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Facts
The assessee purchased debentures worth Rs. 50,00,000/- and Rs. 20,00,000/- for AY 2016-17 and 2019-20 respectively, but did not file returns. The Assessing Officer (AO) reopened the assessment, and due to non-response and non-participation of the assessee, completed the assessment ex-parte, making additions to income and initiating penalty proceedings. The assessee's appeals before the First Appellate Authority were dismissed on grounds of delay.
Held
The Tribunal held that the interest of justice would be better served if the assessee is given an opportunity to explain the cause of delay. The Tribunal expected the First Appellate Authority to adopt a liberal view in condoning the delay and decide the appeals on merit after providing a reasonable opportunity of being heard.
Key Issues
Whether the assessee should be given an opportunity to explain the delay in filing appeals before the First Appellate Authority, and whether the appeals should be decided on merit.
Sections Cited
147, 271F, 271(1)(c), 271AAC (1), 272A(1)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI MAKARAND VASANT MAHADEOKAR
Per Saktijit Dey, Vice President:
Captioned appeals by the same assessee arise out of separate orders passed by National Faceless Appeal Centre (NFAC), Delhi pertaining to Assessment Years (A.Y) 2016-17 and 2019-20. arises out of quantum proceeding relating to AY 2016-17. Whereas and and 8109/Mum/2025 respectively are appeals against imposition of penalty under section (u/s.) 271F and 271(1)(c) of the Income Tax Act, 1961 (in short the ‘Act’) for AY 2016-17.
8112/Mum/2025 respectively arise out of penalty proceedings u/s. 271AAC (1) and 272A(1)(d) of the Act for AY 2019-20. However, the basic common grievance of the assessee in all these appeals is against dismissal of appeals in limine on account of delay.
We have considered rival submissions and perused the materials on record.
Briefly the facts are, based on information received that the assessee had purchased debentures of Rs.50,00,000/- in Financial Year 2015-16, whereas she did not file return of income, the Assessing Officer (AO) reopened the assessment u/s. 147 of the Act. The AO has alleged that the assessee neither responded to number of statutory notices issued to her nor did participate in the assessment proceeding nor furnished the details to explain the source of investment in debentures. Thus, ultimately, AO proceeded to complete the assessment ex-parte to the best of his judgment. While doing so, he added back the amount of Rs. 50,00,000/- to the income of the assessee. Further, the AO initiated proceedings for imposition of penalty under various provisions of the Act. Similarly, for AY 2019-20 also assessment was completed ex-parte to the best of judgment of AO, making addition of Rs.20,00,000/- on account of purchase of debentures. Based on such addition penalty u/s. 271AAC and 272A(1)(d) of the Act were imposed.
Against the aforesaid orders of the Assessing Officer, the assessee preferred appeals before learned First Appellate Authority. However, as noted by learned First Appellate Authority, appeals were delayed by more than two months. While explaining the delay, assessee stated, the reasons of “inadvertent mistake”. However, not being satisfied with reasons shown, learned First Appellate Authority dismissed the appeals on ground of delay without deciding them on merit.
Before us, it is the say of the assessee that due to improper handling of the matter by erstwhile Authorized Representative (AR), the assessee could not be properly represented either before the AO or before learned First Appellate Authority. He submitted, even the concerned AR did not furnish a proper submission explaining the cause of delay. He submitted, due to ex-parte completion of assessment and dismissal of appeals in limine, the assessee was prevented from explaining the source of investment in debentures through supporting evidence. He submitted, given an opportunity, assessee would explain the cause of delay and also the source of investment.
Having gone through the factual matrix and submissions of the parties, we are of the view that interest of justice would be better served, in case the assessee gets an opportunity to properly explain the cause of delay in filing the appeals before learned First Appellate Authority. Accordingly, we are inclined to set aside the impugned orders of learned First Appellate Authority and restore the matters back to him. It will be open to the assessee to furnish proper explanation before the learned First Appellate Authority explaining the cause of delay in filing the appeals.
Considering the fact that delay is not inordinate and the additions made were on account of non-participation of the assessee in the assessment proceeding, we expect the learned First Appellate Authority to take a liberal view in the matter of condonation of delay and decide the appeals on merit after providing due and reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
In the result, appeals are allowed for statistical purposes.