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Facts
The assessee, a closely held company, failed to file its income tax return for AY 2018-19. Based on information of large financial transactions, the AO initiated assessment proceedings under Section 147 r.w.s. 144, determining income at Rs. 3,47,21,400/- and penalty under Section 270A. The assessee appealed against these orders, but the CIT(A) dismissed the appeals in limine due to delay.
Held
The Tribunal condoned the delay in filing the appeals before the CIT(A), finding reasonable cause. It held that the quantum and penalty issues require reconsideration and set aside the CIT(A)'s orders. The matters were restored to the AO for fresh adjudication after affording the assessee an adequate opportunity of being heard.
Key Issues
Whether the CIT(A) was justified in dismissing the appeals on the grounds of limitation without considering the reasons for delay, and whether the assessment and penalty proceedings should be restored to the AO for fresh adjudication.
Sections Cited
250, 147, 144, 148, 270A, 143(3)
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR
आयकर अपीलीय अिधकरण, अहमदाबाद "ायपीठ “सी“, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD सु"ी सुिच"ा का"ले, "ाियक सद" एवं "ी मकरंद वसंत महादेवकर, लेखा सद" के सम"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA Nos.2080/Ahd/2024 & 2081/Ahd/2024 िनधा"रण वष" /Assessment Year : 2018-19 Vishal Infraglobal Pvt.Ltd. The DCIT बनाम/ Plot No.42, 2nd Floor Gandhinagar Circle v/s. Apple Avenue Gandhinagar B/h. Dharti Flats Gayatri Temple, Highway Mehsana – 384 002 "थायी लेखा सं./PAN: AAECV 2187 J अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee by : Shri S.N. Divatia, AR Revenue by : Shri A.P. Singh, CIT-DR & Shri Rignesh Das, Sr.DR सुनवाई की तारीख/Date of Hearing : 27 /03/2025 घोषणा की तारीख /Date of Pronouncement: 01 /04/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM:
Both these appeals filed by the assessee against separate orders passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”) by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] for the Assessment Year (AY) 2018-19. The first appeal – i.e. challenges the ex-parte order dated 08.10.2024 passed by the Ld. CIT(A) dismissing the assessee’s appeal against the assessment order dated ITA Nos.2080 & 2081/Ahd/2024 Vishal Infraglobal Pvt.Ltd. vs. DCIT Asst. Year : 2018-19 2 24.03.2023 passed under section 147 r.w.s. 144 of the Act passed by the Assessing Officer [hereinafter referred to as “AO”] The second appeal – i.e. CIT(A) dated 08.10.2024 passed under section 250 of the Act upholding the penalty levied under section 270A of the Act by the AO vide his order dated 21.09.2023. Facts of the Case:
The assessee is a closely held company engaged in the business of execution of Government contracts. It maintains regular books of accounts. However, the assessee did not file its return of income for the year under consideration. Based on information gathered from the Insight Portal indicating large financial transactions including cash withdrawals and time deposits aggregating to Rs.16.15 crores, notice under section 148 of the Act was issued on 30.03.2022. Since no return was filed in response, the Assessing Officer completed the assessment under section 144 r.w.s. 147 of the Act on 24.03.2023, determining the total income at Rs.3,47,21,400/- and initiated penalty proceedings under section 270A of the Act.
The assessee filed appeals against both the assessment and penalty orders before the Ld. CIT(A). However, both appeals were dismissed in limine on the ground of limitation. In the quantum appeal, the delay in filing was 329 days, and in the penalty appeal, the delay was 148 days. The CIT(A) held that no sufficient cause was shown by the assessee for condoning the delay and, hence, did not admit the appeals.
Aggrieved by the order of the CIT(A), the assessee is in appeal(s) before s raising following grounds of appeal: & 2081/Ahd/2024 Vishal Infraglobal Pvt.Ltd. vs. DCIT Asst. Year : 2018-19 3 1.1 The order passed u/s.250 on 08.10.2024 for AY 2018-19 by NFAC(CIT(A) Delhi (for short "CIT(A)") dismissing the appeal filed by the appellant on the ground of limitation holding that there was no sufficient cause for delay in filing the appeal before NFAC and thereby confirming the aggregate additions of Rs.3,47,21,400/- is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld. CIT(A) has grievously erred in law and or on facts in dismissing the appeal on the ground of limitation holding that there was no sufficient cause for delay in filing the appeal before NFAC and thereby confirming the aggregate additions of Rs.3,47,21,400/- 1.3 The Ld. CIT(A) has grievously erred in law and or on facts in confirming ex- parte assessment u/s 144 as well as failed to appreciate that there was sufficient cause for alleged non-compliance to the notices of hearing issued so that the assessment is liable to be struck down.
