SHREENATH BUILDERS AND DEVELOPERS,INDORE vs. ITO -1(1), INDORE, INDORE

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ITA 672/IND/2024Status: DisposedITAT Indore28 April 2025AY 2017-186 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay of 190 days in filing the appeal, finding that the assessee had a sufficient cause for the delay due to notices being sent to an incorrect email address. The Tribunal relied on Section 253(5) of the Act and the principle of substantial justice over technical considerations, as laid down by the Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others. The Tribunal also agreed to the joint request of both parties to remand the matter back to the CIT(A) for fresh adjudication on merits. The CIT(A) was directed to provide the assessee with an opportunity of hearing and to pass an appropriate order. The assessee was cautioned against seeking unnecessary adjournments. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Shreenath Builders and Developers, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging an order dated 29.12.2023 passed by the Commissioner of Income-Tax (Appeals) - NFAC, Delhi. This order arose from an assessment order dated 20.12.2019 passed by the Income Tax Officer (ITO)-1(1), Indore, under Section 143(3) of the Income-tax Act, 1961, for Assessment Year 2017-18. The appeal was filed on 04.09.2024, which was 190 days beyond the prescribed time limit. The assessee contended that the delay was caused by the CIT(A) sending notices to an incorrect email address, leading to an ex-parte order. The original assessment order included additions of Rs. 1,72,00,000/- on account of unexplained capital and Rs. 3,58,70,000/- on account of unsecured loans. The CIT(A) deleted the first addition but sustained the second.

What were the issues?

1. Whether the appeal filed by the assessee is delayed and, if so, whether the delay should be condoned under Section 253(5) of the Income-tax Act, 1961, on the grounds of sufficient cause. - Assessee's contention: The delay was caused by the CIT(A) sending notices to an incorrect email address (Selot Co@yahoo.co.in instead of Manish.jain8687@gmail.com), resulting in the assessee being unaware of the proceedings and the ex-parte order. The assessee claimed there was no lethargy or mala fide intention and sought condonation in the interest of justice, citing the Supreme Court's decision in Collector, Land Acquisition Vs Mst. Katiji and others. - Revenue's contention: The Revenue's Senior Departmental Representative agreed to the condonation of delay. 2. Whether the CIT(A) erred in sustaining the addition of Rs. 3,58,70,000/- towards unsecured loans under Section 68 read with Section 115BBE of the Income-tax Act, 1961. - Assessee's contention: The assessee argued that all loan creditors provided confirmations and all loans were transacted through banking channels, making the addition unsustainable. The assessee also requested a remand of the matter to the CIT(A) for fresh adjudication on merits. - Revenue's contention: The Revenue's Senior Departmental Representative agreed to the remand of the matter to the CIT(A).

Which sections of the Income-tax Act were involved?

Section 143(3),Section 68,Section 115BBE,Section 253(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI

For Appellant: Ms. Nisha Lahoti and Shri Vijay Bansal, ARs
For Respondent: Shri Ashish Porwal, Sr. DR
Hearing: 24.04.2025Pronounced: 28.04.2025

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

1.

Feeling aggrieved by order of first-appeal dated 29.12.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 20.12.2019 passed by learned ITO-1(1), Indore [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:

Page 1 of 6 “1, On the facts and circumstances of the case and applicable law. Ld. CIT(A) erred in sustaining the assessment order passed u/s 143(3) which is contrary to the material on records and provisions of the Act, unjust and bad in law.

2. On the facts and circumstances of the case and applicable law Ld. CIT(A) erred in sustaining the addition made u/s 68 r.w.s. 115BBE o Rs.3,58,70,000/- towards the unsecured loan.

3.

On the facts and circumstances of the case and applicable law the Ld. CI(A) erred in not giving reasonable opportunity of being heard.”

2.

The Ld. DR for revenue has filed a written-application seeking adjournment in this case but during hearing he expressed to withdraw the adjournment request and proceed for hearing. Accordingly, the hearing is proceeded today.

