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Facts
The assessee firm failed to file its income tax return for AY 2009-10, leading to a reassessment. The primary partner of the firm expired, and the surviving partner was not conversant with tax laws. Due to a series of unfortunate events and lack of proper representation, appeals were filed belatedly before the CIT(A) and later the Tribunal.
Held
The Tribunal condoned the 20-day delay in filing the appeal before it, finding it was not deliberate. The delay in filing the appeal before the CIT(A) was also considered to have sufficient cause due to the circumstances. The appeals were allowed for statistical purposes, with the matter restored to the AO for de novo assessment and penalty adjudication.
Key Issues
Whether the delay in filing the appeals before the CIT(A) and the Tribunal was sufficient to warrant condonation, and consequently, whether the reassessment and penalty orders should be set aside and restored to the AO for fresh adjudication.
Sections Cited
250, 271(1)(c), 148, 69, 69A, 144, 147, 253(3), 249(3)
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Before: MS SUCHITRA RAGHUNATH KAMBLE & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: These two appeals by the assessee emanate from the separate orders passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) both dated 06.05.2024 by National Faceless Appeal Centre (NFAC), Delhi/ Commissioner of Income-tax (Appeals) [in short ‘Ld. CIT(A)’] for the Assessment Year (AY) 2009-10. One appeal is against quantum assessment and other is against penalty levied under section 271(1)(c) of the Act on 20.04.2017. Since facts are same, with consent of the parties, the appeals were heard together and a common order is passed for the sake of convenience and “1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in not admitting the appeal filed by assessee on the ground that appeal was filed belatedly although the genuine reasons were given for condonation of delay.” “2. On the facts and circumstances of the case as well as law on the subject, the NFAC has erred in confirming the action of A.O. in reopening assessment by issuing notice u/s 148 of the I.T Act. 1961.” “3. On the facts and circumstances of the case as well as law on the subject, the NFAC has erred in confirming the action of A.O in making addition of cash deposits and cash credits of Rs.42,50,000/- as unexplained investment.” “4. On the facts and circumstances of the case as well as law on the subject, NFAC has erred in confirming the action of A.O in making addition of Rs.39,01,500/- as unexplained money.
5. It is therefore prayed that above addition made by Assessing Officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted.
Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
These two appeals filed by the assessee are barred by limitation by 20 days in terms of provisions of section 253(3) of the Act. The assessee has filed an affidavit giving reasons for delay in filing the appeal before the Tribunal. In the affidavit, the assessee stated that the physical copy of the orders passed by NFAC, Delhi was not received by the appellant. When the ITBA portal was opened by the Counsel of the appellant, it was known that the CIT(A) has already passed the order. Immediate steps were taken and appeal was filed before Tribunal after a small delay of 20 days. The delay was neither wilful nor deliberate, but due to the circumstances beyond its control. The Ld. AR -790/SRT/2024/AY.09-10 I K Corporation requested that in the interest of justice, the delay may be condoned and appeal may be decided on merit.
On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that Bench may decide the matter as it thinks fit.
We have heard both the parties on this preliminary issue of delay in filing appeal. In the affidavit, it is submitted that there was a small delay of 20 days due to non-receipt of the order by the appellant. The appellant filed both appeals immediately after its CA informed about the order passed by CIT(A). The Ld. Sr-DR has also not raised any objection if the delay is condoned. Considering all these facts, we find that delay was not deliberate and intentional. We, therefore, condone the small delay of 20 days and admit both the appeals.
Facts of the case in brief are that assessee-firm had not filed its return of income for AY 2009-10. The case was reopened within the meaning of section 147 of the Act and notice u/s 148 was issued on 23.03.2016. The assessee did not file return in response to the notice issued u/s 148 of the Act. It also did not respond to the notices u/s 142(1) and the show cause notice issued by the AO. In absence of any details, the AO held that the investment of Rs.42,50,000/- in purchase of immovable property was unexplained and he added the same u/s 69 of the Act. He also added credit entries of -790/SRT/2024/AY.09-10 I K Corporation Rs.39,01,500/- u/s 69A of the Act. Total income was determined at Rs.81,51,500/-. Aggrieved by the order of AO, assessee filed appeal before CIT(A).
