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Facts
The assessee filed an appeal against an ex-parte order passed by the Ld. CIT(A) for AY 2017-18, which upheld an assessment made under Section 144. There was a delay of 385 days in filing the appeal to the ITAT, attributed by the assessee to their consultant's failure to inform them and the closure of the firm due to partner disputes. The CIT(A)'s order also addressed issues like unexplained cash deposits and disallowance for non-deduction of taxes.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause. It held that while the CIT(A) passed an ex-parte order due to the assessee's non-appearance, the case ought to have been decided on merits. Therefore, the Tribunal set aside the CIT(A)'s order and remitted the matter back for fresh consideration on merits, cautioning the assessee to cooperate in future proceedings.
Key Issues
Whether the delay in filing the appeal before the ITAT should be condoned; whether the CIT(A) was justified in passing an ex-parte order without deciding the case on merits; and whether the additions for unexplained cash deposits under Section 69A and disallowance for non-deduction of taxes were valid.
Sections Cited
144, 69A
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Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER V. DURGA RAO, JM:
The captioned appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (in short “Ld. CIT(A)”) vide DIN & Order No. ITBA/NFAC/S/250/2023- 24/1055984618 (1) dated 12.09.2023 for the A.Y.2017-18 arising out of order Sri Lakshmi Narasimha Stone Crushers passed under section 144 of Income Tax Act, 1961 (in short ‘Act’) dated 27.11.2019.
2. At the outset, we observe that there is a delay of 385 days in filing the appeal before the Tribunal. Assessee has filed an affidavit wherein he has stated that “Consultant” who have handled assessee’s accounts and taxes and filed the appeal before Ld. CIT(A) have not informed the appellant about the notice and never responded to any of the notices issued by the Ld. CIT(A). The order passed by Ld. CIT(A) on 12.09.2023 was not brought to the notice of the assessee. The firm was closed due to disputes among the partners. It is submitted that under these circumstances the delay in filing the appeal, neither intentional nor wanton. Therefore, assessee prayed that delay may be condoned.
On the other hand, Ld. Departmental Representative [hereinafter in short “Ld. DR”] submitted that delay may not be condoned.
We have heard both the sides and perused the affidavit filed by the assessee, we find that that due to closure of the firm and also no information from the tax consultant, assessee could not file the appeal within the due date. We are of the opinion that there is sufficient cause to condone the delay, accordingly, the delay is condoned.
Assessee has raised following grounds in its appeal: -
Page No. 2 Sri Lakshmi Narasimha Stone Crushers “1. The order of the Learned Assessing Officer (AO), as upheld by the Learned Commissioner of Income Tax (Appeals) hereinafter referred to as the "CIT(A)"], is erroneous in law and on the facts of the case.
The Learned AO and the Ld. CIT(A) erred in treating the cash deposits totaling Rs. 12,01,000/- during the demonetization period as unexplained income under Section 69A of the Income Tax Act, 1961, without appreciating the fact that these are mere receipts from business activities of the Appellant which is totally arbitrary.
3. The Learned AO and the CIT(A) have made an erroneous disallowance for non-deduction of taxes for the payment of Rs. 24,00,000/- to Sri.Nimmagada Jaya Prakash towards rental expense.
4. Without prejudice to the above grounds or any other grounds which may be raised, the Ld. CIT(A) has erred in law and on facts of the case by upholding an order which has a high pitched assessment in the case of the appellant by making an addition to the highest magnitude thereby causing harassment and serious grievance to the appellant.
5. The Appellant craves to leave, add, modify, alter, delete and / or rescind all or any of the grounds of appeal
on or before the final hearing if necessary so arises, with the approval of Hon'ble Income Tax Appellate Tribunal.
6. In the light of the above grounds, the Appellant requests and prays the Hon'ble Income tax Appellate Tribunal, Visakhapatnam bench to grant the necessary relief based on the facts.”
6. Ld.AR submitted before us that the Ld. CIT(A) had passed ex-parte order without providing proper opportunity to the assessee of being heard. Therefore, the Ld.AR pleaded that the assessee may be provided with one more opportunity to pursue his case before the Ld. CIT(A).
Ld. DR on the other hand objected to the submissions of the Ld. AR and argued that sufficient opportunities had been provided to the assessee, however, on the given dates of hearing, neither the assessee nor his Representative appeared
Page No. 3 Sri Lakshmi Narasimha Stone Crushers before the Ld. CIT (A). Under these circumstances, the Ld. CIT (A) had no other option but to pass ex-parte order based on the materials available on record. Hence, Ld. DR pleaded that the orders passed by the Ld. Revenue Authorities do not call for any interference and appeal of the assessee may be dismissed.
We have heard both the sides and perused the record and gone into the orders of the Revenue Authorities. On examining the facts of the case, we find that though Ld. CIT (A) had posted the case on several occasions, none appeared on behalf of the assessee before the Ld. CIT(A) on the given dates of hearing. Hence, the Ld. CIT(A) left with no other option except to pass ex-parte order based on the material available on record. In our opinion, the Ld. CIT(A) ought to have decided the case on merits instead of dismissing the appeal ex-parte. In this situation, we find strength in the arguments advanced by the ld. AR. Therefore, considering the prayer and the submissions of the Ld. AR and the issues involved in the appeal, in the interest of justice, we are of the opinion that the one more opportunity should be given to the assessee to substantiate its case before the Ld. CIT(A). In view of the above, the order passed by the Ld. CIT(A) is set-aside and remit back to the file of Ld. CIT(A) to consider afresh in accordance with law. At the same breath, we also hereby caution the assessee to promptly co-operate before the Ld.Revenue Authorities in their proceedings failing which the Ld. Revenue Authorities shall be at liberty to pass appropriate
Page No. 4 Sri Lakshmi Narasimha Stone Crushers orders in accordance with law and merits based on the materials on the record. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12th June, 2025.