3. The registry has informed that the present appeal has been filed on 04.09.2024 against impugned order dated 29.12.2023 of first-appeal passed by Ld. CIT(A), therefore the present appeal is delayed by 190 days and time- barred. Ld. AR for assessee submitted that the assessee-firm has filed an application for condonation of delay supported by an affidavit of its partner Shri Ratnesh Goyal. Referring to same, Ld. AR submitted that while conducting the proceedings of first-appeal, Ld. CIT(A) served notices dated 09.03.2020, 30.12.2020, 12.12.2022, 10.10.2023 and 24.11.2023 fixing hearings on 13.03.2020, 14.01.2021, 22.12.2022, 25.10.2023 and 11.12.2023 respectively to email id: Selot_Co@yahoo.co.in whereas the assessee had given email id: Manish.jain8687@gmail.com in Form No. 35 for giving notices. Copies of the notices downloaded from income-tax portal are Page 2 of 6 placed before bench. Ld. AR submitted that the assessee took note of first two notices dated 09.03.2020 and 30.12.2020 from portal of income-tax and filed adjournment application to CIT(A) but the subsequent notices dated 12.12.2022, 10.10.2023 and 24.11.2023 uploaded on income-tax portal and sent to wrong email id, did not reach to the knowledge of assessee which has resulted in non-compliance of same and led the CIT(A) to pass ex-parte order for non-prosecution of first-appeal by assessee. Ld. AR went further to submit that the AO, in the assessment framed, made two additions, viz. (i) addition of Rs. 1,72,00,000/- on account of unexplained capital introduced by partners in assessee-firm, and (ii) addition of Rs. 3,58,70,000/- on account of unexplained unsecured loans taken by assessee-firm. While passing ex-parte order of first-appeal, the Ld. CIT(A) has already deleted the first addition of Rs. 1,72,00,000/- on account of partners’ capital but, however, upheld the second addition of Rs. 3,58,70,000/- on account of unsecured loans. Ld. AR carried us to Para 4 of assessment-order to show that the assessee has filed A/c Confirmations of all loan creditors to AO and that all loans have been taken through banking channel. Therefore, the addition made by AO treating the unsecured loans as unexplained is not sustainable; thus the case of assessee has a strong merit. Ld. AR next submitted that against the action of CIT(A) deleting the first addition of Rs.

1,72,00,000/- on account of partners’ capital, the revenue filed appeal to Page 3 of 6 ITAT which was registered as and that appeal came for hearing on 01.08.2024 and on that day of first hearing, the assessee became aware of the impugned order having been passed by CIT(A) against assessee qua the second addition of unsecured loans. Ld. AR submitted that prior to 01.08.2024, the assessee had no knowledge of impugned order having been passed by CIT(A). Immediately, the assessee paid fee on 03.09.2024 and filed present appeal on 04.09.2024. This has only resulted in delayed filing of appeal. Ld. AR very humbly submitted that there is no lethargy, negligence, mala fide intention or ulterior motive of assessee in making delay and the assessee does not stand to derive any benefit because of delay. She submitted that the sole reason of delay is as explained by assessee in the affidavit and therefore the delay should be condoned having regard to the reason explained and in the interest of justice.

4.

Ld. AR further requested to remand this matter to the file of CIT(A) for adjudication afresh on merits of the ground raised as re-produced above, more specifically the Ground No. 2 relating to addition on account of unsecured loans.

5.

Ld. DR for Revenue instantly agreed to both prayers of Ld. AR i.e. for condonation of delay as well as remanding this matter to CIT(A). Ld. DR,

Page 4 of 6 however, prays that the assessee must be directed to make representation before CIT(A) without seeking unnecessary adjournment.

6.

We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” for delay in filing present appeal as narrated above.

We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the provision of section 253(5), the decision of Hon’ble Supreme Court and the fair consent of Ld. DR for revenue, we take a judicious view, condone delay and admit appeal.

7.

Further, we remand this matter back to the file of CIT(A) for adjudication afresh as agreed by parties. The CIT(A) shall give necessary opportunity of hearing to assessee and pass an appropriate order. The assessee is also directed to ensure participation in the hearings as may be fixed by CIT(A) and do not seek unnecessary adjournments failing which the Page 5 of 6 CIT(A) shall be at liberty to pass appropriate order in accordance with law.

Ordered accordingly.

8.

Resultantly, this appeal is allowed for statistical purpose.

Order pronounced in open court on 28/04/2025

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