Loading judgment…
Facts
The assessee filed an appeal against the order of the National Faceless Appeal Centre (NFAC), which was passed ex-parte. The assessee explained the delay in filing the appeal due to personal and medical issues of the Managing Director, including his detention in judicial custody and his father's illness. Both the assessment order and the first appellate order were also passed ex-parte.
Held
The Tribunal condoned the delay in filing the appeal, noting that both the assessment order and the first appellate order were passed ex-parte due to the assessee's inability to make effective representation. The Tribunal decided to remit the matter back to the Assessing Officer for a de novo assessment.
Key Issues
Whether the delay in filing the appeal is justifiable, and whether the matter should be remitted for fresh assessment.
Sections Cited
144, 154, 41(1), 69C, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI GIRISH AGRAWAL
Present for: Assessee : Shri Prakash Jhujhunwala, CA Revenue : Shri Hemanshu Joshi, SR DR Date of Hearing : 17.12.2025 Date of Pronouncement : 10.03.2026 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), vide order no. ITBA/NFAC/S/250/2024-25/1070534180(1), dated 21.11.2024, passed against the rectification order by DCIT, Circle-5(2)(1), Mumbai, u/s. 154 r.w.s. 144 of the Income-tax Act (hereinafter referred to as the “Act”), dated 27.08.2021 for Assessment Year 2017-18.
Grounds taken by assessee are reproduced as under: “1.0 On facts and circumstances of the case and in Law, Ld. CTT(A) erred in not condoning the delay in filing the appeal of 440 days (excluding Covid-19, pandemic) and ought to have considered the bonafide reasons and compelling circumstances that had precluded the appellant to file the 1" appeal in time; Kabel Metal Power Cables Ltd. AY 2017-18 2.0 On facts and circumstances of the case and in law, Ld. CIT(A), ought to have permitted the appellant to cure the defect in filing the Form No.35 to dispute the additions made in the assessment order passed u/s. 144 dated 10/12/2019; 3.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in passing the order ex-parte, without considering the bonafide reasons that had precluded the appellant to participate in 1" appeal on disputing the additions made in the assessment order passed u/s 144 dated 10/12/2019, 4.0 On facts and circumstances of the case and in law, Ld. CIT(A) ought to have deleted the addition made u/s.69C of Employee benefit expense disclosed in audited P&L a/c of Rs.34,75,737/-; 5.0 On facts and circumstances of the case and in law, Ld. CIT(A) ought to have deleted the addition made u/s.69C of finance cost (interest), disclosed in audited P&L a/c of Rs.7,51,506/-; 6.0 On facts and circumstances of the case and in law, Ld. CIT(A) ought to have deleted the addition made u/s.69C of Other expenses, disclosed in audited P&L a/c of Rs.48,88,207/-; 7.0 On facts and circumstances of the case and in law, Ld. CIT(A) ought to have deleted the addition made u/s.41(1) of Rs.89,14,622/- on estimating the 8.0 Without prejudice, the provisions of Sec. 115BBE charging the tax 60% shall apply only on the transactions entered on or after 15/12/2016, being the date of granting the assent of President of India.”
At the outset, we note that there is a delay of 207 days in filing the present appeal before the Tribunal for which a petition for condonation of delay along with affidavit of the Managing Director of the assessee company is placed on record. In the affidavit filed by the Managing Director of the assessee company, it is stated that he was occupied in attending various litigation matters before the session court and PMLA court to defend ongoing investigations and charge sheet filed against him and his associate companies. Prior to these investigations, he was detained in judicial custody by the Enforcement Directorate and then got released on bail subsequently. Due to this, he had been into a disturbed state of mind and therefore could not lay his hands on filing the present appeal within the prescribed limitation. Also, it is stated that his father had been going through certain medical issues and was bedridden which required his personal attention and had to travel to his hometown in Rajasthan frequently to take care of his father for his
Kabel Metal Power Cables Ltd. AY 2017-18 medical illness. All these averments in the affidavit are supported by corroborative documentary evidences forming part of the affidavit.
