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Facts
The assessee filed its ITR for AY 2015-16 after receiving a notice under Section 148 based on cash deposits. The assessee alleged non-receipt of statutory notices and that the assessment was ex-parte. The CIT(A) dismissed the appeal due to a 157-day delay, without adjudicating on merits.
Held
The Tribunal held that the dismissal on technical grounds denied the assessee an effective opportunity to be heard. The matter was restored to the Assessing Officer for fresh adjudication, considering the ex-parte assessment and the substantial addition.
Key Issues
Whether the CIT(A) erred in dismissing the appeal solely on the ground of delay without considering the merits, especially when the assessment was ex-parte and statutory notices were allegedly not properly served?
Sections Cited
148, 142(1), 143(2), 147, 144, 144B, 69A, 46A
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Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 28/03/2025 pertaining to Assessment Year 2015-16. 2. In the present appeal the assessee has raised following grounds:
That the Hon'ble Commissioner of Income tax (Appeals) NFAC has erred on facts of the case and in Law while dismissing the appeal solely on the ground of delay in filing the appeal without going into the merits and detailed grounds of appeal
filed along with annexures.
2. That the Hon'ble Commissioner of Income tax (Appeals) NFAC has erred in complying the principle of natural justice.
3. That the Hon'ble Commissioner of Income tax (Appeals) NFAC has erred both in law and on facts while not taking into consideration of the additional evidence placed on record under Rule 46A of the Income Tax Rules 1962.
4. That the Hon'ble Commissioner of Income tax (Appeals) NFAC has erred both in law and on facts that the assessment of the assessee was concluded u/s 144 of the Income Tax Act i.e. ex parte assessment.
5. That the Hon'ble Commissioner of Income tax (Appeals) NFAC has erred in rejecting the appeal on the ground of condonation for delay in filing of appeal.
2 6. That the appellant prays that the impugned order passed by the Ld. Commissioner of Income tax (Appeals) NFAC as well as Ld. AO by making an addition of Rs. 10,04,47,625/- to the returned income may kindly be annulled and returned income at Rs. Nil may be accepted. Further, it is prayed that penalty proceedings initiated may also be vacated.
7. That the appellant craves to leave to add, alter, amend, modify, substitute, delete any of the ground(s) of appeal at or before the time of the final hearing of the appeal, if necessary.
Briefly, the facts of the case are that the assessee filed its ITR for Assessment Year 2015-16 in response to a notice issued under Section 148 of the Income Tax Act, 1961. The proceedings were initiated based on information regarding cash deposits amounting to Rs. 70,14,581/- in the assessee’s bank account. The assessee contended that multiple notices, including those under Section 142(1) and a show-cause notice, were not personally served via postal service but were sent to an incorrect email ID or the e-filing portal, leading to a lack of knowledge regarding the ongoing proceedings. Consequently, the assessee challenged the resulting assessment order, alleging it was passed against the principles of natural justice and without a speaking order.
The AO, Assessment Unit, framed the assessment under Section 147 read with Sections 144 and 144B of the Act. Due to the non-compliance or lack of representation from the appellant, the AO proceeded to make a significant addition of Rs. 10,04,47,625/- to the assessee’s income. This addition was primarily based on information concerning cash deposits in the bank account, which the AO treated as unexplained under Section 69A. As a result of this addition, the AO raised a total tax demand of Rs. 10,31,09,191/- for the relevant assessment year.
Against the order of the AO the assessee went in appeal before the Ld. CIT(A). The CIT(A) observed that the assessment order was served on 31/10/2023, but the appeal was not instituted until 06/05/2024, resulting in an extraordinary delay of 157 days. The assessee sought condonation of delay, attributing the lapse to the health issues of their Chartered Accountant. However, the CIT(A) found that the appellant failed to provide material 3 evidence to substantiate this claim on a day-to-day basis or show "sufficient cause" for the delay.
Relying on various judicial precedents, including Basawaraj & Anr vs. Special Land Acquisition Officer, the CIT(A) emphasized that the law of limitation must be applied with rigour and that equity aids only the vigilant. The CIT(A) noted that while technical delays might be overlooked to advance substantial justice, gross negligence and inaction cannot be condoned. Furthermore, the CIT(A) declined to accept new evidence submitted under Rule 46A because the underlying delay in filing the appeal was not satisfactorily explained. Consequently, the CIT(A) refused to condone the delay and dismissed the appeal in limine as non-maintainable on technical grounds
Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal.
During the course of hearing the Ld. AR argued that the notices under Sections 148, 142(1), and 143(2) were never properly served via postal service; instead, they were sent to an incorrect email address or uploaded to the portal without the appellant’s knowledge. Substantively, Ld AR contended that the addition of Rs. 10,04,47,625/- for cash deposits was made without a reasoned "speaking order" or a fair opportunity to explain the source of funds.
Per contra, the Ld. DR relied on the order of the lower authorities.
We have heard the rival submissions and perused the material on record. It is observed that the assessment for the year under consideration was completed under section 147 read with sections 144 and 144B of the Act on an ex parte basis, wherein a substantial addition of Rs. 10,04,47,625/- was made. The Ld. CIT(A)/NFAC dismissed the appeal in limine solely on the ground of delay of 157 days in filing the appeal, without adjudicating the issues on merits.
4 11. Considering the fact that the assessment itself was framed ex parte, the assessee’s contention regarding non-service of statutory notices, and the magnitude of the addition involved, we are of the view that the matter deserves to be examined on merits in the interest of substantial justice. The dismissal of the appeal on technical grounds has resulted in denial of effective opportunity to the assessee.
Accordingly, the impugned order of the Ld. CIT(A) is set aside and the matter is restored to the file of the Assessing Officer for fresh adjudication in accordance with law, after affording due and reasonable opportunity of being heard to the assessee. The assessee is directed to fully cooperate in the remand proceedings. It is further directed that the assessee shall deposit a sum of Rs. 10,000/- towards cost in the Poor Patient Relief Fund, PGI, Chandigarh within 30 days from the date of receipt of this order. Proof of such deposit shall be furnished before the Assessing Officer, which shall be a condition precedent for granting fresh hearing.
In the result, appeal of the assessee allowed for statistical purposes.