What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in dismissing the appeals on technical grounds, especially when the defects were rectified and the reasons for the initial mistake were bonafide. Substantial justice should be considered over technicalities.

The assessees filed appeals before the CIT(A) but used an incorrect procedure for filing, leading to dismissal. The assessees argued that the new rules for filing appeals were not widely known and they rectified the mistake by filing a revised Form 35 using DSC.

What were the issues?

Whether an appeal dismissed on technical grounds for incorrect filing procedure should be restored if the assessee rectifies the mistake and provides bonafide reasons, prioritizing substantial justice over technicalities.

M/S. Prakash Supplies vs ACIT | ITAT Chennai 2020

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI DUVVURU RL REDDY & SHRI G.MANJUNATHA

Hearing: 04.12.2020

Heard together (3 matters)

I.T.A.No.315/Chny/2020

I.T.A.No.317/Chny/2020

I.T.A.No.318/Chny/2020

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / O R D E R PER BENCH:

These three appeals are filed by different assessees against the separate, but identical orders of Commissioner of Income Tax (Appeals)–10, Chennai dated 10.01.2020, 10.01.2020 and 23.01.2020 and pertain to assessment years 2015-16, 2015-16 and 2011-12 respectively. Since, the facts are identical and issues are common, for the sake of convenience, they were clubbed, heard together and disposed of by way of this consolidated order.

We have heard both the parties and perused the material available on record along with the order of the learned CIT(A). We find that the learned CIT(A) has dismissed the appeal filed by the assessee on the ground that although the assessee is covered under Rule 45(2)(a)(i) of Income Tax Rules, 1962, the present appeal has been filed under rule 45(2)(a)(ii) of I.T.Rules, 1962, in contravention of prescribed rules for filing appeal before the first appellate authority.

Before us, the learned AR for the assessee submitted that new rules has been notified for filing appeals by using DSC and many people are not aware of the procedure for filing appeal and consequently, assessee has filed appeal by EVC through Aadhaar OTP but the such appeal has been filed within the time prescribed under the Act. No doubt, the appeal should be filed in accordance with the prescribed procedure provided under the rule. In case, the appeal is not filed in accordance with the prescribed rules, the said appeal becomes invalid and not maintainable. However, when the assessee explains the reasons for defects in filing the appeal and such reasons are bonafide, then it is the duty of the appellate authority to provide opportunity to the assessee to rectify mistakes in filing the appeal, because during transition period many people may not aware of the changes made in the Rules for filing appeal.

Moreover, while deciding the appeal instead of look into technicalities substantial issue involved in appeal needs to be considered to advance substantial justice. In this case, the learned CIT(A) dismissed the appeal filed by the assessee on technical grounds, even though the assessee rectified the said mistakes by filing revised Form 35 by using DSC. Therefore, we are of the considered view that learned CIT(A) has erred in dismissing these appeals filed by the assessees on technical grounds and hence, we set aside the orders passed by the learned CIT(A) and restore these appeals to the file of the learned CIT(A) to decide the appeals on merits in accordance with law.

In the result, these three appeals filed by the assesses are allowed for statistical purposes.

Order pronounced in the open court on 4th December, 2020

M/S. PRAKASH SUPPLIES,CHENNAI vs. ACIT, NCC - 22, TAMBARAM,

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