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Facts
The assessee's appeal was directed against the order of the NFAC/CIT(A) which confirmed the additions made by the Assessing Officer. The primary issue was the delay of 108 days in filing the appeal before the CIT(A), which was dismissed as unadmitted. The assessee claimed they were unaware of the assessment order due to the faceless process.
Held
The Tribunal acknowledged that technical considerations should not stand against substantial justice. While the assessee was found to be slightly negligent, the delay in filing the appeal before the CIT(A) was condoned subject to the payment of costs. The matter was then restored to the Assessing Officer for a fresh adjudication.
Key Issues
The appeal challenges additions made by the AO and confirmed by the CIT(A), and the dismissal of the appeal by the CIT(A) due to a delay in filing. The core issue is whether the delay should be condoned and the case heard on merit.
Sections Cited
68, 115BBE, 143(3), 144B, 40A(2)(b), 37(1), 271AAC(1), 270A, 272A(1)(d)
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िनधा�रती की ओर से /Assessee by Shri P.M. Jagasheth, CA राज� की ओर से /Revenue by Shri Minal Kamble, Sr-DR सुनवाई की तारीख/Date of hearing 17.12.2024 उद्घोषणा की तारीख/Date of 21.01.2025 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi/Commissioner of Income tax (Appeals) [for short to as “NFAC/Ld.CIT(A)] dated 20.08.2024 for assessment year (AY) 2022-23, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) 22.03.2024. The assessee has raised following grounds of appeal:
1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition (A.Y.22-23) Shree Sai Alang House Rs.78,57,635/- on account of outstanding liabilities of unsecured loan received during the year treated as alleged unexplained cash credit u/s 68 r.w.s 115BBE of the Income Tax Act, 1961.
2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.15,73,185/- on account of the payment made to person specified u/s 40A(2)(b) of the amounting to Rs.15,73,185/- treated as alleged disallowed expenses u/s 40A(2)(b) of the Income Tax Act, 1961.
3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.21,89,637/- on account of alleged 30 percent disallowance out of total expenses u/s 37(1) of the Income Tax Act, 1961.
4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in not considering the application for condonation of delay in filing appeal.
5. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed non merit order and hence the case may please be set aside and restored back to the CIT(A) or AO.
6. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirm the action of the Assessing Officer in initiating penalty proceedings u/s 271AAC(1) of the Income Tax Act, 1961.
7. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in initiating penalty proceedings u/s 270A of the Income Tax Act, 1961.
8. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in initiating penalty proceedings u/s 272A(1)(d) of the Income Tax Act, 1961. 2 (A.Y.22-23) Shree Sai Alang House 9. On the facts and in the circumstances of the case as well as the law on the subject, the case appellant craves for admission of addition evidence in the interest of natural justice and equity. 10.It is therefore prayed that the above addition may please be deleted as learned member of the Tribunal may deem it proper. 11.Appellatn craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”
2. Rival submissions of both the parties have been heard and record perused. The Ld. Authorized Representative (Ld.AR) of the assessee submits that there was delay of 108 days in filing appeal before Ld.CIT(A). The Assessing Officer passed assessment order on 22.03.2024 thereafter appeal was filed before Ld.CIT(A) on 31.07.2024. The assessee filed application for condonation of delay. In the application for condonation of delay, assessee stated that he has no knowledge about passing the assessment order. The Ld. AR of the assessee submits that assessee’s previous consultant has not informed him about passing the assessment order in faceless manner. When he visited his consultant’s office on 31.07.2024, his consultant checked the ITBA portal and came to know about the passing assessment order. Therefore, delay in filing appeal was neither intentional nor deliberate. The Ld.CIT(A) despite recording such fact has not condoned the delay and resultantly appeal was dismissed as “unadmitted” The Ld. AR of the assessee submits that delay in filing appeal before Ld.CIT(A) was not intentional nor deliberate rather the assessee was not aware about the passing assessment order. The delay was not inordinate. The assessee has a good cate on merit and is likely to succeeds if one more opportunity is given to contest his case on merit before lower authorities. The Assessing Officer made various (A.Y.22-23) Shree Sai Alang House additions on account of unsecured loan of Rs. 78,57,635/-, addition of Rs.15,73,185/- under section 40A(2)(b) and addition on account of disallowance of total indirect @ 30% expenses of Rs.72,98,792/- under section 37 of the Act. The Ld. AR of the assessee submits that lower authorities passed order for the want of proper compliance. Therefore, in the interest of natural justice matter may be restored back either to the file of Assessing Officer or Ld.CIT(A) for afresh adjudication after condoning the delay in filing appeal before first appellate authority. The Ld. AR of the assessee undertakes on behalf of assessee to be more vigilant in future to furnish all details and to get it verify without seeking any further delay before lower authorities.
