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Facts
The assessee, engaged in manpower supply and sale of housekeeping materials, filed a revised return. The Assessing Officer (AO) disallowed service tax payments of Rs.24,25,158/- and related late payment interest of Rs.2,07,144/-, citing insufficient evidence and lack of prior disallowance under Section 43B. The assessee's subsequent appeal to the CIT(A) was dismissed due to a 191-day delay in filing.
Held
The Tribunal condoned the 191-day delay, relying on judicial precedents emphasizing adjudication on merits. It set aside the CIT(A)'s order and remitted the matter back to the CIT(A) for fresh adjudication on merits, instructing the CIT(A) to consider the additional evidence regarding service tax payments.
Key Issues
Condonation of a 191-day delay in filing an appeal before the CIT(A) and the disallowance of service tax payments under Section 43B of the Income Tax Act.
Sections Cited
250, 143(3), 144B, 142(1), 43B
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 :
This appeal by the assessee pertaining to the Assessment Year 2020-21 is directed against the order dated 26.06.2024 passed by the National Faceless Appeal Centre, Delhi [in short the “ld.NFAC)”] Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) which inturn is arising out of the Assessment order passed u/s.143(3) r.w.s.144B, dated 31.08.2022.
Succinctly, the facts of the case are that the assessee is an individual stated to be engaged in the business of supply of manpower for Multitasking Services at various Municipalities. The assessee also deals in purchase and sale of house-keeping materials. The assessee filed the original return of income on 11.11.2020 declaring total income of Rs.39,96,080/-, claiming refund of Rs.3,29,430/-. Subsequently, the said return was revised on 29.03.2021 declaring total income of Rs.15,70,920 and claimed refund of Rs.10,86,080/-. After the case selected for Complete Scrutiny under CASS following by statutory notices u/s.142(1) of the Act, the assessee furnished details of bank statements, ledger copy of expenses, receipts towards expenses incurred etc. Further, in response to notice u/s.142(1) of the Act, the assessee submitted that service tax payments of Rs.24,25,158/- which was disallowed in the previous assessment years is paid along with late payment of Rs.2,07,144/- in the year under consideration and the same is allowable u/s.43B of the Act. On verification of the details provided by the assessee, the Assessing Officer completed the assessment disallowing the expenses claimed along with interest amounting to Rs.24,25,158/- and Rs.2,07,144/- respectively. While arriving at such conclusion, the AO held that the assessee has only attached RTGS transfer evidencing the payment, however, it not clear that the said RTGS transfer is towards service tax payments. The assessee has not produced the copy of assessment order. Further, the AO also stated that no such disallowance u/s.43B of the service tax has been made during the earlier assessment years, as claimed by the assessee. The AO also made addition of Rs.3,998/- as undisclosed speculative profit.
3. Aggrieved assessee challenged the assessment made by the AO before ld.CIT(A)/NFAC but with a delay of 191 days. The ld.CIT(A)/NFAC dismissed the appeal of the assessee as not maintainable, without condoning the delay.
4. Further aggrieved, the assessee is now in appeal before the Tribunal.
5. When the appeal is called for, none appeared on behalf of the assessee. I therefore proceed to dispose of the appeal with the able assistance from the ld. Departmental Representative exparte qua the assessee.
I have heard the ld. Departmental Representative and perused the material on record. Primarily, I would deal with on the aspect of delay of 191 days occurred in preferring the appeal before the ld.CIT(A)/NFAC. In connection with delay, the assessee has putforth the following reasons for the delay :
“2. That I am filing this affidavit in support of my request for the condonation of delay in filing appeal, which I was required to submit to Commissioner of Income Tax Appeal.
That due to the following facts and reasons, the filing of CIT Appeal could not be done within the prescribed time limit:
I was served with the assessment order passed by the ITO dated 31 August 2022 vide email on 1 September 2022. The said email was missed by me since it was automatically routed to the 'Spam folder of my inbox. I was not aware of the order until my refund for the next year was adjusted against the demand arising from the said order. The appeal was filed on 11 March 2023. There is a delay of 191 days in the filing of an appeal as my erstwhile consultant ending their professional engagement expressing his inability to take up appellate work. It took some time to search for and appoint a counsel to represent my case in appellate proceedings. Being in the business of manpower supply, I have to handle the payroll of more than 1,500 employees and have to engage in liaising activities with the local bodies, as well as private entities. I was also preoccupied with my personal and family problems as well which led to a delay in the appointment of a counsel. The reason for delay is genuine and unintentional.
That due to the above-mentioned circumstances, the filing of CIT Appeal was delayed by 191 days.
That I have not intentionally or willfully delayed the filing, and the delay was due to unavoidable reasons beyond my control.
6. That I assure Income Tax Appellate Tribunal that such delay will not occur in the future, and I shall ensure that all future submissions and filings are made promptly within the prescribed timelines.”
At this stage, it is relevant to note the judgment of the Hon’ble Bombay High Court in Vijay Vishin Meghani Vs. DCIT & Anr (2017) 398 ITR 250 (Bom) holding that none should be deprived of an adjudication on merits unless it is found that the litigant deliberately delayed the filing of appeal. In that case, delay of 2984 days crept in due to improper legal advice. Relying on Concord of India Ins. Co. Limited VS Nirmala Devi (1979) 118 ITR 507 (SC), the Hon’ble jurisdictional High Court condoned the delay.
In yet another case in Anil Kumar Nehru and Another vs. ACIT (2017) 98 CCH 0469 BomHC, there was a delay of 1662 days in filing the appeal. Such a delay was not condoned by the Hon’ble High Court. In further appeal, condoning the delay, the Hon’ble Supreme Court in Anil Kumar Nehru vs. ACIT (2018) 103 CCH 0231 ISCC, held that : `It is a matter of record that on the identical issue raised by the appellant in respect of earlier assessment, the appeal is pending before the High Court. In these circumstances, the High Court should not have taken such a technical view of dismissing the appeal in the instant case on the ground of delay, when it has to decide the question of law between the parties in any case in respect of earlier assessment year. For this reason we set aside the order of the High Court; condone the delay for filing the appeal and direct to decide the appeal on merits.’
Turning to the facts of the instant appeal, I find that the legal issue of passing the ex parte order dismissing the appeal at the threshold stage has merits in favour of the assessee. Considering the principles enunciated in the above judicial precedents, I am of the view of that the delay of 191 days deserves condonation for paying way to render substantial justice.
Coming to the issue on merits, the assessee has filed certain additional evidences regarding the service tax payments before the Tribunal. It is the submission of assessee that the assessee has submitted the computation of income for the A.Yrs. 2016-17 and 2017-18 and the certificate from the bank establishing the payments of service tax dues. However, the ld.CIT(A) has not decided the issue on merits, but merely dismissed the appeal without condoning the delay. On going through the evidences placed on record which goes to root of the matter, the written submissions filed before me and also the facts and circumstances of the instant case, I am of the opinion that in the interest of justice, the matter needs remission to the file of ld.CIT(A) for adjudicating the issue on merits denovo. 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)/NFAC shall be free to proceed in accordance with law. Finding of the ld.CIT(A)/NFAC is set aside and Grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, the appeal of assessee is allowed for statistical purposes. Order pronounced on this 6th day of January, 2025.