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Facts
The assessee, dealing in timber and allied goods, filed its return for AY 2009-10. The AO made an addition of Rs. 79,76,099/-, treating unreconciled outstanding sundry creditor balances as suppressed income. The CIT(A) dismissed the assessee's appeal without discussing the merits, citing the assessee's failure to furnish supporting documents despite multiple opportunities.
Held
The Tribunal condoned a 92-day delay in filing the appeal, applying the principles for condonation of delay. It held that the CIT(A) erred in dismissing the appeal without considering its merits or providing a proper opportunity of being heard, thereby violating Section 250(6) of the Income Tax Act. The case was remitted back to the CIT(A) for fresh consideration on merits, with a direction for the assessee to produce all necessary documents.
Key Issues
1. Condonation of delay in filing the appeal. 2. Legality of the CIT(A)'s dismissal of the appeal without discussing merits or providing an opportunity of hearing. 3. Addition made by the AO regarding unreconciled sundry creditor balances.
Sections Cited
250, 143(1), 143(2), 142(1), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH:COCHIN
AssessmentYear:2009-10 K.L. Abdul Sathar South Bazar Kannur 670002 Vs. DCIT Kannur PAN NO : AAFFK4769B APPELLANT RESPONDENT Appellant by : Shri R. Krishnan, A.R. Respondent by : Smt. Leena Lal, Sr. D.R. Date of Hearing : 19.02.2025 Date of Pronouncement : 24.04.2025 O R D E R PERKESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 29.01.2024 vide DIN & Order No.ITBA/NFAC/S/250/2023-24/1060194335(1) for the AY 2009-10 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).
The assessee has raised the following grounds of appeal:
There is a delay of 92 days in filing the appeal before this Tribunal. The ld. Counsel for the assessee has drawn our attention on the petition for condonation of delay filed, which is reproduced below for ease of reference &convenience:-
The ld. DR on the one hand though opposed for the condonation of delay but could not controvert the submissions made therein.
We have heard the rival submissions and perused the materials available on record. In our opinion, it cannot be said that assessee is very callous in its approach in filing the appeal before us. At this juncture, it is appropriate to mention the judgement of Apex Court in the case of Collector Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.
K.L. Abdul Sathar, Kannur Page 4 of 7 (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
5.1 Being so, when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserve to be preferred for the other side and claimed to have vested right for injustice doing so because of non-deliberate delay. Therefore, in our opinion, this is a fit case to condone the delay of 92 days for the AY 2009-10 in filing the appeal before this Tribunal. Accordingly, the delay is condoned, and appeal is admitted for adjudication.
Now the brief facts of the case are that the assessee is dealing in purchase and sale of timber, tiles and other allied goods. For the assessment year 2009-10, the assessee firm filed its return of income on 24.3.2010 declaring total income of Rs.11,79,760/-. The return was processed u/s 143(1) on 29.10.2010. Subsequently the case was selected for scrutiny and notices u/s 143(2)& 142(1) of the Act were issued. The AO observed that The items dealt with by the assessee included Timber, Scantlings, Plywood, Tiles, Round logs, Rubber wood, Laminated flooring etc. Substantial portion of sales is Timber size Scantlings and Round logs. On a total sales of Rs.2,27,74,563/- the GP shown is Rs.24,40,983/-. This comes to 10.7%. In the immediate previous year, the GP rate was 9.66%. Further as observed by the AO, during the year the sales has increased considerably. In the course of assessment proceedings, K.L. Abdul Sathar, Kannur Page 5 of 7 the assessee was asked to file addresses of sundry creditors against whom large amounts are shown as outstanding. Account copies were called for from some of the creditors, which showed difference in account balances as follows:-
6. Further the AO asked to reconcile the difference with reference to books of accounts produced. However, the assessee could not reconcile the figures as per assessee’s books and as per the accounts of creditors. Thusthe AO held that the assessee has shown as non-existing liability as outstanding. The AO held that to the extent of liability the assessee has suppressed income as such liabilities if at all there was, would have been cleared by the assessee out of undisclosed income from business. It could also be accumulated discounts and rebates received not accounted for in the respective years accounts. It could also be remission of liabilities by the creditors. In any case no such liability is outstanding as on 31.3.2009. As the liability is not proved and as K.L. Abdul Sathar, Kannur Page 6 of 7 the liability is non-existent as on 31.3.2009 and as the assessee has not identified the years in which the liabilities ceased to exist, the difference in creditor’s accounts is treated as assessee’s own income from business and added by the AO.
Aggrieved with the above order of the AO, the assessee went in appeal before the ld. CIT(A)/NFAC who had dismissed the appeal of the assessee on the ground that assessee has not furnished any details/documents/written submissions whatsoever in support of the grounds of appeal in spite of several opportunities granted to the assessee. The ld. CIT(A) is of the view that assessee firm is not interested in representing its case and has nothing to say on the merit of the case and accordingly dismissed the appeal without any discussion on the merits of the case.
8. Aggrieved by the order of CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal.
9. Before us, ld. A.R. of the assessee vehemently submitted that the ld. CIT(A)/NFAC erred in dismissing the appeal without any discussion on any merit of the case. Further, ld. A.R. of the assessee submitted that even the assessment order has been passed without referring to any of the provisions of the Income Tax Act and therefore, the addition made by the AO has no legal validity.
Ld. D.R. on the other hand, supported the order of the authorities below.
We have heard the rival submissions and perused the materials available on record. On going through the order of ld. CIT(A)/NFAC we find that the ld. CIT(A)/NFAC has dismissed the appeal solely on the ground that assessee has not submitted any details/documents/written submissions to support the grounds of K.L. Abdul Sathar, Kannur Page 7 of 7 appeal raised. Further, we also take note of the fact that ld. CIT(A)/NFAC has also not adjudicated the case on merits. As rightly contended by the ld. A.R. of the assessee, as per the provisions contained in section 250(6) of the Act, the order of ld. CIT(A)/NFAC disposing of the appeal shall be in writing and shall state the points for determination, the decision thereof and the reason for the decision. This being so, we are of the opinion that in the interest of justice and fair play and as requested by the ld. A.R. of the assessee we remit the entire issues in dispute to the file of ld. CIT(A)/NFAC for fresh consideration in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce/submit all the necessary documents/reconciliation/ evidences in support of its claim. Further, we make it clear that in case of further default, the assessee firm shall not be entitled for any leniency. It is ordered accordingly.