3. On the other hand, Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue supported the order of lower authorities. The Ld. Sr-DR submits that assessee has not furnished any details before Assessing Officer and further first appeal was not filed in time. The Ld. Sr-DR for the Revenue submits that assessee is most negligent and it is a fit case to confirm the addition. In alternative submission, Ld. Sr-DR for the Revenue submits that in case this Bench is of the view that assessee deserves any leniency, then matter may be restored back to the file of Ld.CIT(A) with exemplary record.
4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We find that assessment order was completed on 22.03.2024. The Assessing Officer while passing the assessment order in para-2 recorded that assessee despite receiving show cause notice, either short adjournment or provided part details. The (A.Y.22-23) Shree Sai Alang House Assessing Officer in para-2.2 of his order has recorded that as many as 5/6 opportunities were given to assessee. The assessee is engaged in trading of timber, wood, wood scrap, wood products like laminates and plywood has shown sales of Rs.6.57 crores. The Assessing Officer issued various show cause notices for seeking details. The Assessing Officer in para-3.6. recorded that despite providing opportunities to the assessee, failed to prove creditworthiness of lenders and genuineness of unsecured loan. In absence of any details, the Assessing Officer treated the outstanding liability of unsecured loan of Rs. 78,57,635/- as unexplained credit and taxed under section 155BBE of the Act. The Assessing Officer also made addition under section 40A(2)(b) on account of payment to related parties without substantiating prove of service rendered by related parties. The Assessing Office made addition under secretin 40A(2)(b) of the Act of Rs.15,73,185/-. The Assessing Officer also disallowed 30% indirect expenses. The Ld.CIT(A) confirmed the action of Assessing Officer in not admitting the appeal filed beyond 101 days of prescribed period of limitation.
Before us Ld.AR of the assesse vehemently argued that assessee was not aware about passing the assessment order as it was passed in faceless manner. However, on coming to know about passing the assessment order immediately filed appeal before Ld.CIT(A) which was not admitted due delay. In support of his contention, Ld. AR of the assessee submits that in support of contention that the assessee has not received assessment order, assessee filed his affidavit. The Ld. CIT(A) instead of taking lenient view dismissed the appeal of assessee in limine by not condoning the delay. We (A.Y.22-23) Shree Sai Alang House find that it is settled law under taxation proceedings that when technical considerations are kept against cause of substantial justice, the cause of substantial justice may be preferred. However, overall consideration in the present fact of the case, we find that assessee was little negligent in making compliance before Assessing Officer. Still keeping in view the principle of natural justice, the delay in filing appeal before Ld. CIT(A) is condoned subject to payment of Rs. 15,000/- (Rupees fifteen thousand). Out of which Rs. 10,000/- (Rupees ten thousand) shall be deposited in Surat District Court Legal Aid and remaining Rs.5,000/- (Rupees five thousand) shall be deposited with the account of Income Tax Appellate Tribunal Bar Association Surat Bench, Surat within 15 days from the date of receipt of this order. Original or receipt shall be kept in record of this case and copy thereof be filed before Assessing Officer. Considering the fact that we have condoned the delay of appeal before Ld.CIT(A) subject to payment of cost. Therefore, further keeping in view the fact that Assessing Officer made addition for want of proper explanation. Hence, we instead of sending matter before Ld.CIT(A) to avoid due long drawn process of remand report, we deem it proper to restore all the issue back to the file of jurisdictional Assessing Office with direction to pass assessment order afresh in accordance with law. Needless to direct that before passing order afresh, the Assessing Officer shall allow reasonable opportunity to the assessee to be more vigilant and to make timely compliance of the notice issued by Assessing Officer. With these directions, the grounds of appeal raised by the assessee is allowed for statistical purposes.
Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद�/Accountant Member �ाियक सद�/Judicial Member सूरत / Surat Dated: 21/01/2025 Dkp Outsourcing Sr.P.S* आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant ��थ�/ The Respondent आयकर आयु�/ CIT िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT गाड� फाईल/ Guard File // True Copy // By order/आदेश से,
सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत