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Facts
The assessee filed a return for AY 2017-18. The AO made an addition of Rs. 22,48,500/- for unexplained cash deposits during demonetisation under Section 143(3). The CIT(A) confirmed this action. The appeal to CIT(A) was filed with a delay of 740 days.
Held
The ITAT held that the CIT(A) erred by rejecting the application for condonation of delay without providing reasons and then proceeding to decide the appeal on merits, contrary to Supreme Court precedent. The ITAT found the CIT(A)'s order ambiguous and not justified. The case was remanded back to the CIT(A) for de novo adjudication after properly considering the condonation of delay request.
Key Issues
Whether the CIT(A) can reject an application for condonation of delay without providing reasons and simultaneously decide the appeal on merits, and if such an action is legally sustainable.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 766/Coch/2023 Assessment Year: 2017-18 Kodiyil Thameem ABC Sales Corporation, ABC Esquire Payannur, Kannur 670307 [PAN: AFPPT3775D] .......... Appellant Vs. The Income Tax Officer Ward - 4, Kannur .......... Respondent Appellant by: Shri Suresh Kumar, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 12.12.2024 Date of Pronouncement: 09.01.2025
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 10.10.2023 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the assessee filed return of income for AY 2017-18 on 27.02.2018 declaring a total income at Rs. 13,82,690/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-4, Kannur (hereafter “the AO”) vide order dated 10.12.12019 u/s. 143(3) of the
2 ITA No. 766/Coch/2023 Kodiyil Thameem Income Tax Act, 1961 (the Act) making an addition of Rs. 22,48,500/- on account of unexplained cash deposits during demonetisation period.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
I heard the rival contentions of both the parties and perused the material available on record. At the outset I find that the appellant filed appeal before the learned CIT(A) with a delay of 740 days. The appellant explained the delay before the CIT(A) stating that the person handling tax matter was ailing from kidney related problems and the assessment order was passed during the Covid-19 pandemic period, owing to the difficulties faced during the pandemic period the appellant could not communicate with the person handling tax matters. The learned CIT(A), without dealing with, as to how the said explanation does not constitute a reasonable cause had refused to condone the delay without assigning any reason by passing a cryptic order as under: -
“Though the petition for condonation of delay in filing of appeal has been rejected and the appeal has been dismissed the case is also discussed on merits as under” 5. However, he proceeded to dispose the issue in appeal on merits. Once the delay is not condoned the CIT(A) ought not have dealt with the merits of the issue in the appeal as held by the Hon'ble
3 ITA No. 766/Coch/2023 Kodiyil Thameem Supreme Court in Commissioner, Nagar Parishad, Bhilwara Vs. Labour Court, Bhilwara and Another reported in 2009 (3) SCC 525 wherein the court has taken a view that while deciding an application for condonation of delay the High Court ought not to have gone into the merits of the case. It has been further held:-
"5. While deciding an application for condonation of delay, it is well settled that the High Court ought not to have gone into the merits of the case and would have only seen whether sufficient cause had been shown by the appellant for condoning the delay in filing the appeal before it. We ourselves have also examined the application filed under Section 5 of the Limitation Act before the High Court and, in our opinion, the delay of 178 days has been properly explained by the appellant. That being the position, we set aside the impugned order of the High Court. Consequently, the appeal filed before the High Court is restored to its original file. The High Court is requested to decide the appeal on merit in accordance with law after giving hearing to the parties and after passing a reasoned order." 6. Thus, the order passed by the CIT(A) suffers from ambiguity and the CIT(A) was not justified in refusing to condone the delay without giving reasons as to how the explanation tendered by the appellant does not constitute sufficient cause for delay.
In the circumstances, I am of the considered opinion that the matter requires remand to the file of the CIT(A) for de novo adjudication in accordance with law after affording opportunity of hearing to the assessee.
4 ITA No. 766/Coch/2023 Kodiyil Thameem 8. In the result, the appeal filed by the assessee stand allowed for statistical purposes.
Order pronounced in the open court on 9th January, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 9th January, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin