LAXMI VENKATESHWARA AUTO FINANCE,NALGONDA vs. ITO., WARD-1, NALGONDA

As the assessee had neither complied with the notice issued u/s 148 and filed its return of income nor furnished the requisite details as were called for vide notice(s) u/s 142(1) of the Act, therefore, the A.O. was constrained to proceed with and frame the assessment to the best of his judgment u/s 144 of the Act.

The A.O. considering the fact that the assessee firm had failed to come forth with an explanation regarding the nature and source of cash deposits of Rs.1,12,36,428/- (supra), held the same as having been sourced out of its unexplained money u/s 69A of the Act. Also, the A.O. was of the view that as the assessee firm had not been able to justify or explain the purpose, nature and application of cash withdrawn from its bank account, therefore, held the excess of the cash withdrawals as against the cash deposits of Rs. 14,85,572/- as the assessee’s unexplained money u/s 69A of the Act. Accordingly, the A.O., based on his aforesaid deliberations, made an addition u/s 69A of Rs. 1,27,22,000/- 4 Laxmi Venkateswara Auto Finance.

Aggrieved, the assessee firm carried the matter in appeal before the CIT(A). As the assessee firm had delayed the filing of the appeal before the CIT(A) by a period of 185 days, therefore, it had requested for condonation of the same.

Ostensibly, the assessee firm in its Memorandum of Appeal i.e., Form No. 35, had stated that as it was unaware about the framing of the assessment by the A.O. vide his order dated 16-03- 2022, therefore, it was for the said bonafide reason that there was a delay in filing of the said appeal. It was further stated that the partners of the assessee firm had gathered about the assessment order only when they were physically served with a copy of a penalty notice on 05-08-2022. Elaborating further, it was stated that, on approaching the A.O. the partners of the assessee firm were informed that the assessment proceedings were already closed on 17-03-2022. The assessee firm had claimed that, on learning about the factual position, it had downloaded the assessment order and advised its tax consultant to file the appeal with the CIT(A). The assessee firm had further stated that, as its partners are uneducated persons putting up in a remote village in 5 Laxmi Venkateswara Auto Finance.

Ostensibly, the CIT(A) did not find favour with the explanation of the assessee firm regarding the reasons leading to the delay in filing of the appeal before him, and dismissed the same by observing, as under:

The assessee firm being aggrieved with the order of the CIT(A), the assessee firm has carried the matter in appeal before us.

We have heard the learned Authorized Representatives of both parties and perused the material on record in the backdrop of the orders of the lower authorities.

Shri Mohammed Afzal, learned Authorized Representative (for short “Ld.AR”) for the assessee firm, at the threshold of the hearing of the appeal, submitted that the impugned order has been passed by the CIT(A) without affording any opportunity of being heard to the assessee firm/appellant. Elaborating on his contention, the 12 Laxmi Venkateswara Auto Finance.

Per contra, Dr. Sachin Kumar, the learned Departmental Representative (for short “Ld. DR”) relied upon the orders of the CIT(A). It was submitted by him that as the assessee firm had failed to explain based on any plausible explanation the inordinate delay of 145 days involved in filing of the appeal before the CIT(A), therefore, he had rightly declined to condone the same. The Ld. DR submitted that as no infirmity emerges from the order of the 13 Laxmi Venkateswara Auto Finance.

We have thoughtfully considered the contentions of the learned Authorized Representatives of both parties in the backdrop of the orders of the lower authorities.

Admittedly, the assessee firm had delayed the filing of the appeal before the CIT(A) by a period of 145 days. Although, the assessee firm had in its Memorandum of Appeal i.e. “Form No. 35” filed before the CIT(A), explained the multi-facet reasons which had resulted to the delay in filing of the appeal viz. (i). that the partners of the assessee firm, who were uneducated persons residing in a remote village in Nalgonda District and not conversant with to the intricacies of the income-tax procedures, had remained unaware of the assessment order that was passed by the A.O. on 16-03-2022; (ii). that the email ID and phone number provided in the Memorandum of Appeal in “Form 35” did 14 Laxmi Venkateswara Auto Finance. neither belong to the assessee firm nor to its partners; (iii). that the tax consultant of the assessee firm had not informed the partners of the assessee firm about the framing of the assessment; (iv). that as the business of the assessee firm was hit hard due to COVID pandemic, therefore, it had reduced its staff, including the person who was looking after the tax matters, which was one of the primary reason for non-verification of the online tax proceedings; and (v). that the partners of the assessee firm came to know about the framing of the assessment only when they were served with a penalty notice on 05-08-2022. However, we find that the CIT(A) was not inspired with the aforesaid explanation of the assessee firm and had declined to condone the delay of more than four months involved in the appeal filed before him.

On a perusal of the CIT(A)’s order, it transpires that he was of the view that though the partners of the assessee firm had stated in Column No. 15 of “Form No. 35” that they were unaware about the culmination of the assessment proceedings, and had gathered about the same only when a physical copy of penalty notice was received on 05-08-2022, but if that would have been 15 Laxmi Venkateswara Auto Finance. so, then, on what basis it was claimed by the assessee firm to have been served with the assessment order or notice of demand on 05- 08-2022. The CIT(A), based on his aforesaid observation had declined to condone the delay involved in the appeal filed by the assessee firm, for the reason that it had failed to come forth with a “sufficient cause” as was required within the meaning of sub- section (2) of Section 249 of the Act.

We have given a thoughtful consideration and are unable to comprehend the reasoning given by the CIT(A) for declining the assessee’s request for condonation of the delay involved in the appeal filed before him. All that the partners of the assessee firm had stated before the CIT(A) was that they were unaware about the order of assessment passed by the A.O. u/s 147 r.w.s. 144 r.w.s 144B of the Act, dated 16-03-2022, and had gathered about the same only when a copy of a penalty notice was physically served upon them on 05-08-2022. In our view, as the assessee firm had gathered/learnt about the framing of the assessment in its case vide order dated 16-03-2022 only on 05-08-2022, therefore, in all fairness it had referred to the said date i.e 05.08.2022 as the date 16 Laxmi Venkateswara Auto Finance. of service of the order/notice of demand in Column No. 2(c) of “Form No. 35”. We are unable to fathom as to what infirmity emerges from the aforesaid factual statement of the assessee firm. As the CIT(A) had failed to come forth with any plausible reason for rejecting the assessee’s request for condonation of the delay involved in the appeal filed before him, we are unable to approve the same. We are further of the firm conviction that a liberal and justice-oriented approach should have been adopted by the CIT(A) while considering the assessee’s request for condonation of the delayof 145 days involved in the appeal filed before him. Our aforesaid conviction is fortified by the judgment of Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025, wherein the Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed, that a justice oriented and liberal approach should be adopted 17 Laxmi Venkateswara Auto Finance. while considering the application filed by an appellant seeking condonation of the delay involved in filing of the appeal. We thus, in terms of our aforesaid observations direct the CIT(A) to condone the delay of 145 days involved in filing of the present appeal by the assessee before him, and restore the matter to his file with a direction to dispose of the appeal qua the issues based on which the impugned order of assessment has been assailed by the assessee firm before him. Thus, the Grounds of Appeal Nos. 1 to 4 are allowed for statistical purposes in terms of our aforesaid observations.

The Ground of Appeal No. 5, being general in nature, is dismissed.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.