K.B. PROCESSING,KOLKATA vs. I.T.O., WARD - 50(6), KOLKATA

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ITA 2305/KOL/2024Status: DisposedITAT Kolkata17 March 2025AY 2017-20186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, after considering the facts and the judgments of the Hon'ble Supreme Court, particularly in Shakuntala Devi Jain v. Kuntal Kumari and N. Balakrishnan v. M. Krishnamurthy, which emphasize the liberal interpretation of 'sufficient cause' to advance substantial justice, found merit in the assessee's plea. The Tribunal noted that the AO's order was ex-parte and there was no compliance before the AO or the CIT(A). The CIT(A) had dismissed the appeal solely on the ground of delay, finding no sufficient cause. However, the Tribunal, considering the affidavit filed by the assessee explaining the delay and the fact that the firm allegedly did not exist during the period, was inclined to condone the delay. The Tribunal decided to remit the appeal back to the file of the Ld. CIT(A) for a fresh order after condoning the delay. The issue of the existence of the firm and the merits of the assessment were not decided by the Tribunal.

What were the facts?

The assessee, K. B. Processing, is in appeal against the order of the CIT(A)-NFAC, Delhi, for Assessment Year 2017-18. The assessee did not file a return of income for the AY 2017-18. The Assessing Officer (AO) issued notices u/s 142(1) and a show cause notice, to which the assessee did not respond. Consequently, the AO assessed the income and made an addition of Rs. 39,50,020/-. The assessee appealed to the CIT(A), but the appeal was dismissed due to a delay in filing. The assessee's counsel argued that the delay was not intentional, as the AO's order was recently discovered upon receiving penalty notices. The assessee claimed the firm did not exist during the relevant period and the order was sent to an inbox not regularly checked. The appeal before the ITAT is against the CIT(A)'s order dismissing the appeal.

What were the issues?

1. Whether the delay in filing the appeal before the Ld. CIT(A) for AY 2017-18, which was filed after 665 days, is to be condoned under Section 5 of the Limitation Act, considering the assessee's explanation that the AO's order was recently discovered upon receipt of penalty orders and the firm was dissolved. Assessee's Contention: The delay was not intentional but due to the order being sent to an inbox not regularly checked, and the assessee only became aware of the assessment order upon receiving penalty notices. The firm K. B. Processing did not exist during the assessment year. The assessee relies on the principle of advancing substantial justice and liberal interpretation of 'sufficient cause' as per Supreme Court judgments in Shakuntala Devi Jain v. Kuntal Kumari and N. Balakrishnan v. M. Krishnamurthy. Revenue's Contention: The Ld. D.R. supported the impugned order of the Ld. CIT(A). No specific arguments or reliance on authorities were recorded for the revenue.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 144,Section 271AAC1,Section 272A(1)(d),Section 271,Section 250,Section 5

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH: KOLKATA

Before: Shri Pradip Kumar Choubey&Shri Sanjay Awasthi]

ORDER / आदेश Per Pradip Kumar Choubey, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 18.09.2024 for the AY 2017-18.

2.

Brief facts of the case of the assessee are that the assessee did not file return of income for the AY 2017-18. It has come into notice of the AO that a huge cash deposit Assessment Year: 2017-18 K. B. Processing in the back account particularly during the demonetization period and also during the FY 2016-17 was made. Accordingly, a notice u/s 142(1) was issued to the assessee. The assessee did not file any return in response to the same and he was non-compliant. A show cause has also been issued but no one from the assessee’s side either appear or made in written compliance, as a result of which, the AO assessed the income and added Rs. 39,50,020/-

3.

Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed on account of delay in filing of the appeal.

Being aggrieved and dissatisfied, the assessee preferred an appeal before us.

4.

The Ld. Counsel instead of arguing into the merit of the case has only submitted that the assessee has to give an opportunity to place his case before the Ld. CIT(A) as the delay caused by the assessee was not intentional rather the copy of the order passed by the AO was come into the notice of the assessee recently when he received the penalty orders. The Ld. Counsel submits that there is no existence of the firm during the year and the order having been sent in the inbox of the of the assessee which was not regularly looked into and was only recently upon receiving call from the Department as the outstanding taxes the same came into the knowledge of the assessee and thereafter he took immediate action. The Ld. Counsel submits that assessee filed an appeal on 29.10.2021 though it ought to be filed on 03.12.2019 but since it has no knowledge of passing order, hence, the delay was therefore not intentional. The Ld. Counsel submits in the interest of justice, assessee has to be given an opportunity to place his case before the Ld. CIT(A) after condoning the delay. The assessee has filed an affidavit to this effect.

5.

Contrary to that the Ld. D.R supports the impugned order.

6.

Upon hearing the Counsel for the respective parties, we have gone through the order passed by the AO as well as Ld. CIT(A). There is no dispute that the order passed Assessment Year: 2017-18 K. B. Processing by the AO is also an ex-parte order. There was no compliance before the AO as well as Ld. CIT(A). The appeal of the assessee has been dismissed on account of delay as the appeal was filed after a delay of 665 days. The Ld. CIT(A) has held in its order that there was no sufficient cause has been mentioned in the condonation petition by the assessee. We have gone through the affidavit filed by the assessee which is as follows- Shakuntala Devi Jain v. Kuntal Kumari [AIR 1969 SC 575], this Court reiterated the following classic statement from Krishna vs. Chathappan [1890 ILR 13 Mad 269]: "... Section 5 gives the courts a discretion which in respect of jurisdiction is to be exercised in the way in which judicial power and discretion ought to be exercised upon principles which are well understood; the words `sufficient cause' receiving a liberal construction so as to advance substantial justice when no negligence nor inaction nor want of bona fides is imputable to the appellant."

7.1. In N.Balakrishnan v. M.Krishnamurthy [1998 (7) SCC 123], this Court held: "It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court. The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice...... Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice.”

8.

Going over the facts of the case and apex court judgment we are inclined to remit back appeal of the assessee to the file to the Ld. CIT(A) for fresh order after condoning the delay.

Assessment Year: 2017-18 K. B. Processing In the result, the appeal of assessee is allowed for statistical purposes. Order is pronounced in the open court on 17th March, 2025

Sd/- Sd/- (Sanjay Awasthi/संजय अव�थी) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 17th March, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- K. B . Processing, Bodai Panchayat Road, Jugberia, Sodpur, Kolkata- 700110 2. Respondent – ITO, Ward-50(6), Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)

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