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Facts
The assessee filed an appeal against the order of the NFAC/CIT(A) which confirmed an addition of ₹25,00,000/- under section 68. The appeal was filed belatedly by 928 days due to various reasons including the order being received electronically late and issues with the previous tax consultant. The Revenue argued against condonation of delay.
Held
The Tribunal condoned the delay, citing the principles of substantial justice over technical considerations. The Tribunal noted that the CIT(A) passed an ex-parte and non-speaking order, violating the principles of natural justice. Therefore, the matter was restored to the Assessing Officer for de novo adjudication.
Key Issues
Whether the addition under section 68 was justified and whether the CIT(A) order violated principles of natural justice. Also, whether the delay in filing the appeal should be condoned.
Sections Cited
143(3), 250, 68, 144
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Income Tax Appellate Tribunal, “SMC”
Before: DR. ARJUN LAL SAINI
Appellant by : Ms. Alpa V. Makadiya, Ld. AR Respondent by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR Date of Hearing : 02/09/2025 Date of Pronouncement : 23/09/2025 आदेश / O R D E R Captioned appeal filed by the assessee, pertaining to Assessment Year 2016-17, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals), dated 14/09/2022, which in turn arises out of an order passed by the Assessing Officer dated 27/12/2018, u/s 143(3) of the Income Tax Act, 1961.
Grounds of appeal
raised by the assessee are as follows:
1. That the learned Commissioner of Income Tax (Appeals), NFAC, has erred in law and on facts in confirming the addition of ₹25,00,000/- under section 68 of the Income Tax Act, 1961, despite the appellant having discharged the initial burden by furnishing PAN, bank statements, confirmations, and ITRs of the creditors.
[CIT v. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); CIT v. Kamdhenu Vyapar Co. Ltd. (2014) 52 taxmann.com 283 (Del)] 2. That the learned CIT(A) failed to appreciate that the appellant had availed temporary business loans from friends and relatives through banking channels, duly confirmed and repaid, and the transactions were genuine and duly explained. [CIT v. Lovely Exports Pvt. Ltd. (2008) 216 CTR (SC) 195] 3. That the learned CIT(A) erred in ignoring the fact that there were no cash credits, but only loan entries through account payee cheques from identified persons with valid PANs and income tax returns. [CIT v. Crystal Networks Pvt. Ltd. (2010) 1 taxmann.com 56 (Cal)] 4. That the learned CIT(A) has erred in law in placing the burden of proving source of source on the appellant, which is not required under section 68 once the primary three conditions-identity, credit worthiness, and genuineness-are satisfied. [CIT v. P. Mohanakala (2007) 291 ITR 278 (SC); PCIT v. Veedhata Tower Pvt. Ltd. (2020) 117 taxmann.com 451 (Bom)] 5. That the assessment and appellate proceedings are vitiated due to lack of independent verification by the AO/CIT(A), and the addition is based on mere suspicion and conjectures. [CIT v. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC)] 6. That the order of the learned CIT(A) is non-speaking and mechanical, passed without properly considering the submissions and evidences furnished, and hence bad in law. [Mohinder Singh Gill v. Chief Election Commissioner AIR 1978 SC 851; Pr. CIT v. Vama Sundari Investment (Delhi HC)] 7. That the learned CIT(A) has erred in relying upon general observations without dealing with the specific documentary evidence submitted by the appellant in the course of assessment and appellate proceedings.
That the learned CIT(A) has passed a non-speaking and mechanical order without considering the detailed submissions and legal position put forth by the appellant.
That the impugned addition violates the principles of natural justice and fair play, as the appellant was not confronted with any adverse material or provided with an effective hearing.
10. That the appellant craves leave to add, amend, delete or alter any of the aforesaid grounds of appeal at the time of hearing.
