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Facts
The assessee's case was selected for scrutiny due to low income from TCS receipts. Due to non-compliance, the Assessing Officer completed an ex-parte assessment under Section 144, adding Rs.3.52 crores as unexplained investment under Section 69. The Ld. CIT(A) dismissed the assessee's appeal due to a 118-day delay in filing, without condoning the delay or considering the merits.
Held
Citing the Supreme Court, the ITAT condoned the 118-day delay in filing the appeal, finding it non-deliberate. The ITAT remitted the matter back to the Assessing Officer, directing a fresh adjudication on the merits of the addition under Section 69 after providing the assessee a final opportunity to present their case.
Key Issues
Condonation of delay in filing appeal before CIT(A) and the validity of the ex-parte addition of Rs.3.52 crore as unexplained investment under Section 69.
Sections Cited
143(2), 142(1), 144, 206CH, 69, 69C, 234A, 234B, 234C, 234D, 270A, 271AAC, 272A(1)(d)
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
This appeal filed by the assessee is directed against the ex-parte order dated 18.09.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2020-21.
Facts of the case, in brief, are that the assessee is an individual and has filed his return of income on 20.03.2021 declaring total income of Rs.18,05,510/-. The case of the assessee was selected for complete scrutiny assessment under the National Faceless E-assessment Scheme on the following issues: “Low income from TCS receipts-Mining and quarrying (Total payment on which TCS was collected u/s 206CH (Form-26AS) 35200000/-)”
Accordingly statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were issued and served on the assessee.
However, in absence of any compliance from the side of the assessee despite number of opportunities granted, the Assessing Officer completed the assessment u/s 144 of the Act determining the total income of the assessee at Rs.3,70,05,510/- by making addition of Rs.3,52,00,000/- u/s 69 of the Act.
Since there was delay in filing of the appeal by 118 days before the Ld. CIT(A) / NFAC, the Ld. CIT(A) / NFAC did not condone the same and dismissed the appeal.
Aggrieved with such order of the Ld.CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:
1. Ld. CIT(A) did not appreciate the reason for condonation of delay and denied natural justice.
2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in passing ex-parte order and without adjudicating grounds of appeal on merit.
3. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming addition of Rs.3,52,00,000/- under section 69 of Income Tax Act, 1961. Rs.3,52,00,000/- shown in 26AS of the appellant, is in fact Royalty paid to the State Government, is in fact expenditure which is duly claimed by the sub-lessee (i.e. M/s Swatik Infra Logic India Pvt. Ltd.) in their books of account. Therefore, the expenditure of Rs.3,52,00,000/- is neither investment nor expenditure of the appellant, hence, the addition is to be deleted.
4. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming charging of interest under section 234A, 234B, 234C and 234D of Income Tax Act. 1961.
5. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming invocation of Penalty provision under Section 270A, 271AAC and 272A(1)(d) of Income Tax Act, 1961.
6. Appellant craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing.
The Ld. Counsel for the assessee submitted that all notices relating to the income tax proceedings were issued solely through ITBA portal and there was no physical service of the notices on the assessee. Since the assessee is not technology savvy, therefore, the assessee remained unaware of the ongoing assessment proceedings and was unable to participate in such proceedings. He submitted that the assessment order was also uploaded only on the income tax portal on 14.09.2022 but was never physically served upon the assessee for which he was not aware of such order. It was only on 25.09.2022 the assessee’s consultant noticed a significant outstanding demand against the assessee’s PAN and he informed it to the assessee. Thereafter, the assessee approached another tax consultant to file the appeal. He submitted that in the process of identifying a specialized consultant and gathering the required documents resulted in delay of 118 days in filing of the appeal before the Ld. CIT(A) / NFAC. Relying on various decisions including the decision of Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) he submitted that the delay in filing of the appeal before the Ld. CIT(A) / NFAC should be condoned and the matter may be restored to the file of the Assessing Officer for deciding the issue after giving due opportunity of being heard to the assessee.
So far as the merit of the case is concerned, he submitted that an amount of Rs.3,52,00,000/- reflected in the assessee’s Form 26AS represents royalty paid to the State Government which is in fact an expenditure duly claimed by the sub- lessee M/s. Swastik Infra Logic India Pvt. Ltd. in its books of account. Therefore, the addition made in the assessment u/s 69C towards unexplained expenditure is erroneous and unjustified. He accordingly submitted that the matter may be restored to the file of the Assessing Officer for due verification and passing an order in accordance with law.
The Ld. DR on the other hand strongly opposed the arguments advanced by the Ld. Counsel for the assessee regarding the delay in filing the appeal before the Ld. CIT(A) / NFAC as well as before the Tribunal. He submitted that the assessment order also is u/s 144 of the Act which shows the callous attitude of the assessee.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that due to non appearance of the assessee before the Assessing Officer despite number of opportunities granted, the Assessing Officer passed the ex-parte order u/s 144 of the Act by making addition of Rs.3,52,00,000/- u/s 69 of the Act as unexplained investment. We find due to delay in filing of the appeal before the Ld. CIT(A) / NFAC, he dismissed the appeal. It is the submission of the Ld. Counsel for the assessee that due to non receipt of the physical copy of order and due to non intimation of any such order by the previous consultant, he was not aware of the existence of such order for which the appeal could not be filed before the Ld. CIT(A) / NFAC in time. It is also his submission that the addition of Rs.3,52,00,000/- made by the Assessing Officer u/s 69 is, in fact an expenditure duly claimed by the sub-lessee M/s. Swastik Infra Logic India Pvt. Ltd. in its books of account.
We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
Following the decision of Hon'ble Supreme Court cited (supra) and considering the totality of the facts of the case and in the interest of justice, we are of the considered opinion that the Ld. CIT(A) / NFAC should have condoned the delay and decided the issue on merit. Since it is the submission of the Ld. Counsel for the assessee that the addition in question is, in fact an expenditure and not an income, therefore, we deem it proper to restore the issue back to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to participate in the assessment proceedings and submit the requisite details before the Assessing Officer on the appointed date without seeking any adjournment under any pretext, failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 22nd April, 2025.