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Facts
The assessee's assessment was reopened under Section 147, and an addition under Section 68 for accommodation entries was made. The assessee's appeal to the CIT(A) against this order was dismissed due to a 251-day delay, which the CIT(A) refused to condone. The assessee then appealed to the ITAT seeking condonation of delay and adjudication of the merits, citing financial distress and management issues.
Held
The ITAT found sufficient cause for the delay in filing the appeal before the CIT(A) and condoned it. Since the CIT(A) had not adjudicated the appeal on its merits, the ITAT set aside both the CIT(A)'s and the AO's orders and remitted the matter back to the AO for fresh adjudication, ensuring the assessee is given a reasonable opportunity of being heard.
Key Issues
Whether there was sufficient cause to condone the delay in filing the appeal before the CIT(A); and whether the assessment order passed under Section 147 r.w.s. 144 and addition under Section 68 were valid.
Sections Cited
250, 253, 147, 144, 68, 148A(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & 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 2016-17 dated 21.11.2024, which has been passed against the assessment order u/s 147 r.w.s. 144 of the Act, dated 23.05.2023. I.T.A. No.: 802/KOL/2025 Assessment Year: 2016-17 Prestar Infrastructure Projects Ltd.
The Registry has informed that the appeal filed by the assessee is barred by limitation. An application seeking condonation of delay has been filed by the assessee stating as under:
“1. The present appeal under section 253 of the Income Tax Act, 1961. is preferred against an order dated 21.11.2024 passed by The Ld. National Faceless Appeal Centre (NFAC) CIT(A) in reference to the appeal made against the assessment order u/s. 147 r.w.s. 144 of the Income Tax Act, 1961 dated 23.05.2023. 2. As per the provisions of section 253(3) of the Act, an appeal against the rejection order dated 21.11.2024 should be filed within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee. Therefore, the present appeal should have been filed on or before 31st January 2025. 3. The present appeal is filed after a delay of 75 days from the date of passing the order under section 250 of the Income Tax Act, 1961. 4. The delay in filing the appeal is for sufficient cause and for reasons beyond the control of the assessee. The delay was caused on account of non-cooperation of a section of employee whose salary were unpaid for period of 3-7 months. The company was unable to meet its salary obligation as it was facing financial stress on account of low business activity, disturbances of employees, various civil and criminal proceedings against the company and its directors for failure to make payment to creditors, disputes with family members of the deceased factory owner leading to disturbances in lease rights holding of the factory premises and intermittent shut down of operations causing low business activity and suspension and slow-down of fabrication activity and resultant suspension of office activities.
Further in order to settle the tax dispute, company filed an application on 27.12.2024 under Direct Tax Vivad Se Viswas Scheme, 2024 for the relevant assessment year 2016-2017 which would have not necessitated filing of this appeal. However, due to non-availability of funds it could not pay relevant impugned tax amount and is thus compelled to seek remedy by way of this appeal.
The delay is for a sufficient and valid cause and for reasons beyond the control of the company and its directors. I.T.A. No.: 802/KOL/2025 Assessment Year: 2016-17 Prestar Infrastructure Projects Ltd.
Your Honour has power under sub-section 5 of section 253 of the Income Tax Act, 1961 which reads as under to condone the delay in filing the appeal beyond the time period specified in section 253(3) of the Act. 253(5) "The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period".
The appellant prays that under the stated facts and circumstances, the delay may kindly be condoned and this appeal against the order dated 21.11.2024 under section 253 may kindly be accepted for ends of justice.”
The assessee has also filed an affidavit in this regard. Considering the application for 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 Tribunal raising the following grounds of appeal:
“1. Because on the basis of law and on the facts and circumstances of the case, order of The Ld. National Faceless Appeal Centre (NFAC) CIT(A), Delhi dated 21.11.2024 under sec 250 of the Income Tax Act, 1961 is illegal and bad in law and in violation of the principles of natural justice.
Because The Ld. CIT(A) erred in rejecting the condonation application and dismissing the appeal on the grounds of delay in filing, without considering the genuine and unavoidable reasons cited by the appellant, that the delay was not intentional, and that the appellant had sufficient cause for not filing the appeal within the prescribed time limit.
Because on the basis of the facts and circumstances of the case, The Ld. CIT(A), Delhi erred in passing an order under section 250 of the Act without considering the documents and papers on records.
Because on the basis of law and on the facts and circumstances of the case order of the Assessing Officer (AO) dated 13.07.2022 under sec. 148A(d) of the Income Tax Act, 1961 is illegal and bad in law.”
Brief facts of the case are that the assessee had filed the return of income showing total income of Rs. 1,18,39,246/- and on the basis of I.T.A. No.: 802/KOL/2025 Assessment Year: 2016-17 Prestar Infrastructure Projects Ltd. the information received from the Insight portal, the assessment of the assessee was reopened as the assessee was one of the beneficiaries of accommodation entries and had received an amount to the tune of Rs. 53,10,905/- from M/s. Multiplier Enterprises Pvt. Ltd. and after considering the reply of the assessee, the addition was made under section 68 of the Act. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 21.11.2024 did not condone the delay in filing the appeal and dismissed the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the submissions made and the details filed have been examined. The Ld. AR submitted before us that for the impugned assessment year AY 2016-17, the reassessment order was made ex parte and before the Ld. CIT(A) as well proper representation was not made and the delay in filing the appeal which was of 251 days was not condoned by the Ld. CIT(A). In the affidavit filed for condonation of delay in filing the appeal before the Tribunal, it is stated that the delay in filing the appeal is attributable to non- cooperation of a section of employees whose salaries was pending for a period of 3-7 months due to financial stress on account of low business activity, disturbances of employees, various civil and criminal proceedings against the company and its directors for failure to make payment to creditors, disputes with family members of the deceased factory owner leading to disturbances in lease rights holding of the factory premises and intermittent shut down of operations causing low business activity and suspension and slow-down of fabrication activity and resultant suspension of office activities. The management could not devote attention to the aforesaid tax matters and failed to file the appeal I.T.A. No.: 802/KOL/2025 Assessment Year: 2016-17 Prestar Infrastructure Projects Ltd. on time in both the instants, on receipt of assessment order and again on receipt of a rectification order and the matter could be taken up after registration of some normalcy. However, the Ld. CIT(A) did not consider this as a sufficient ground and did not condone the delay of 251 days in filing the appeal. The Bench was however of the view that on the facts mentioned and in the interest of justice the delay ought to have been condoned as the assessee had sufficient cause for the delay. Accordingly, the delay in filing the appeal before the Ld. CIT(A) is hereby condoned. As the Ld. CIT(A) has not adjudicated the appeal on merits, therefore, as requested by the Ld. AR, we set aside both the orders of the Ld. CIT(A) as well as of the Ld. AO and remit the matter back to the Ld. AO to consider the submission of the assessee as per law and if permissible, grant the requisite relief and make the addition only after affording adequate opportunity of being heard to the assessee. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 25th June, 2025. [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 25.06.2025 Bidhan (P.S.) I.T.A. No.: 802/KOL/2025 Assessment Year: 2016-17 Prestar Infrastructure Projects Ltd. Copy of the order forwarded to:
Prestar Infrastructure Projects Ltd., 10, Clive Row, 4th Floor, Kolkata, West Bengal, 700001. 2. DCIT, 5(1), P-7, Chowringhee Square, Aaykar Bhawan, Kolkata - 700069. 3. CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order