3. When the matter was called for hearing, the learned Counsel for the assessee, at the outset submitted that the appeal has been filed by the assessee belatedly. The learned Counsel adverted my attention to the affidavit filed in this regard citing reasons for condonation of delay and urged for a benign view and sought condonation of delay of 928 days in filing the appeal before the Tribunal. The ld. Counsel submitted that the prescribed time limit for filing the appeal before the Hon'ble Income Tax Appellate Tribunal expired on 19.11.2022, however, the appeal could not be filed within the prescribed time due to the following bona-fide reasons: (i) The order passed by NFAC was received electronically and came to the notice of the appellant belatedly during compilation of tax records.
(ii) The appellant was under the bona fide belief that all required details and confirmations were already furnished and that the case was properly addressed at the NFAC level.
3.1 Learned Counsel also submitted that old tax consultant of the assessee, did not cooperate with the assessee, therefore, delay caused in filing the appeal is purely unintentional and due to the above-mentioned bona fide reasons, and not due to any negligence, mala fide or deliberate action on the part of the assessee, therefore, delay may be condoned.
On the other hand, learned DR for the revenue argued that in the absence of reasonable, satisfactory or even appropriate, explanation for seeking condonation of delay, the same is not to be condoned lightly. It is further submitted that the law of limitation may harshly affect a particular party but it has to be applied with all its rigor when the statute so prescribes and the courts have no power to extend the period of limitation on equitable grounds. It was further Page | 3 submitted that while exercising discretion for condoning the delay, the court has to exercise discretion judiciously. As the assessee has failed to explain the sufficient cause, therefore assessee`s appeal may be dismissed on this score only.
I have heard both the parties on the issue and I am of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law & provisions are laid down to benefit both sides of litigation. Be that as it may, I have to do justice and the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others , reported in 167 ITR 471, (1988 SC 897) (7) observes ....
“4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.” 5.1 When we weigh these two aspects then the side of justice becomes heavier and casts a duty on us to deliver justice. A perusal of the affidavit gives me an impression of existence of mitigating circumstances to enable me to exercise my discretion in favour of the assessee. Accordingly, the delay is condoned.
On merit, at the outset itself, the ld. Counsel for the assessee assailed the impugned order by contending that the assessee could not represent his case before Ld. CIT(A) and the order being an ex-parte order, stood vitiated on account of violation of principle of natural justice. The Ld. Counsel for the assessee submitted that notices were not issued to the assessee during the assessment proceeding, therefore, the assessee has submitted only part details before the assessing officer. On appeal, before the Ld. CIT(A), the assessee could not appear because notices were not served on the assessee, therefore, the Ld. CIT(A) has passed the ex-parte order. Hence, the Ld. Counsel prayed to the Bench that now the assessee wants to submit some additional documents and evidences, therefore, matter may be restored back to the file of the Ld. AO for fresh adjudication.
On the other hand, the ld. DR for the Revenue submitted that assessee was negligent in his approach and did not appear before the Lower Authorities, therefore a cost should be imposed on the assessee, on account of his non- compliance attitude of the assessee, as the assessee neither appeared before assessing officer nor before CIT(A), hence it is a wasting of time and resource of the lower authorities.
8. I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A) and other materials brought on record. I note that in the assessee’s case under consideration, the assessment was carried out u/s 144 of the Act and the impugned order passed by the ld. CIT(A), is an ex parte order and non-speaking order, therefore, I do not wish to make any comments on the merits of the grounds raised by the assessee.
9. Considering the above facts, I note that assessee has not given sufficient opportunity of being heard and could not plead his case successfully before the ld. CIT(A). I note that the ld. CIT(A) did not discuss the assessee’s case on merits based on the material available before him hence it is a violation of principle of natural justice. I note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. However, on account of non-compliance attitude of the assessee, I imposed a cost of Rs. 10,000/- on the assessee which should be deposited in the Prime Minister National Relief Fund. Therefore, without delving much deeper into the merits of the case, in the interest of justice, I restore the matter back to the file of Ld. Assessing Officer for de novo adjudication and pass Page | 5 a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Therefore, I deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the Ld. Assessing Officer to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the assessee is treated as allowed.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 23/09/2025.