2.1 The Ld. CIT(A) has grievously erred in law and or on facts in confirming the aggregate additions of Rs.3,47,21,400/- made by AO 2.2 That in the facts and circumstances of the case as well as in law, the Ld. AO has grievously erred in confirming the aggregate additions of Rs.3,47,21,400/- made by AO.
3.1 Without prejudice to above and in the alternative the impugned additions made by AO is highly excessive and calls for substantial reduction and relief on the ground of telescoping additions.
3.2 It is therefore prayed that the delay in filing the appeal before CIT(A) should be condoned and the impugned assessment should be restored back to AO or in the alternative, the aggregate additions of Rs.3,47,21,400/- made by AO should be deleted/reduced. 1.1 The order passed u/s.250 on 08.10.2024 for AY 2018-19 by NFAC(CIT(A) Delhi (for short "CIT(A)") dismissing the appeal filed by the appellant on the ground of limitation holding that there was no sufficient cause for delay in filing the appeal before NFAC and thereby upholding the penalty of Rs.56,38,318/- imposed u/s 270A is wholly illegal, unlawful and against the principles of natural justice. & 2081/Ahd/2024 Vishal Infraglobal Pvt.Ltd. vs. DCIT Asst. Year : 2018-19 4 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in dismissing the appeal on the ground of limitation holding that there was no sufficient cause for delay in filing the appeal before NFAC. The appellant had claimed the service of the impugned order of penalty on 06.03.2024 in which case there is no delay, but the CIT(A) has treated the date of mail on 22.09.2023 as the date of service.
2.1 The Ld. CIT(A) has grievously erred in law and or on facts in confirming the penalty of Rs.56,38,318/- imposed u/s 270A in respect of the aggregate additions of Rs.3,47,21,400/- made by AO.
2.2 That in the facts and circumstances of the case as well as in law, the Ld. AO has grievously erred in confirming the penalty of Rs.56,38,318/-imposed u/s 270A in respect of the aggregate additions of Rs.3,47,21,400/- made by AO.
3.1 Without prejudice to above and in the alternative the impugned penalty imposed by AO is highly excessive and calls for substantial reduction and relief on the ground of telescoping additions. It is therefore prayed that the delay in filing the appeal before CIT(A) should be condoned and the impugned penalty of Rs.56,38,318/-should be deleted/reduced.
The Ld.Authorized Representative (AR) of the assessee submitted that the statement of facts filed before the Ld. CIT(A) clearly and sufficiently set out the reasons for the delay in filing the appeal, which, despite being genuine and duly explained, were not appreciated by the Ld.CIT(A), resulting in summary dismissal of the appeal on the ground of limitation. The AR further submitted that since the assessment as well as the penalty proceedings were concluded ex-parte, without affording effective opportunity of hearing to the assessee, the matter may be restored to the file of the AO for fresh adjudication in accordance with law.
The Ld.Departmental Representative (DR), on instructions, did not raise any serious objection to the proposal for restoring the matter to the file of the AO. & 2081/Ahd/2024 Vishal Infraglobal Pvt.Ltd. vs. DCIT Asst. Year : 2018-19 5
On careful consideration of the material on record, and more particularly, the explanation offered in the Statement of Facts filed before the CIT(A) itself, which sets out the reasons for the delay, we are satisfied that the assessee was prevented by reasonable cause from filing the appeals within the prescribed time. In our view, the reasons advanced for the delay are bona fide and supported by the surrounding facts and circumstances.
7.1. Further, considering the quantum of additions involved (Rs. 3.47 crore) and penalty levied (Rs.56.38 lakh) and having regard to the principle that litigants should not be shut out without a hearing where a plausible explanation exists, we are of the considered view that it would be in the interest of justice to condone the delay in both appeals. Since the penalty under section 270A of the Act is consequential in nature, dependent upon the outcome of the quantum assessment, we are of the view that both the quantum and penalty issues require reconsideration.
7.2. We accordingly condone the delay in filing both appeals and set aside the impugned orders of the CIT(A), in both quantum and penalty matters. The issues are restored to the file of the AO to be adjudicated afresh in accordance with law, after affording adequate opportunity of being heard to the assessee. Needless to add, the Assessing Officer shall re-examine the issue of penalty in light of the final outcome of the reassessment proceedings.
7.3. The assessee is directed to co-operate fully in the set-aside proceedings and furnish all relevant details and explanations as may be called for by the Assessing Officer, without seeking unnecessary adjournments. & 2081/Ahd/2024 Vishal Infraglobal Pvt.Ltd. vs. DCIT Asst. Year : 2018-19 6
In the result, both the appeals filed by the assessee are allowed for statistical purposes.