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Facts
The assessee filed an appeal against a penalty order under Section 271DA for Assessment Year 2018-19, with a delay of 474 days. The assessee attributed the delay to severe financial hardships, attachment of partners' properties by the department, and lack of knowledge of the ex-parte order passed by the CIT(A) due to email communication issues, leading to the dismissal of their original appeal.
Held
The tribunal condoned the 474-day delay, finding the assessee's reasons for non-filing and non-participation before the CIT(A) to be bonafide and beyond their control. The CIT(A)'s ex-parte order was set aside as it was passed without providing an effective opportunity of hearing to the assessee, and the matter was remanded back to the CIT(A) for fresh adjudication on merits.
Key Issues
Whether the delay in filing the appeal should be condoned; whether the ex-parte order passed by the CIT(A) was valid; and the merits of the penalty levied under Section 271DA.
Sections Cited
271DA, 250(6), 143(3), 144B, 269ST, 269SS, 269T
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Visakhapatnam “Division” Bench, Visakhapatnam
Before: Shri Vijay Pal Rao, Vice-Shri S. Balakrishnan
(िनधा�रण वष�/Assessment Year: 2018-19) Sri Rajani Gold Vs. Income Tax Officer Vijayawada Ward(1) PAN:ACNFS6675E Vijayawada (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri G.V.N. Hari, Advocate (Hybrid) राज� व �ारा/Revenue by:: Dr. Satyasai Rath, CIT(DR) सुनवाई की तारीख/Date of hearing: 01/05/2025 घोषणा की तारीख/Pronouncement: 13/05/2025 आदेश/ORDER
Per Vijay Pal Rao, Vice President
This appeal filed by the assessee is directed against the order dated 25/05/2023 of the learned CIT (A)-NFAC Delhi, arising from the penalty order passed u/s 271DA of the I.T. Act, 1961 for the A.Y.2018-19.
There is a delay of 474 days in filing the present appeal. The assessee has filed a petition for condonation of delay
ITA 471 of 2024 Sri Rajani Gold Vijayawada which is supported by the affidavit of Managing Partner of the assessee firm. The learned AR of the assessee has submitted that a huge addition of Rs.31.41 crores was made by the Assessing Officer while completing the assessment for the year under consideration and consequently, a demand of about Rs.40 crores was raised. Further, the penalty was levied u/s 271DA of the Act to the tune of Rs.53.94 crores. The assessee firm did not have the capacity to meet such huge tax demand. Moreover, the properties of the Partners were attached by the Department for recovery of arrears and consequently, the firm was disabled in mobilizing further funds. As such the assessee firm slowly become defunct with a very meager business which has resulted reducing the strength of the employees and there was no regular Accountant for the assessee firm. The notices issued by the learned CIT (A) was sent to the email which could not be opened during the period from April, 2023 to November, 2024 resulting an ex-parte order passed by the learned CIT (A). Thus, the learned AR has submitted that the assessee was having no knowledge about the impugned order till the Managing Partner of the assessee firm received a call from the Income Tax Department regarding the payment of arrears of the tax and then the assessee found that the appeal filed by the assessee against the penalty order has been dismissed by the learned CIT (A) ex-parte. The learned AR has thus, submitted that till November, 2024, the assessee was not having the knowledge of the impugned order passed by the learned CIT (A) and thereafter, immediately the assessee took
ITA 471 of 2024 Sri Rajani Gold Vijayawada steps and filed the present appeal. Thus, the learned AR has submitted that the delay in filing the appeal was neither intentional nor deliberate but due to the reason beyond the control of the assessee. Hence, he has pleaded that the delay in filing the appeal may be condoned and the appeal of the assessee be admitted for adjudication on merits. The learned AR has relied upon the judgement of the Hon'ble Supreme Court in the case of Collector of Land Acquisition v. Mst. Katiji & Others (1987) 167 ITR 471 (SC) as well as the decision of the Hon'ble Andhra Pradesh High Court in the case of State of Andhra Pradesh vs. Venkataramana Chuduva & Muramura Merchant & Anr. (159 ITR 59).
On the other hand, the learned DR has objected to the condonation of delay and submitted that there is an inordinate delay of 474 days and the assessee has not explained a sufficient cause for such inordinate delay.
We have considered the rival submission and carefully perused the contents of the condonation petition filed by the assessee. The assessee has given the reasons for delay as the assessee was not having the knowledge of the impugned order and explained that after the huge demand raised by the Assessing Officer, as a result of high pitch additions made in the assessment as well as penalty levied u/s 271DA of the I.T. Act, 1961, the assessee was not able to manage the funds to meet the demand
ITA 471 of 2024 Sri Rajani Gold Vijayawada and consequently, the business of the assessee was severely affected to reach the state of defunct/non-functional. The strength of the employees of the assessee was reduced drastically and there was no regular Accountant of the assessee firm. The Department has not disputed the fact that for the recovery of the demand arising from the assessment, properties of the Partners were also attached by the Department. In such a situation and financial crunch, the assessee could not follow up the appeal filed before the learned CIT (A) against the penalty order and consequently, the appeal of the assessee was dismissed by the learned CIT (A) while passing the impugned ex-parte order. It is pertinent to note that the learned CIT (A) has given the details of the notices issued in para 4 of the impugned order as under: “4. PROCEEDINGS: The appellant was provided multiple opportunities of being heard by way of issue of hearing notice dated 18.04.2023, 01.05.2023 and 12.05.2023. The appellant has not responded to any of the notices. Grounds of Appeal and Statement of Facts and the order of the Learned Assessing Officer have been carefully considered. Grounds of Appeal of the Appellant as reproduced above are adjudicated as under.”
