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Facts
The assessee, an HUF, faced an assessment order for AY 2017-18, where interest income of Rs. 4,78,61,557/- was brought to tax due to non-compliance with notices. The CIT(A) dismissed the assessee's appeal without discussing merits.
Held
The Tribunal condoned the delay in filing the appeal, noting the assessee's illiteracy, lack of technical knowledge, and issues with notice service. The CIT(A)'s order was set aside for de novo adjudication on merits, providing the assessee a reasonable opportunity of hearing.
Key Issues
Whether the delay in filing the appeal should be condoned due to the assessee's circumstances, and whether the CIT(A) correctly dismissed the appeal without addressing the merits.
Sections Cited
147, 144, 144B, 250, 194A, 148, 253, 143(2), 142(1)
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to A.Y. 2017-18 is directed against the order dated 27.12.2023 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) arising out of the Assessment order dated 24.03.2022 passed u/s.147 r.w.s.144 r.w.s.144B of the Act.
2. When the appeal was called for, none appeared on behalf of the assessee despite due service of notice of hearing. A perusal of the impugned order indicates that ld.CIT(A) has passed a non speaking order. We therefore proceed to dispose of the appeal with the assistance of ld. Departmental Representative.
3. Registry informed that there is delay of 386 days in filing the appeal before this Tribunal. Application for condonation of delay has been filed by the assessee explaining the reasons which led to delay in filing the appeal and the same read as under :
“1. The Applicant is a Hindu Undivided Family (HUF), with Shivdas Venkat Gomare serving as the Karta. The Karta, an agriculturist, derives his entire income from agricultural activities. He is an illiterate individual who lacks the ability to fully comprehend the complexities of the Income Tax Act, 1961 ("The Act") and the related procedural requirements. Despite these limitations, the Applicant diligently pursued his case but was hindered by insufficient legal knowledge and guidance. Furthermore, the Applicant was unable to access the income tax portal to verify the status of the income tax appeal order due to a lack of knowledge in this regard.
The Applicant has filed this application seeking the condonation of a 392-day delay in filing an appeal under Section 253 of the Act, challenging the order dated 27.12.2023, passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre ("NFAC"), under Section 250 of the Act.
The Applicant resides in Taluka Babhalgol, District Latur, and has filed the appeal against the order passed by CIT Appeals, NFAC. It is respectfully submitted that the Income Tax Appellate Tribunal, Pune, has the jurisdiction to hear and decide this application.
4. The Applicant states that the impugned Order under Section 250 of the Act by the Commissioner of Income Tax (Appeals) is improper, without considering the submission and documents submitted by the Applicant, without giving sufficient opportunity to the Applicant and reflects non-application of mind and therefore, the delay in filing the Appeal may be condoned based on the following grounds, each of which is in the alternative and without prejudice to the other.
5. No interest received in FY 2016-17, the Sub-Divisional Officer, Latur, erroneously deducted TDS under Section 194A of the Act amounting to Rs. 47,80,422/- (Rupees Forty-Seven Lakh Eighty Thousand Four Hundred Twenty-Two Only) during that period. In the Applicant's Income Tax Return for AY 2017-18, no refund was claimed for this TDS, as no interest was received, and the TDS was carried forward.
The Applicant's case was selected through the multi-layer NMS Priority-1 for verification, and notices under Section 148 of the Income Tax Act were issued on 31.03.2021 and 01.03.2022. However, the Applicant never physically received these notices. The Applicant was unacquainted with the technology and therefore, was unaware of the proceedings.
The income tax portal experienced significant technical glitches, remaining inoperative from 01.06.2021 to 05.12.2021, further hindering the Applicant's ability to respond.
The Applicant did not receive physical copies of the notices issued by the CIT Appeal, the notices were only sent via email, contrary to the legal requirement of physical service. Furthermore, the CIT Appeal order was passed ex parte within 70 days, without giving the Applicant a reasonable opportunity to respond or physically serve the order.
The Applicant, being unacquainted with technology and unaware that notices and orders were served via email, missed crucial proceedings. This lack of awareness cannot be construed as negligence or deliberate disregard for the process.
10. The Hon'ble Supreme Court has emphasized that delays should be condoned liberally, ensuring that cases are decided on merits rather than dismissed on procedural technicalities, especially when there is no evidence of deliberate delay.
The Applicant made reasonable efforts to comply with legal obligations and provided all necessary documents. However, the Assessing Officer and CIT Appeals failed to consider these submissions, leading to an unjust ex parte order.
The matter involves significant legal issues, and the Applicant has a strong case on merits. The Applicant seeks a fair opportunity to contest the matter before the Hon'ble Tribunal.
The delay in filing this appeal was due to genuine hardships, including technical knowledge and a lack of proper legal guidance. The Applicant respectfully requests that the delay be condoned in the interest of justice, allowing the appeal to be heard on merits.
The Applicant submits that due to the non-receipt of physical notices and orders, he remained completely unaware of the proceedings. The entire process was conducted electronically, and given the Applicant's lack of familiarity with digital communication, he was unable to access or respond to the notices in a timely manner. The failure to serve notices physically deprived the Applicant of a fair opportunity to present his case.
