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Facts
The assessee, a manufacturer of particle boards, filed loss returns for AY 2017-18 and 2018-19. The AO made various additions to income and levied penalties under Sections 270A, 271D, and 271E of the Income Tax Act. The assessee appealed these orders to the CIT(A) with significant delays, citing financial crunch and consultant's failure, but the CIT(A) dismissed all appeals in limine without condoning the delay.
Held
The Tribunal, citing the Supreme Court's judgment in Collector Land Acquisition Vs. MST Katiji, condoned the substantial delays in filing appeals before the CIT(A) after finding that there was a reasonable cause for the delays. It remitted all quantum and penalty appeals back to the CIT(A) for de novo adjudication on merits, setting aside the CIT(A)'s earlier orders.
Key Issues
Whether the CIT(A) erred in dismissing appeals in limine by not condoning delay, and whether there was reasonable cause for the delay in filing appeals against quantum additions and penalty orders.
Sections Cited
143(2), 142(1), 143(3), 36(1)(va), 40(a)(ia), 40A(7), 40A(9), 43B, 270A, 269SS, 271D, 269T, 271E
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE
Before: DR.MANISH BORAD & MS. ASTHA CHANDRA
In this batch of four appeals, to 1150/PUN/2024 pertain to Assessment Year 2017-18 and are directed against the orders framed by National Faceless Appeal Centre, Delhi (in short ‘NFAC’) confirming the penalties levied u/s.270A, 271A and 271E of the Act. pertain to Assessment Year 2018-19 and is directed against the order framed by NFAC, Delhi in relation to quantum addition. to 1151/PUN/2024 Ecoboard Industries Ltd., All these appeals are being disposed of by this consolidated order for the sake of convenience as in all these appeals ld.CIT(A) has not condoned the delay and dismissed the appeals in limine.
Boards which are made from Bagasse (dry waste from sugar factory). Current Loss of Rs.9,50,99,095/- was furnished in its return of income for the A.Y. 2017-18 filed on 31.10.2017. The case selected for complete scrutiny under CASS followed by issuance of statutory notices through ITBA portal u/s.143(2)/142(1) of the Act. Based on the Tax Audit Report and other details, ld. AO made the following additions :
Sl.No. Particulars Amount 1 Disallowance u/s.36(1)(va) Rs.8,74,687/- 2 Disallowance u/s.40(a)(ia) Rs.79,66,372/- 3 Disallowance u/s.40A(7) Rs.4,37,526/- 4 Disallowance u/s.40A(9) Rs.5,29,927/- 5 Disallowance u/s.43B Rs.70,47,123/- 6 Disallowance of prior period Rs.7,24,677/- expenses 7 Unpaid Taxes/Dues Rs.79,23,070/- 8 Disallowance of Provisions for Bad Rs.3,42,00,280/-. and Doubtful Debts, Doubtful Advances and loss on disposal of slow moving stock to 1151/PUN/2024 Ecoboard Industries Ltd., Ld. AO also initiated proceedings u/s.270A(2) of the Act and issued show cause notices to the assessee to which there was no compliance from the side of assessee. In the event, ld. AO vide order dated 27.10.2021 levied penalty of Rs.92,94,216/- u/s.270A(2) for underreporting of income.
3. Similarly, ld. AO also levied penalty of Rs.1,71,33,560/- on the various loans received by it through modes other than mode specified u/s.269SS of the Act invoking the provisions of section 271D. Ld. AO also levied penalty of Rs.1,75,10,751/- on the ground that the assessee repaid loans/deposits to various parties through modes other than the modes specified u/s.269T of the Act.
Dissatisfied assessee contested the penalty orders before the ld.CIT(A) with a delay of 775, 366, 363 and 979 days. Before the ld.CIT(A), the assessee submitted that the notices of hearing were sent on email id of the consultant who failed to pursue the case. It is also a fact that the company suffered huge losses and was under acute financial crunch and its management was under pressure to improve its operations. The assessee enclosed its financial statements to indicate the company’s position. It was also submitted that staff from the accounts department left the job due to delay in payment of salary etc. Assessee relied on various decisions for condonation to 1151/PUN/2024 Ecoboard Industries Ltd., of delay. However, ld. CIT(A) dismissed the appeals in limine by not condoning the delay.
5. Facts in brief in respect of for A.Y. 2018-19 are that the assessee filed the return declaring loss. The case selected for scrutiny through CASS and assessment was completed u/s.143(3) determining total income of assessee at Rs.5.43 crore. Assessee preferred appeal before the ld.CIT(A) with delay of 979 days who dismissed the appeal in limine by not condoning the delay.
6. Now the assessee is in appeals before the Tribunal against the aforesaid impugned orders.
We have heard both the sides and perused the record placed before us. It is as admitted position that all the appeals before us have been dismissed by the ld.CIT(A) in limine by not condoning the delay and During the course of present hearing, Ld. Counsel for the assessee at the outset submitted that assessee could not represent its case in the penalty appeals for A.Y. 2017-18 as well as quantum appeal for A.Y. 2018-19 before the authorities for the reasons submitted before the authorities about its company’s financial position and non- pursuing of the appeals by the tax consultant. However, the submissions were brushed-aside by the ld.CIT(A) and dismissed the appeals without dealing on merits of the issues, thereby to 1151/PUN/2024 Ecoboard Industries Ltd., confirming the penalties levied under the Act. It is therefore prayed for remanding the issues on merit to the file of ld.CIT(A) so that the assessee is in a position to substantiate its case. Ld. Departmental Representative has no objection for remanding the matters to the file of ld.CIT(A) for denovo adjudication.
On the ground of delay, we would like to quote the judgment of Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 SC . In the said Judgment, their Lordships have given certain principles based on which, the issue with regard to the delay can be approached and the said portion of the order of the Judgment cited supra is reproduced hereunder:
Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
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.
Every day's delay must be explained does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, the 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. to 1151/PUN/2024 Ecoboard Industries Ltd.,
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
In the light of above and considering that there was ‘reasonable cause’ which prevented the assessee in presenting the appeals with respectively delays mentioned above, we condone the delay occurred in preferring the appeals before the ld.CIT(A) in respect of penalty appeals as well as quantum appeal filed before us. In view thereof, without dwelling into merits of the case and considering the submissions of ld. Counsel for the assessee, the issues on merit are being remitted to the file of ld.CIT(A) for denovo adjudication of the above appeals. The assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld. CIT(A) shall be free to proceed in accordance with law. Finding of the ld. CIT(A) is set aside and effective grounds of appeal raised by the assessee are allowed for statistical purposes. to 1151/PUN/2024 Ecoboard Industries Ltd.,
9. In the result, all the appeals of the assessee are allowed for statistical purposes.
Order pronounced on this 17th day of January, 2025.