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Facts
The assessee company filed its return declaring 'NIL' income after claiming a significant loss. The case was selected for scrutiny due to low PBDIT ratio and pending share application money. The Assessing Officer treated certain transactions as sham and assessed total income at Rs.36,10,390/-. The assessee appealed to the CIT(Appeals) after a delay of 563 days.
Held
The Tribunal held that the delay in filing the appeal before the CIT(Appeals) was due to COVID-19 pandemic and acute illness of family members of the assessee. Considering these circumstances, the Tribunal condoned the delay and remitted the matter back to the CIT(Appeals) for disposal on merits.
Key Issues
Whether the CIT(Appeals) erred in dismissing the appeal on grounds of delay without considering the substantive justice, and whether the delay due to pandemic and personal illness should be condoned.
Sections Cited
143(2), 142, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2017-2018 A.K. Properties Pvt. Limited,………….…………Appellant Vill. Kalikakhali, P.O. + P.S. Math Cahndipur, Tamluk, Purba Medinipur-721659, West Bengal [PAN:AAGCA4016P] -Vs.- Income Tax Officer,………………….…………...Respondent Ward-27(3), Haldia, Income Tax Office, Basudebpur, Talpukur, Khanjanchak, Haldia, Purba Medinipur-721101, W.B. Appearances by: Shri Anand Sen, A.R., appeared on behalf of the assessee Shri L.N. Dash, Addl. CIT(D.R.), appeared on behalf of the Revenue Date of concluding the hearing: March 12, 2025 Date of pronouncing the order: May 29, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of ld. Addl./JCIT(Appeals)-2, Jaipur dated 16th May, 2024 passed for Assessment Year 2017-18.
The appellant is a Private Limited Company, which filed its return of income on 03.11.2017 in ITR 6 by declaring total income (A.Y. 2017-2018) A.K. Properties Pvt. Limited at ‘NIL’, after claiming current year loss of Rs.12,71,27,213/-. Subsequently the case was picked up for complete scrutiny under CASS and the reason for selection for scrutiny was (i) very low PBDIT ration in specific business code and turnover range and (ii) large share application money pending for more than one year as compared to preceding year. Accordingly, statutory notice under section 143(2) of the Act dated 08.08.2018 was issued online through ITBA module as well as through speed post and duly served on the assessee asking to produce or cause to produce any evidence in support of the said return of income on or before 24.10.2018 through e-filing portal. Therefore, statutory notice dated 21.05.2019 in terms of sub-section (1) of section 142 of the Act along with the questionnaires was issued online through ITBA module as well as through Speed Post and the same was duly served on the assessee. From the profit & loss account of the assessee, it is seen that the assessee has not produced proper explanation why the opening work in progress of Rs.12,46,28,620/- has been reduced to Rs.4,64,20,180/- at the end of the year after booking job bills of Rs.3,49,49,368/-. Moreover, the assessee has claimed the direct expenses of Rs.2,49,65,736/-. The assesese has made a bogus entry during the relevant year of Rs.5,52,30,184/- under the head bad debts to covert its income into loss. The assessee has claimed the amount of Rs.11,65,795/- as sundry creditor, consultancy charges of Rs.36,000/-, depreciation charges of Rs.16,142/-, interest on income tax return amounting to Rs.1,13,696/-, various expenditures of Rs.29,27,941/- and subscription & donation of Rs.27,600/-, which were remained unexplained. After considering (A.Y. 2017-2018) A.K. Properties Pvt. Limited the submissions made by the assessee, the ld. Assessing Officer concluded that the transactions made by the appellant were sham transactions and treated the same as unexplained money under section 69A of the Act. Accordingly, total income of the assessee was assessed by the ld. Assessing Officer at Rs.36,10,390/-. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals) with a delay of 563 days and filed condonation petition.
After considering the submissions made by the assessee, the ld. CIT(Appeals) dismissed the appeal saying that the assessee failed to establish the reasonable cause to condone the delay of 563 days.
On being aggrieved, the assessee preferred an appeal before the ITAT and raised the following issues:- (1) For that ld. CIT(A), NFAC in dismissing the appeal on ground of delay in the process completely ignored the settled principle of law that when substance justice and technical consideration are pitted against each other, the cause of substantial justice deserved to be preferred. (2) For that the ld. CIT(A)m NFAC in course of dismissing the appeal due to delay only noticed a part of the explanation given by the appellant that too in a partisan manner. (3) For that Ld. C.I.T.(A), NFAC ought to have consider the sufficiency of the cause in a pragmatic manner. (4) For that in any event and without prejudice the ld. CIT(A), NFAC consequent on filing of appeal along with condonation of delay having issued the notices dated 6th June, 2022 and 25th January, 2024 eliciting response in the matter on merits ought not to have thereafter dismissed the appeal for delay.
(A.Y. 2017-2018) A.K. Properties Pvt. Limited 5. I have heard both the sides. It was the submission of the ld. Counsel for the assessee that the delay occurred due to illness of mother of some persons of the appellant company in filing of the appeal for the period falling before COVID exempt period. The ld. Counsel for the assessee further pleaded that the assessee has fair chance to win the case and pleaded to set aside the order passed by the ld. CIT(Appeals) and remit the matter back to the file of ld. CIT(Appeals) with a direction to dispose of the appeal on merits.
On the other hand, ld. Departmental Representative for the Revenue submitted that the assessee has not satisfactorily explained the reasons to condone the delay of 563 days. Therefore, the ld. CIT(Appeals) has rightly dismissed the appeal filed by the assessee. He pleaded to uphold the order passed by the ld. CIT(Appeals).
I have perused the material available on record. Considering the reasons mentioned in the petition, I am of the view that the delay had occurred due to Covid pandamic and acute illness of family members of the assessee-company. Therefore, considering the facts and circumstances of the case, I am of the view that it is a fit case to condone the delay and accordingly, I condone the delay of 563 days and remit the matter back to the file of ld. CIT(Appeals) with a direction to dispose of the appeal on merits. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the Ld. CIT(Appeals) failing which the Ld. CIT(Appeals) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available (A.Y. 2017-2018) A.K. Properties Pvt. Limited on the record. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 29/05/2025.