6. There was delay of 437 days in filing appeal before the CIT(A). The appellant has submitted application for condonation of delay, where it was submitted that the affairs of the assessee-firm were handled by Shri Kuntesh Desai, who expired on 11.02.2015 under mysterious circumstances. The other partner, Smt. Ina Desai was a common person and was not conversant with the income tax law. She consulted a Chartered Accountant who assured that she would carry out all necessary works in respect of the income tax matter. However, she did not pursue the matter before AO. When the bank account was attached and recovery notice was received, she again contracted another CA who advised her to file appeal with request to the CIT(A) to condone the delay. The CIT(A) has, however, not condoned the delay. He observed that the appellant received the order after a day from passing the order by AO. He has also noted that the husband of the surviving partner, Shri Kuntesh Desai expired on 11.02.2015 which was more than a year before the assessment order u/s 144 r.w.s. 147 was passed. He also observed that the business of the assessee was carried out by the assessee herself or with the support of another person and accordingly, the appeal could have been filed on time. The CIT(A) did not find merit in the condonation petition and dismissed the appeal.
-790/SRT/2024/AY.09-10 I K Corporation 7. Aggrieved, the appellant has filed present appeal before the Tribunal. The Ld. AR submitted that the CIT(A) was not justified and reasonable in not condoning the delay in filing appeal before him. It is an undisputed fact that the main partner of the assessee-firm, Shri Kuntesh Desai expired on 11.02.2015, before the proceedings for re-assessment commenced by issue of notice u/s 148 on 23.03.2016. Shri Kuntesh Desai was managing the affairs of the assessee-firm as well as the related income-tax matters. The surviving partner, Smt. Ina Desai contracted a CA and requested him to make necessary compliance before the Income-tax authorities. However, the CA had not complied with the notices of the authorities or filed appeal before CIT(A) for reasons best known to her (CA). The appellant came to know about the delay in filing appeal when the deposit in the bank account was withdrawn by the Department. Thereafter, she contracted a new CA who advised her to file appeal before CIT(A) with a request to condone the delay in filing appeal. The Ld. AR submitted that the delay in filing appeal before CIT(A) was neither deliberate nor intentional and it was due to circumstances beyond the control of the surviving partner, Ms. Ina Desai. Hence, he requested that the order of CIT(A) may be set aside in the interest of justice and one more opportunity should be given to the appellant to argue the case on merit.
On the other hand, Ld. Sr-DR for the Revenue submitted that the appellant was negligent before both lower authorities. The AO had to pass an -790/SRT/2024/AY.09-10 I K Corporation ex parte assessment order and the CIT(A) had to dismissed the appeal due to late filing appeal without sufficient cause.
We have heard both the parties and perused the materials on record. There is no dispute regarding the fact that there was delay in filing the appeal before the CIT(A). We also find that there was non-compliance before the AO during the re-assessment proceedings due to which an ex parte order u/s 144 r.w.s 147 of the Act was passed by the AO by making addition of Rs.81,51,500/-. The Ld. AR submitted that the main partner of the assessee- firm, Shri Kuntesh Desai, expired on 11.02.2015 under mysterious circumstances. Therefore, the re-assessment proceedings initiated vide notice u/s 148 dated 23.03.2016 could not be complied with Smt. Ina Desai, the surviving partner was a common person and was not conversant with the business of the assessee-firm or the income tax matters. She had contracted a CA during re-assessment proceedings and assigned all income tax matters to him. However, he had not attended the proceedings before AO, due to which ex parte was passed by the AO. Only when recovery proceedings were initiated and bank account was attached, she came to know about failure to file appeal before CIT(A). She contracted a new CA and filed the appeal before CIT(A) due to which the impugned delay has occurred. After considering the totality of facts and peculiar circumstances of the case, we are of the considered view that there was sufficient cause within the meaning of Section 249(3) of the Act for not presenting the appeal within the period allowed under sub-section(2)
-790/SRT/2024/AY.09-10 I K Corporation of Section 249 of the Act. Accordingly, the order of CIT(A) is set aside. Since the AO has also passed an ex parte order u/s 144 r.w.s. 147 of the Act, the matter is restored back to the file of AO for de novo order after granting adequate and fair opportunity of being heard to the assessee. The assessee is also directed to provide complete details of its investment and credit entries to the satisfaction of AO. Accordingly, appeal of assessee is allowed for statistical purposes.
In the result, assessee’s appeal is allowed for statistical purposes.
. Considering the facts that the additions in the quantum assessment is restored back to the file of AO, therefore, the penalty levied in ex-parte order u/s 271(1)(c) is also restored to for fresh adjudication after deciding the quantum issue in accordance with law. In the result, the ground of appeal raised in this appeal is allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 11/07/2025.