RAJNIBHAI BHOGILAL DESAI,KHEDA vs. THE ITO, WARD-5, NADIAD

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

At the outset, we note that there is a delay of 376 days in filing of the present appeal before us. In this regard, the assessee has submitted that the delay was neither deliberate nor intentional but was due to circumstances beyond his control. It was submitted that at the time of filing the appeal before the Ld. CIT(A), the assessee was being represented by a different consultant who subsequently failed to comply with the notices issued under section 250 of the Act during the appellate proceedings. The assessee has contended that the said consultant did not inform him about the notices received nor forwarded them, as they were being sent to the consultant’s registered email address and not to the assessee directly. The assessee became aware of the ex parte order passed by the Ld. CIT(A) only much later, when his accountant was verifying records on the e-filing portal and noticed the appellate order. Upon coming to know of the same, the assessee immediately engaged a new consultant and took necessary steps to file the present appeal. It was submitted before us that the assessee had no malafide intention and was unaware of the notices issued and proceedings conducted before the Ld. CIT(A). The assessee has also pointed out that he had duly complied with all notices and proceedings during the assessment and reassessment stages, and the default in the appellate stage was solely due to the lapse on part of the erstwhile consultant. In support of the prayer for condonation, reliance has been placed on various judicial pronouncements, which have held that delay should be condoned in a liberal manner where the cause is bona fide and not deliberate, and especially where the party seeking condonation should not suffer for the fault of their representative. Considering the facts of the case and the explanation offered, and keeping in view the principles laid down in the cited decisions, we are of the view that the reasons given by the assessee constitute a reasonable and sufficient cause for the delay in filing of the appeal. Accordingly, we condone the delay of 376 days in the interest of substantial justice, and admit the appeal for adjudication on merits.

Before us, the counsel for the assessee submitted that the reassessment proceedings initiated by the Assessing Officer are fundamentally defective, as they were carried out in complete disregard of the applicable legal framework governing search assessments under Section 153C of the Act. It was pointed out that the Assessing Officer failed to follow the prescribed procedures under this provision, such as the mandatory transfer of seized material to the jurisdictional Assessing Officer of the third party and the issuance of proper notice. As a result, the entire reassessment is vitiated in law and the notice itself is invalid. On this ground alone, the impugned assessment deserves to be quashed. On the merits of the case, the counsel for the assessee contended that the additions made by the Assessing Officer are solely based on data and documents seized from the premises of third parties, without any corroborative evidence linking such material to the assessee. Further, the additions are based on loose sheets and Tally data found in a laptop belonging to another person. The assessee submitted that there is no direct or independent evidence showing that the data pertains to him, nor was any inquiry made to establish its authenticity. It was submitted that entries in a third party’s books, without anything further, cannot be a valid basis for making additions in the hands of the assessee. Further, the assessee has pointed out certain discrepancies in the seized documents that clearly show the accounts were not properly maintained and could not be relied upon. The counsel for the assessee also submitted that additions have been made on the basis of assumptions, and in some cases, amounts already considered elsewhere have been taxed again, resulting in double taxation. It was further submitted that the appellant was not given an opportunity to cross-examine the person from whose premises the material was seized, which violates the principles of natural justice. In view of these submissions, the counsel for the assessee submitted that the assessee has a strong case on merits and accordingly, in the interest of justice, he may be granted one more opportunity of hearing so that the matter may be adjudicated fairly and on the basis of proper evidence.

In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders.

We have heard the rival contentions and perused the material on record. In view of the foregoing and considering the submissions made by the assessee, we are of the opinion that the assessee was denied effective opportunity of hearing before the Ld. CIT(A) due to non-communication of notices by the erstwhile consultant, which constitutes a reasonable cause for non-compliance. We also find that the issues involved in the present appeal are fact-intensive and require proper appreciation of evidences and explanations to be furnished by the assessee. Further, the assessee has raised serious legal and factual contentions regarding the validity of reassessment proceedings as well as the merits of the additions made, which deserve to be adjudicated in accordance with law after affording a proper opportunity of hearing. Accordingly, in the interest of justice and fair play, we set aside the impugned order passed by the Ld. CIT(A) and restore the matter to his file for de novo adjudication. The Ld. CIT(A) is directed to afford adequate opportunity to the assessee to present his case and to decide the appeal afresh on merits by passing a speaking and reasoned order in accordance with law. The assessee is also directed to extend full cooperation in the proceedings before the Ld. CIT(A) and ensure timely compliance. We also make it clear that in case there is any further non-compliance on the part of the assessee to cause appearance before Ld. CIT(A), then Ld. CIT(A) would be at liberty to pass appropriate orders in the light of material available on record.

In the result, the appeal filed by the assessee is allowed for statistical purposes.