Thus, all the 3 notices were issued by the learned CIT (A) within a span of less than one month and thereafter, the appeal of the assessee was dismissed for non-prosecution. Passing of the ex-parte order by the learned CIT (A) itself shows that the assessee could not participate in the proceedings before the learned CIT (A) and therefore, the reasons explained by the assessee in the petition for condonation of delay are fortified by Page 4 of 10
ITA 471 of 2024 Sri Rajani Gold Vijayawada the fact that the learned CIT (A) has passed the impugned order for non-prosecution and no details were given by the learned CIT (A) as how the notices were sent or served on the assessee. The appeal of the assessee was not decided by the learned CIT (A) on merits but the same was dismissed in limine for non-prosecution which is also contrary to the provisions of section 250(6) of the I.T. Act, 1961 resulting a gross injustice to the assessee when huge penalty levied by the Assessing Officer u/s 271DA of the Act has been confirmed without deciding the appeal on merits. It is settled proposition of law that the expression of sufficient cause must be construed liberally in favour of the litigant approached the Court belatedly so that the dispute could be decided as far as possible on merits and not on technicalities.
5.1 Having regard to the facts and circumstances of the case when the assessee was facing the financial hardships and almost reached to the state of closure of the business due to the higher demand as well as attachment of the properties by the Department for recovery of the tax arrears, it is clear that the delay in filing the appeal cannot be attributed to any ulterior purpose to be achieved by the assessee. The reasons explained by the assessee are also found to be beyond the control of the assessee as the assessee was not having the knowledge of the notices issued by the learned CIT (A) as well as the impugned order passed ex-parte. The assessee has explained that only in the month of November, 2024, when the Department has called
ITA 471 of 2024 Sri Rajani Gold Vijayawada the Managing Partner of the assessee firm for payment of the outstanding tax dues, the assessee came to know about the impugned order and then filed the present appeal. The Hon'ble Supreme Court in the case of Collector of Land Acquisition v. Mst. Katiji & Others (Supra) has laid down the principles that the Courts should be liberal in construing the sufficient cause and should lean in favour of such party. It was observed that whenever substantial justice and technical principles are opposed to each other, the cause of substantial justice has to be preferred and justice oriented approach has to be adopted by the Courts while deciding the matter of condonation of delay. Therefore, when the reasons explained by the assessee are bonafide and not a device to cover up ulterior purpose or attempt to save the litigation in underhand way, then a lenient and liberal approach has to be taken for considering the sufficient reasons for the delay in filing the appeal. Having considered the facts and circumstances of the case and particularly when the learned CIT (A) has passed the impugned order ex-parte in haste without giving an effective opportunity of hearing to the assessee, we are satisfied that the assessee was having a sufficient and Bonafide cause for the delay in filing the present appeal. Hence, the delay of 474 days in filing the present appeal is condoned.
The assessee has raised the following grounds of appeal:
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At the time of hearing, the learned AR of the assessee has submitted that the learned CIT (A) has not decided the appeal on merits but the same is dismissed for non-prosecution. The reasons for non-appearance before the learned CIT (A) are the same as explained in the petition for condonation of delay. Thus, the learned AR has prayed that the matter may be remanded to the record of the learned CIT (A) for deciding the same on merits after giving an appropriate opportunity of hearing to the assessee.
On the other hand, the learned DR has no serious objection so far as the matter be remanded to the record of the learned CIT (A) for fresh adjudication.
Having considered the rival submission and careful perusal of the impugned order, at the outset, we note that the learned CIT (A) has not decided the appeal on merits but the same was dismissed for non-prosecution. As we have already noted the fact that the learned CIT (A) has issued 3 notices within a short span of less than one month and then passed the impugned ex- parte order. Thus, prima facie it appears that the assessee was not given an effective opportunity of hearing. Further, when the assessee was facing the financial crisis and other hardships on account of attachment of the properties of the Partners by the Department for recovery of the outstanding dues, then the reasons explained by the assessee for non-participation are found to be reasonable and Bonafide. Accordingly, the impugned order
ITA 471 of 2024 Sri Rajani Gold Vijayawada of the learned CIT (A) is set aside and the matter is remanded to the record of the learned CIT (A) for fresh adjudication of the appeal on merits after giving appropriate opportunity of hearing to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.