Loading judgment…
Facts
The assessee, a partnership firm, filed an appeal against an ex-parte order passed by the CIT(A) which dismissed their appeal. The delay in filing the appeal before the Tribunal was attributed to severe financial crises, denial of access to records, and a subsequent ex-parte order from the CIT(A).
Held
The Tribunal condoned the delay of 631 days in filing the appeal due to reasonable cause. Considering the ex-parte nature of the CIT(A) order and the assessee's submission for another opportunity, the Tribunal restored the issues to the file of the CIT(A) for de novo adjudication.
Key Issues
Whether the delay in filing the appeal is condonable, and whether the assessee should be granted another opportunity for adjudication before the CIT(A)?
Sections Cited
250, 143(3), 36(1)(iii), 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to A.Y. 2016-17 is directed against the order dated 27.04.2023 of National Faceless Appeal Centre (NFAC) Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 22.12.2018 passed u/s. 143(3) of the Act.
Registry has informed that there is delay of 631 days in preferring the instant appeal before this Tribunal. Assessee has filed an Affidavit explaining the delay by stating as under :
“3. I say that, an assessment order dated 22.12.2018 was passed u/s.143(3) of Income Tax Act, 1961 for AY 2016-17 in case of above referred Partnership firm. Aggrieved by the said order, an appeal was filed before Ld. CIT(A) on 31.03.2019. However, subsequently the Id. CIT(A) has passed an ex-parte order dismissing the appeal vide its order dated 27.04.2023.
I say that, by mid of the year 2019, I along with my fellow doctors and partners started facing severe financial crises, as a result of which we were unable to re-pay the loan taken by us from the financial institution namely M/s. Bajaj Finance Limited & M/s. Siemens Financial Limited. Such financial crises continued for a long period. It is submitted that due to such non-repayments, these financial institutions have started taking rigorous recovery action against us which also included seizure of our business premises/nursing home.
I say that, I along with other partner were completely denied access to any record kept at the office premises for a long period. I say that, after various request and follow-up we were allowed to take the documents from the said premises in month November 2024.
6. I say that, it took us considerable period of time to compile and understand the heap of documents recovered from the seized premises. I say from these documents it was understood that the appeal way pending before the CIT(A) the ultimate fate of which was not known to us.
7. I say that, it was only in the month of December 2024, it was realized that an ex-parte CIT(A) order has been passed in the case of the partnership firm.
I say that, subsequently, an appeal was filed on 22.03.2025 before Hon'ble Income Tax Appellate Tribunal.
I say that, there is a delay of 631 days in filing the said appeal, due to aforesaid reasons as mentioned above.
10. I say that, the delay in filing the appeal before the Hon'ble Tribunal is purely due to genuine and unavoidable circumstances, and I humbly request that the same be condoned in the interest of natural justice.
I say that, the facts mentioned above are true and correct to the best of my knowledge and belief and are being stated herein in proper chronological order for the kind consideration of this Hon'ble Tribunal.
I am filing this affidavit to place the true and correct facts on record and to seek condonation of delay in the interest of justice.
After hearing both the sides and perusing the averments made in the Affidavit, I am satisfied that due to ‘reasonable cause’ assessee failed to file the appeal within the stipulated time. I note that the assessee would not have gained from filing the appeal with a delay. I therefore in light of judgments of Hon’ble Apex Court Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condone the delay of 631 days in filing of the instant appeal before this Tribunal.
4. Assessee has raised following grounds of appeal :
“The following grounds of appeal are without prejudice to one other:-
1. On the facts and circumstances of the Appellant's case and in law the Id. CIT(A) erred in passing an ex-parte order without providing adequate opportunity to the appellant.
2. On the facts and circumstance of the case and in law the Id. A.O. erred in confirming the action of the Id. A O. in making a disallowance of interest amounting to Rs.29,47,283/ claimed u/s 36(1)(iii) of the Act, for the reasons stated in the impugned order otherwise.
3. On the facts and circumstance of the case and in law the Id. A.O. erred in confirming the action of the Id. A.O. in alleging that the cash in hand shown by the appellant is unexplained, for the reasons mentioned in the impugned order or otherwise.
4. On the facts and circumstance of the case and in law the Id. A.O. erred in confirming the action of the Id. A.O. in making an addition at an ad-hoc rate of 10% i.e. Rs.6,85,875/ on account of unexplained cash in hand, for the reasons stated in the impugned order or otherwise.
5. The Appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing.”
5. At the outset, ld. Counsel for the assessee submitted that impugned order is exparte and the assessee failed to file necessary details and therefore prayed for restoring the issues raised on merits to the file of ld.CIT(A) for necessary adjudication.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities.
I have heard the rival contentions and perused the record placed before me. I observe that the assessee is a partnership firm and filed its return of income for A.Y. 2016-17 on 10.05.2017 declaring income of Rs.2,52,580/-. Case selected for Limited Scrutiny through CASS followed by validly serving notices u/s.143(2) and 142(1) of the Act for verification of ‘cash in hand’ shown in the return of income on the rational the assessee has deposited cash during the period of demonetization and filed the return of income for the year after the date of demonetization. Ld. Assessing Officer (AO) after examining the balance sheet of the assessee and the submissions filed came to the conclusion that on one hand assessee is incurring expenditure in the form of interest paid on the borrowed funds but on the other hand the borrowed funds have been utilised for paying to the partners who have debit balances at the close of the year but no interest has been charged on such debit balances. Ld. AO thus concluded that said interest expenditure of Rs.29,47,283/- is disallowable u/s.36(1)(iii) of the Act. Similarly, ld. AO also made addition of Rs.6,85,875/- @10% of the cash in hand of Rs.68,58,750/-. Income assessed at Rs.38,85,739/-.
8. I further note that though the assessee preferred appeal before ld.CIT(A) but the first two notices(s) of hearing were issued during covid-19 pandemic outbreak and further assessee failed to appear on the remaining notices of hearing for the reasons mentioned in the Affidavit filed for condonation of delay. In absence of the submissions, ld.CIT(A) passed the exparte order dismissing the appeal.
9. Now before me, Ld. Counsel for the assessee has submitted that due to unavoidable circumstances assessee could not appear before ld.CIT(A) and therefore prayed to afford more opportunity to go before ld.CIT(A). I therefore in the larger interest of justice and being fair to both the parties, deem it proper to grant one more opportunity to the assessee and all the issues raised in the instant appeal are restored back to the file of ld.CIT(A) for denovo adjudication. Needless to mention that ld.CIT(A) shall grant reasonable opportunity in the set aside proceedings. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause. Impugned order is set aside and the effective grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 23rd day of September, 2025.