3.1. We have perused the material and gone through the petition along with the affidavit. Taking into account the submission so made, we find it appropriate to condone the delay in filing the present appeal before the Tribunal and take up the matter for adjudication. It is also noted that both, the impugned assessment order and the first appellate order are ex parte since assessee could not make effective representation at both the stages, owing to the above stated inabilities at the end of the Managing Director.
3.2. There is a delay of 524 days in filing the first appeal before the ld. CIT(A) also. In Form no. 35 at serial no. 14, assessee has mentioned about the delay in filing the first appeal explaining the reason which states that it occurred on account of Director being infected in the COVID pandemic which prevented in filing the appeal before the ld. CIT(A) within the limitation. If the period relating to COVID pandemic is excluded in view of the decision of Hon'ble Supreme Court in its suo moto PIL, the period of delay comes down to 440 days at the first appellate stage. For this also, Managing Director of the assessee has averred in the same affidavit, explaining the reason for the said delay which are on similar footing as mentioned in respect of delay in filing the appeal before the Tribunal.
Appeal of the assessee relates to addition made u/s. 41(1) in respect of sundry creditors. Ld. Assessing Officer, for want of details has applied 5% of the total outstanding creditors appearing in the balance sheet to make an addition which is made on an ad-hoc basis rather than making addition in respect of identified creditors for their
Kabel Metal Power Cables Ltd. AY 2017-18 remission or cessation of liability. Another addition made by the ld. Assessing Officer is on account of unexplained expenditure u/s. 69C for which ld. Assessing Officer noted from the profit and loss account of the assessee about the expenses relating to employee benefits, finance cost and other expenses. For want of documentary evidences and explanation, ld. Assessing Officer resorted to make addition for these three expenses debited to the profit and loss account by treating them as unexplained expenditure. To substantiate the merits of the case, assessee has placed on record a paper book containing 74 pages. In the paper book, assessee has submitted documentary evidences in respect of both the additions made by the ld. Assessing Officer. For this, assessee has made a prayer for admission of these additional evidences under the provisions of Rule 29 of the Income-Tax (Appellate Tribunal) Rules, 1963 (ITAT Rules).
We have perused the material and gone through the orders of the authorities below. In the given set of facts and circumstances where both, the assessment order and the first appellate order are ex parte, passed without taking cognizance of any submissions made by the assessee as he was prevented to comply with the same on account of issues as described above, while referring to the condonation of delay, it is prayed by the ld. Counsel for the assessee that the matter may be remitted back to the file of ld. Assessing Officer for de novo meritorious assessment, wherein assessee would comply with all the requirements to substantiate its claim. Per contra, ld. Sr. DR objected to the same and submitted to remit the matter back to the file of ld. CIT(A) since explanation on delay are not justified.
We have heard both the parties and perused the material. We find it appropriate to remit the matter back to the file of ld. Assessing Officer
Kabel Metal Power Cables Ltd. AY 2017-18 for de novo meritorious adjudication of the issues raised in the assessment, as it would lead to multiplicity of proceedings if the matter is remitted back to the file of ld. CIT(A) who would be required to call for a remand report from the ld. Assessing Officer for the additional evidences filed by the assessee under Rule 29 of the ITAT Rules. It would be more appropriate to remit the matter back to the file of ld. Assessing Officer who would take into account all the submissions and material furnished by the assessee.
Needless to say that assessee be given reasonable opportunity of being heard and furnish all its explanations and documentary evidences to substantiate the claim. We also direct the assessee to be diligent in attending the hearings for expeditious disposal of the matter and need not resort to seeking adjournments unless warranted by compelling reasons. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 10 March, 2026 Sd/- Sd/- (Anikesh Banerjee) (Girish Agrawal) Judicial Member Accountant Member
Dated: 10 March, 2026 MP, Sr.P.S.
Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai