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Facts
The Assessee filed an appeal against the order of the Ld. Commissioner, which was delayed by 266 days. The Ld. Commissioner declined to entertain the delay but proceeded to examine the merits of the case. The Assessee contended that the Ld. Commissioner's action was prejudicial as they were not given an opportunity to be heard on the merits after the delay was not condoned.
Held
The Tribunal observed that once an appeal is dismissed on the grounds of delay or limitation, the merits of the case should not be examined. Citing various High Court judgments, it was held that proceeding to decide on merits after rejecting the delay is an error and without jurisdiction. The Tribunal found that the Ld. Commissioner, by examining the merits, effectively condoned the delay.
Key Issues
Whether the Ld. Commissioner, by examining the merits after declining to condone the delay, effectively condoned the delay, and if so, whether proper opportunity of hearing was afforded to the assessee on merits.
Sections Cited
250, 253(5)
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Income Tax Appellate Tribunal, NAGPUR BENCH :NAGPUR
Before: SHRI NARENDER KUMAR CHOUDHRY& SHRI K.M. ROY
I.T.A.No. 203/NAG/2025 (Assessment Year 2018-19) M/s. Sant Yogiraj Urban ITO, Ward-4(4), Nagpur. Credit Co–op Society, 22, vs. Noor Nagar, Swami Amma, Umred Road, Dighori, Nagpur. PAN : AAQAS 3121 F (Appellant) (Respondent) For Assessee : Shri D.P. Lohiya, Ld. CA For Revenue : Shri Anand Nagrale, Ld. Sr. DR Date of Hearing : 16.06.2025 Date of Pronouncement : 16.06.2025 ORDER PER NARENDER KUMAR CHOUDHRY, JM:
This appeal has been preferred by the Assessee against the order dated 20/01/2025 impugned herein passed by the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [in short, “ Ld. Commissioner”] u/sec. 250 of the Income Tax Act, 1961 (for short, “the Act”) for the Assessment Year (for short, “AY”) 2018-19.
In the instant case, though the Ld. Commissioner declined to entertain the delay of 266 days in filing of first appeal before him, however still he touched upon the merits of the case, therefore following question emerge:
2 ITA.No.203/NAG/2025 “Whether the Ld. Commissioner by making superseded exercise examining the merits of case, eventually condoned the delay or not?
We observe that identical issue has also been dealt with by the Hon'ble Gauhati High Court in the case of Williamson M/s. Galaxy Co- Op HSG Society Ltd. Financial Services Ltd. vs. CIT (2004) 140 taxman.com 246 (Gauhati), by observing and holding as under: "Once the Tribunal has arrived at the conclusion that the appeal is barred by limitation the Tribunal has no jurisdiction to entertain the appeal of the Revenue on the merits and issue any direction in regard thereto. The Tribunal having committed an error of law in remanding the matter, we allow the appeal filed by the Assessee and set aside the order of remand passed by the Tribunal."
The Hon'ble Madras High Court in the case of Centre for Individual & Corporate Action (CICA) vs. Assistant Commissioner of Income Tax, Business Circle XII, Chennai (2016) 66 taxmann.com 346 (Madras), has also dealt with identical issue and held as under: "10. Even at the very outset we find that the procedure adopted by the Tribunal is highly prejudicial to the interests of the appellant-assessee inasmuch as the Tribunal having decided not to proceed with the matter on the ground of condonation of delay, cannot unilaterally decide the appeals on the merits, more so when the appellant-assessee was not given proper opportunity to contest the matter in the main appeals on the merits. The order of the Tribunal is also not in consonance with section 253(5) of the Income-tax Act. Section 253(5) of the Income-tax Act mandates that an appeal should be admitted before ever an order is passed on the merits. Once the appeal itself is not entertained, the question of going into the merits of the matter does not arise. We, therefore, find that the order of the Tribunal deciding the appeals of the assessee on the merits, after dismissing the appeal itself on the question of delay, is an error apparent on the face of the record and that the order passed is without jurisdiction since when there is no appeal, there is no question of deciding the issue raised in the appeal on the merits. 11. The above view of ours is fortified by the decision of the Gauhati High Court in the case of Williamson Financial Services Ltd. v CIT [2003] 262 ITR 595/140 Taxman 246. 12. In view of the reasons above mentioned, we set aside the order of the Tribunal and remand the matters back to the Tribunal for reconsideration.
3 ITA.No.203/NAG/2025 Accordingly, the matters are allowed by way of remand to the Tribunal. Consequently, connected miscellaneous petitions are closed. It is needless to add that while dealing with the condonation of delay issue, the Tribunal shall keep in mind the proceedings which the assessee first went through even before this order, which goes to show that the assessee has been acting bona fide and diligently pursuing the matter before the appropriate forum."
We further observe that Hon'ble High Court of Madras in another case i.e. All Angels Educational Society vs. Chief Commissioner of Income Tax, Chennai-III (2016) 72 taxmann.com 251 (Madras) also dealt with the identical issue by holding that having rejected the application on the ground of limitation, the question of examining the merits of the matter would not arise, as it is a superseded exercise.
We further observe that recently the Coordinate Bench at Mumbai in Galaxy Co. Op. Hsg Society Ltd, Navi Mumbai Vs ITO Ward(1)(1), Thane, Thane { & 514/M/2025 decided on 29 April, 2025} has also dealt with the identical issue as involved in this case and held as under : “ Once the Court declined to condone the delay and/or dismissed the appeal of the Assessee in limine for want of limitation, then the Court is not supposed to touch upon the merits of the case and/or is not supposed to decide the case on merits”.
Thus, on the aforesaid analyzation, it has become clear that the Ld. Commissioner though did not condoned the delay but still touched upon the merits of the case and therefore eventually allowed the condonation of delay. Thus, the question posed is answered affirmative.
4 ITA.No.203/NAG/2025 8. Thus, coming to the merits of the case, we observe that the Ld. Commissioner after declining request for condonation of delay and before touching upon the merits of the case, eventually has not given any opportunity of being heard to the Assessee and therefore in the interest of substantial justice and for just and proper decision of the case, we are inclined to remand the case to the file of Ld. Commissioner for decision afresh on merits, suffice to say, by affording a reasonable opportunity of being heard to the Assessee.
Thus, the case is accordingly remanded to the file of Ld. Commissioner, in the terms above.
In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on16.06.2025.