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Facts
The assessee filed an appeal against an order which disallowed Rs. 3,62,264/- in remuneration to a partner. The primary issue revolves around the delay in filing the appeal before the CIT(A), which was 1401 days.
Held
The tribunal held that the assessee failed to provide sufficient cause for the extraordinary delay in filing the appeal. While the issue of disallowance was debatable and could be referred to the AO, the delay prevented adjudication on merit.
Key Issues
Whether the delay of 1401 days in filing the appeal before the CIT(A) should be condoned, and if the disallowance made under Section 143(1) was justified.
Sections Cited
143(1), 154, 40(b), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,’’SMC” JAIPUR
आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’’SMC” JAIPUR JhjkBkSM+ deys'kt;UrHkkbZ] ys[kk lnL; ,o aJhujsUnzdqekj] U;kf;dlnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;djvihyla-@ITA No. 715/JPR/2025 fu/kZkj.ko"kZ@AssessmentYear : 2018-19 cuke M/s. Udai Lal Mahabir Prasad The ITO HP Petrol Pump, Village: Lalsot Vs. Ward -Dausa Distt. Dausa – 303 503 (Raj) LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAFU 6294 J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Tanuj Agarwal, Advocate jktLo dh vksjls@Revenue by: Shri Gautam Singh Choudhary,JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 31/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: : 01 /08/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM
This appeal filed by the assessee is directed against the order of the ld. Addl./JCIT(A)-1, Delhi dated 05-03-2025 for the assessment year 2018- 19 in the matter of section 143(1) of the Act by raising the following grounds of appeal; ‘’1. That on the facts and circumstances of the case and in law the ld Addl./ JCIT(A) grossly erred in not condoning the unfortunate delay in filing of the appeal thereby ignoring the principles of substantial justice.
That on the facts and circumstances of the case and in law the ld. Addl./ JCIT(A) grossly erred in not quashing the intimation order passed u/s 143(1) as illegal and further erred in not deleting the addition of Rs.3,62,264/- in respect of remuneration to Karta namely Shri Shikar Chand Jain in his individual capacity who is partner in the appellant firm in his representative capacity representing Shikhar Chand Jain HUF as Karta of HUF.’’ 2.1 Apropos grounds of appeal, it is noticed that the ld. CIT(A) had dismissed the appeal of the assessee on the ground of non-condonation of delay of 1401 days as the assessee failed to demonstrate sufficient cause for the extraordinary delay of over three years. The relevant observations made by the ld. Addl./JCIT(A) at pages 5 & 6 are reproduced as under:-
‘’Furthermore, the delay in the present case amounts to 1401 days which is excessive and inordinate. In the present case, the appellant has failed to demonstrate sufficient cause for the extraordinary delay of over three years. The appellant has also not provided any evidence to substantiate the alleged non- receipt of the intimation, apart from a general assertion regarding the non- availability of physical copies. Since the legal framework of electronic communication has been upheld by the Courts, the appellant cannot claim ignorance as a valid excuse. In view of the above facts and settled legal position, the application for condonation of delay is rejected. Consequently, the appeal is dismissed in limine as time barred.’’ 2.2 During the course of hearing, the main grievance of the ld. AR of the assessee was that the Addl./JCIT(A) has erred in not condoning the delay of 1401 days in filing the appeal before him as there was sufficient reason that the assessee was trying to get rectified the intimation but that efforts was in vain. The assessee was taking up that matter on e-filing portal with the request to rectify the mistake apparent from record and delete the erroneous demand [ paper book page 15 & 16]. The assessee had filed an application dated 31-03-2023 to the ITO, Dausa on the same issue (PB 17) which is reproduced as under:-
Dated 31 March, 2023
The Income-tax Officer, Ward DAUSA, Rajasthan Reg: Rectification Application u/s 154 of the Income-tax Act, 1961, in the case of M/S UDAI LAL MAHAVIR PRASAD, H.P. Petrol Pump, Village Lalsot, District Dausa-303503, Rajasthan: Assessment Year: 2018-19, PAN: AAAFU6294J Dear Sir, On perusal of Income Tax web portal of the undersigned, we came to know that some dement for the assessment year 2018-2019 is created by order passed us 143(1) dated 31.05.2019 by wrong disallowing Rs.3,62,264 in respect of remuneration to Karta namely Shri Shikhar Chand Jain in his individual capacity who is partner in the appellant firm in his representative capacity representing Shikhar Chand Jain HUF as Karta of HUF It is humbly submitted that the remuneration is allowable as per section 40(b) of the Act read with the partnership deed. The impugned disallowance being beyond the purview of section 143(1) Illegal. Moreover, the claim of the assessee was also accepted uls 143(3) for the earlier AY 2017 18 (copy of assessment order is attached)
Online rectification window is not available on the portal, hence this rectification application is being filed through grievance option on the portal with a request that as the above constitute mistakes apparent from the record, necessary order of rectification may please be passed and the erroneous demand may kindly be deleted at your earliest and oblige. Thanking you, Yours faithfully, Sd/- Humble Assessee’’ The ld. AR further submitted that the assessee has mentioned at para 15 of Form 35 before the ld.CIT(A) to condone the delay with following prayer.
