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Facts
The assessee appealed against an ex-parte order by the CIT(A) which confirmed an addition of Rs. 88,40,074/- for bogus transactions during re-assessment for A.Y. 2009-10. The appeal to the ITAT was filed with a delay of 480 days, attributed to a company merger and issues with receiving communications.
Held
The ITAT condoned the 480-day delay, acknowledging 'reasonable cause'. It set aside the ex-parte order of the CIT(A) and restored all issues to the CIT(A) for fresh adjudication, directing a reasonable opportunity of hearing for the assessee.
Key Issues
Whether there was reasonable cause for delay in filing the appeal; the validity of the ex-parte order passed by the CIT(A); and the merits of the addition for alleged bogus transactions.
Sections Cited
250, 143(3), 147, 148, 143(2), 142(1), 5
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
This appeal at the instance of assessee pertaining to the Assessment Year 2009-10 is directed against the order dated 19.05.2023 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Assessment Order dated 19.03.2014 passed u/s.143(3) r.w.s.147 of the Act.
Assessee has raised following grounds of appeal :
“1. The learned CIT(A) - NFAC erred in law and on facts in confirming addition made by the learned AO of Rs. 88,40,074/- on account of alleged bogus transactions and computing total assessed income at Rs.2,71,07,360/- instead of returned income of Rs.1,82,67,290/.
2. The learned CIT(A) erred in law and on facts in upholding the addition on account of alleged bogus transactions incurred amounting to Rs. 88,40,074/- without considering the detailed submission made along with documentary evidence to substantiate alleged bogus transactions vide physical submission before CIT(A)- 9, Pune made before 2019. Learned CIT(A) erred in observing that, the appellant could not file any submission/reply without appreciating that, the appellant has submitted relevant documents/information during appellate proceedings.
The learned AO & thereby learned CIT(A) erred in law and on facts in assuming jurisdiction under 147 of ITA, 1961 only on the basis of information received from sales tax department without having any reasons to believe for income escaped assessment.
4. The Learned IT Authorities in particular erred in making additions only on ground that so called parties with whom alleged transactions took place, were in black list of Sales Tax Department (VAT Department) and failed to appreciate that this is not sufficient reason for making the addition. 5. The learned IT authorities erred in law and on facts in not restricting the addition only on percentage of gross profit on alleged hawala purchases. 6. Appellant trust craves leave to add/modify/delete / amend all / any of the grounds of appeal.”
3. Registry has informed that there is delay of 480 days in filing the appeal before this Tribunal. Assessee has filed application for condonation of delay stating the reason that “due to merger of the transferor company with the appellant, updates on e-filing portal were glossed over and remained unattended. Also the communications were sent to the earlier tax consultant of the transferor company at nerlikar123@gmail.com. It was only on receiving the notices of recovery of outstanding demand that the assessee came to know about passing of the impugned order”.
We have heard the rival submissions and gone through the averments made in the condonation application. Hon’ble courts in plethora of judgments observed that when consideration of an appeal on merits is pitted against the rejection of a meritorious claim on the technical ground of the bar of limitation, the Courts lean towards consideration on merits by adopting a liberal approach towards ‘sufficient cause’ to condone the delay. The Court considering an application under section 5 of the Limitation Act may also look into the prima facie merits of an appeal. A liberal approach may be adopted when some plausible cause for delay is shown. Hon’ble Supreme Court in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condoned delay of 1537 days sub-serving the cause of justice. It was held so while observing that the appeal filed by the appellant with a delay was unintentional, much less due to any deliberate laches, and was well-explained by the State before the High Court. Hon’ble Court further held that in cases where the merits are significant, a more liberal approach may be adopted to allow for the examination of the case on its merits. Having gone through the averments made in the condonation application and considering the ratio laid down by the Hon’ble Court in the case of Inder Singh (supra), we are of the view that due to ‘reasonable cause’ assessee failed to file the appeal within the stipulated time. We therefore condone the delay of 480 days and admit the appeal for adjudication.
Before us, at the time of hearing, Ld. Counsel for the assessee requested for setting aside the issues raised on merit to the file of ld.CIT(A) as the assessee failed to make proper compliance before ld.CIT(A). Ld. Departmental Representative did not oppose to the request.
We have heard the rival contentions and perused the record placed before us. Assessee is a Private Limited Company engaged in the business and return of income for A.Y. 2009-10 filed on 30.09.2009 declaring income of Rs.1,82,67,290/- Case reopened for A.Y. 2009-10 by issuance of notice u/s.148 of the Act followed by validly serving of statutory notices u/s.143(2) and 142(1) of the Act. Re- assessment proceedings were carried out and after making an addition of bogus purchase transaction of Rs.88,40,074/- income assessed at Rs.2,71,07,364/-. Aggrieved assessee preferred appeal before ld.CIT(A) but then failed to appear on nine occasions which also includes the notices of hearing issued during covid-19 pandemic outbreak prevailed across the country. Ld.CIT(A) has passed an exparte order on merits of the case dismissing the appeal of the assessee.
Before us, Ld. Counsel for the assessee filed paper book running into 173 pages which includes the Audited Financial statements, submissions filed before ld.CIT(A), Rectification Application against order u/s.250 and other documents for Amalgamation of the appellant with Jyoti Stampings and Assemblies Private Limited.
Considering the ‘reasonable cause’ and that the assessee was not able to get the information about the notices of hearing resulting into exparte order by ld.CIT(A), we in the larger interest of justice and being fair to both the parties deem it proper to restore all the issues raised in the instant appeal to the file of ld.CIT(A) for necessary adjudication. Needless to mention that ld.CIT(A) in the set-aside proceedings shall allow reasonable opportunity of hearing to the assessee.
After considering the submissions made by the assessee, ld.CIT(A) shall decide the issues in accordance with the law. Assessee is directed to update latest email id and contact detail on ITBA portal. 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 14th day of July, 2025.