The Applicant, being an agriculturist with no regular access to email communication, was unaware that notices were issued. Since he was under the impression that all tax-related communications would be delivered physically, he had no reason to suspect that any proceedings were ongoing. The non-receipt of physical notices and the absence of any intimation from his tax consultant led to an unintentional delay in filing the present appeal.
The Applicant's consultant, who was handling tax compliance matters, also did not inform the Applicant about the issuance of notices or the passing of the impugned order. It was only recently, upon making inquiries with another professional, that the Applicant became aware of the ex parte order passed against him and the earlier consultant had not filed an Appeal challenging the same.
The Applicant further submits that, as per established legal principles, the service of notices is a mandatory requirement under the Income Tax Act, and failure to physically serve notices vitiates the entire proceedings.
The Applicant's lack of access to professional legal assistance further contributed to the delay. Due to his trust in his consultant, he was unaware that an order had been passed against him, and he did not possess the expertise to verify the status of proceedings independently. The failure of his consultant to communicate crucial information prevented him from taking timely action.
Given these genuine and bonafide reasons, the delay in filing the appeal was neither wilful nor deliberate but solely due to the lack of physical service of notices and the consultant's failure to inform the Applicant. It is a well-settled principle that procedural delays should not obstruct substantial justice, and hence, the Applicant prays for the condonation of delay in the interest of fairness and justice.
It is humbly submitted that the Hon'ble Tribunal should hear the case based on its merits, ensuring that justice is delivered and the Applicant is not unfairly prejudiced due to procedural delays or technological limitations.
The Applicant has a very good case on merits and has a chance to succeed in the Appeal before this Hon'ble Tribunal.
RELIEFS SOUGHT:
In view of the above, that this Hon'ble Tribunal may be pleased to: a. Condone the delay of 392 days in filing the appeal under Section 253 of the Income Tax Act, 1961 by the Applicant; b. Pass any such further or other order/s as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case to grant justice to the Applicant.”
We have heard the ld. Departmental Representative 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 second appeal filed by the appellant 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 there was ‘reasonable cause’ which prevented the assessee in filing the appeal within the stipulated time. We therefore condone the delay of 386 days and admit the appeal for adjudication.
Brief facts of the case are that the assessee is a HUF. Based on the information received through ITBA Multi Year NMS, it was observed that assessee received other interest u/s.194A at Rs.4,78,61,557/-, notice u/s.148 of the Act was issued to the assessee and the assessee filed the return for A.Y. 2017-18 in response to notice u/s.148 of the Act on 08.08.2021 declaring income of Rs.57,340/- carrying forward the TDS deducted. Since there was non-compliance to the notices issued u/s.143(2) and 142(1) of the Act, ld. AO brought to tax the interest income of Rs.4,78,61,557/-.
6. Aggrieved assessee preferred before ld.CIT(A) and the ld.CIT(A) dismissed the appeal of the assessee in limine, without discussing anything on merits of the issue. Now the assessee is in appeal before the Tribunal assailing the impugned order.
7. We have heard the ld. Departmental Representative and perused the record placed before us. A perusal of the assessment order would reveal that there was no compliance from the side of assessee to the statutory notices issued u/s.143(2)/142(1). We note that these notices were issued during the covid-19 pandemic period prevailed across the country. Further, we note that in the submissions, assessee contends that he is illiterate and Karta of HUF, deriving income from Agricultural activities. He has not received notices of hearing physically. He was not familiar with the technology and lacked proper guidance. Applicant was unaware of the notices sent through email and therefore prayed for an opportunity before the authorities for disposal of the appeal on merits of the case. Further, we observe that ld.CIT(A) merely dismissed the appeal of the assessee for non-prosecution without discussing anything on merits of the issues and the finding of ld.CIT(A) reads as under :
“2. Aggrieved with the order issued by the AO, appellant has filed present appeal on 22.11.2022. In the course of appellate proceedings, it is seen that the appellant was issued and served various notices u/s 250 of the Act from this office to present his contentions and any documents supporting them. The said notices were issued in 2023 and all of them remain un-complied with. The National Faceless Appeal Centre (NFaC) also in January, 2023 enabled communication window to facilitate filing of submissions by the appellant but to no avail.
3. In view of the above, it is clear that the appellant is not interested in prosecuting the present appeal because there has been no response as yet. In view of the above, the appeal stands dismissed.
Thus, the appeal filed by the appellant stands dismissed.”
8. From the above, it is evident that ld.CIT(A) has not passed a speaking order as contemplated u/s.250(6) of the Act. Hon’ble Bombay High Court in the case in the case of PCIT (C) vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bombay) has held that ld.CIT(A)/NFAC is obliged to dispose of the appeal on merits even in an exparte order.
9. Under the given facts and circumstances, considering the submissions of the assessee as well as no objection raised by the ld. Departmental Representative, we deem it proper to restore the issues on merit to the file of ld.CIT(A) for denovo adjudication who shall provide reasonable opportunity of hearing to the assessee. Assessee is directed to provide latest email id and contact detail to the department for receiving the notices from 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 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 27th day of May, 2025.