‘’The appellant belongs to a small village Lalsot,District Dausa in Rajasthan. Intimation for the A.Y. 2018-19 creating erroneous demand was not received by the appellant physically. On going through the portal, it was realized that some demand had been created for which no communication was received. Hence, the appeal is being filed. In the aforesaid circumstances, it is humbly requested to be kindly condone the delay in the interest of justice.’’ Conclusively, the ld.AR of the assessee prayed to condone the delay and restore the appeal to the file of the AO for afresh adjudication of the issue of erroneous demand on merit.
2.3 On the other hand, the ld.DR supported the order of the ld.CIT(A).
2.4 We have heard both the parties and perused the materials available on record. Admittedly, intimation u/s 143(1) of the Income Tax Act, 1961, related to the assessee-appellant- a partnership firm, and pertained to the assessment year 2018-19.
2.5 As per claim of the appellant before Ld. CIT(A) and also before this Appellate Tribunal the intimation dated 31.05.2019 was never received by the appellant, and further that that the intimation was physically not received and that the demand was only noticed while reviewing Income Tax Portal. 2.6 While dealing with the point of condonation of delay of 1401 days, Ld. CIT(A) observed that the appellant had not presented any evidence to substantiate non receipt of said intimation. He further observed that as per standard procedure followed by CPC, all intimations u/s 143(1) of the Act are sent electronically to the tax payers on the given registered email ID and also made available on the e-filing portal. The Ld. CIT(A) further observed in para 5 of the impugned order that as per decision by Hon’ble Apex Court in case of Principal commissioner of Income Tax, Mumbai v. M/s IVen Interactive Limited, failure on the part of the assessee to check e-filing portal or registered email ID cannot be a ground to claim of non-service of notices. With these observations, Ld. CIT(A) rejected the contention on behalf of the appellant there that the intimation was physically not received and that the demand was only noticed while reviewing Income Tax Portal. 2.7 In the course of arguments advanced before us, the above observation about standard procedure followed by CPC has not been challenged on behalf of the appellant. Learned AR has not cited before us any rule or regulation requiring the CPC to serve intimation physically on the assessee, in presence of the standard procedure. 2.8 Appellant has nowhere claimed that the Return of Income was filed without any assistance of any Tax Consultant or Chartered Accountant or that the appellant had mentioned in the Return of Income only its own address for the purpose of communication and service of such intimations or notices on the official or officer of the firm-appellant at the given address. 2.9 We find that while putting forth its claim regarding non service of the intimation on the appellant firm, the appellant did not specifically deny service of the intimation as per the standard procedure followed by CPC. For want of specific denial in this regard in the claim, it can safely be inferred that the intimation sent to the appellant as per standard procedure stands admitted. 2.10 As regards the claim of the appellant that it came to know of the intimation only having noticed demand from the Income Tax Portal,as per Form 35 submitted before ld. CIT(A), the notice of demand was served on the appellant on 17.11.2022. Although, no material has been placed on record regarding service of notice of demand on 17.11.2022, even if it is assumed to be correct, for the sake of arguments, the appellant has failed to explain as to why the intimation was not challenged from 18.11.2022 to 30.3.2023 (the appeal before ld. CIT(A) having been filed on 31.3.2023). Even in the course of arguments before this Bench, learned AR for the appellant has not furnished any cause, what to say of any “sufficient cause” for the delay in filing of the appeal from 18.11.2022 to 30.3.2023. 2.11 The appellant submitted grievance on 31.03.2023, with a request for rectification of the above said intimation. Ld. AR for the appellant has submitted that rectification application u/s 154 of the Act could not be uploaded as the Income Tax Portal did not allow its filing. Appellant alleges to have attempted to file application for rectification various times before 31.3.2023. But, in this regard, appellant has not furnished any proof, and as such, this claim of the appellant does not stand proved. 2.12 As per case of the appellant firm, the dispute pertains to disallowance of the payment made by the firm to one if its partner Shri Shikhar chand Jain, in his individual capacity, even though he was partner in the firm, in the capacity of Karta of HUF-Shri Shikar Chand Jain HUF. 2.13 Ld. AR for the appellant has referred to the return of income pertaining to the previous year and pointed out that no such disallowance was made by the department in the previous year, and that the claim for the year under consideration needs to be adjudicated by the Jurisdictional Assessing Officer. 2.14 Ld DR has not disputed that in the previous Assessment year payment similarly made to the said partner of the firm-who was also Karta of the HUF, was ultimately accepted on scrutiny. 2.15 In the given facts and circumstances, we are of the view that this is a fit case for referring the matter to Jurisdictional Assessing Officer for decision afresh, as regards the payment to above named partner. But, keeping in view that the appellant did not file the appeal within the prescribed period of limitation and has failed to explain delay particularly from 18.11.2022 to 30.3.2023, we deem it a fit case to impose cost of Rs. 2,000/-on the appellant, for being deposited in “Prime Minister’s National Relief Fund”. 2.16 Consequently, while setting aside the impugned order passed by Learned CIT(A), the matter is remanded to the Jurisdictional Assessing Officer for decision on the abovesaid issue involved, after providing reasonable opportunity to the appellant of being heard.
3.0 In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 01 / 08 /2025.