluru not permissible being outside the purview of Section 143(1)(a)(i) to 143(1)(a)(vi) of the Income Tax Act, 1961.
That under the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A). Vadodara has grossly erred both on facts and in law in sustaining the act of the Asst. Director of Income Tax, CPC Bengaluru in not giving the assessee an intimation seeking to make the adjustment/disallowance thereby violating the mandate of 1st Proviso to Section 143(1) rendering the order bad in law.
The appellant craves leave to make any addition, alteration or modification etc., of the grounds either before the appellate proceedings, or during the course of appellate proceedings.”
Before us, the Ld. AR vehemently argued that the delay before the Ld. Addl/JCIT(A) was due to the fact that the assessee had filed a rectification application u/s 154 of the Act. It was mentioned that even after persuasion the application u/s 154 of the Act was not disposed of. Thereafter, the assessee decided to file the appeal before the first appellate authority. The 2.1 The Ld. DR relied on the AO’s order.
We have carefully considered the documents before us and heard the Ld. AR/DR. It is settled position that in the interest of substantive justice any judicial or the quasi-judicial forum would be liberal in condoning delays in filing of the appeals. On appraisal of the facts and circumstances of this case, we feel that the assessee deserves a chance to present his case before the first appellate authority and accordingly we condone the delay before him and remand this matter back to the file of Ld. Addl./JCIT(A) for adjudication. Needless to say, the impugned order is set aside.
In result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 30.06.2025