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Facts
The Assessing Officer (AO) added Rs. 58,49,800/- to the assessee's income under section 68 as unexplained cash credit from share capital and share premium, due to the assessee's failure to provide explanations. The CIT(A) dismissed the assessee's subsequent appeal in limine, condoning a portion of the delay caused by the COVID-19 pandemic but refusing to condone a remaining 67-day delay.
Held
The Tribunal ruled that the CIT(A) is statutorily bound to dispose of appeals on their merits and cannot summarily dismiss them solely on grounds of delay or non-prosecution. The ITAT condoned the remaining 67-day delay, deeming it unintentional, and remanded the case back to the CIT(A) for a decision on merits, directing the CIT(A) to examine the genuineness of the share capital and share premium transactions.
Key Issues
1. Can the CIT(A) dismiss an appeal in limine on grounds of delay without addressing the merits? 2. Should the remaining delay in filing an appeal before the CIT(A) be condoned? 3. The genuineness of share capital/share premium additions under Section 68.
Sections Cited
144, 68, 251(1)(a), 251(1)(b), 251(2), 250, 250(6), 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI ARUN KHODPIA
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM:
The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 18.03.2025 for the assessment year 2017-18 as per the grounds of appeal on record.
The brief facts in this case are that large share premium received during the year under consideration. Thereafter, it was noted by the A.O that the assessee has a share capital and share premium account during the year under scrutiny which has been raised by an amount of Rs.26,59,000/- and Rs.31,90,800/- from immediately preceding year. The assessee has not responded to the notice before the A.O and has not furnished any reply nor provided any corroborative documentary evidence. Therefore, the A.O completed the assessment u/s. 144 of the Income Tax Act, 1961 ( for short ‘the Act’) treating the amount of Rs.26,59,000/- and Rs.31,90,800/- under the head share capital/share premium as unexplained cash credit and added the same u/s. 68 of the Act in the hands of the assessee. That in absence of any explanation from the assessee, the A.O had therefore added the total amount of Rs.58,49,800/- to the income of the assessee as unexplained cash credit u/s. 68 of the Act.
3 JDS Capital Markets Private Limited Vs. ITO, Ward-1(2), Raipur (C.G.) ITA No. 309/RPR/2025
Further it is noted that when the matter reached before the first appellate authority, the Ld. CIT(Appeals)/NFAC as evident from Paras 5.22 to 6, decided regarding condonation of delay of appeal of 634 days in filing of the appeal before the said authority. In this regard, the assessee had explained that the delay was caused due to COVID 19 pandemic and that the assessee was not well conversant with the ITBA portal which caused the said delay. That as per the above mentioned paras, the Ld. CIT(Appeals)/NFAC had accepted that the period from 15.03.2020 to 01.10.2021 falls within the extension granted by the Hon’ble Supreme Court in response to the COVID 19 pandemic which was therefore excluded from the total delay and remaining delay of 67 days out of total delay of 634 days, since no explanation a/w. corroborative evidence was provided by the assessee, the said delay was not condoned and without going into the merits of matter, the Ld. CIT(Appeals)/NFAC had dismissed the appeal of the assessee in limine on the ground of limitation only.
That the Ld.CIT(Appeals)/NFAC had dismissed the appeal of the assessee in limine on ground of delay only without dealing with the merits of the case. In our considered view, once an appeal is preferred before the CIT(Appeals)/NFAC, it becomes mandatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of delay itself. In fact, a perusal of Sec.251(1)(a) and (b), as well
4 JDS Capital Markets Private Limited Vs. ITO, Ward-1(2), Raipur (C.G.) as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(Appeals) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per the mandate of law the CIT(Appeals)/NFAC is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under:
"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to 5 JDS Capital Markets Private Limited Vs. ITO, Ward-1(2), Raipur (C.G.) all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.”
Therefore, as per the mandate of law, it is absolutely clear that the appellate authority has to deal with the grounds of appeal on merits and could not summarily dismiss the appeal.
That regarding the reasons for delay which were furnished by the assessee, we are of the considered view that the remaining delay of 67 days which were not condoned by the Ld. CIT(Appeals)/NFAC, the fact remains that the assessee has submitted that the person responsible for taxation matters was not well conversant with the ITBA portal which resulted in not responding and filing the appeal within time. In our considered view the said reason do not attribute to any malafide or deliberate conduct on the part of the assessee for causing the said delay and the same is absolutely unintentional and circumstantial. We, therefore condone the delay of 67 days and remand the matter back to the file of the Ld. CIT(Appeals)/NFAC with a direction to adjudicate the matter as per law on merits while complying with the principles of natural justice.
Before parting, it is also mentioned that it is now onus on the part of the Ld. CIT(Appeals)/NFAC to determine and examine the genuineness of the share capital/share premium transaction encountered by the assessee.
6 JDS Capital Markets Private Limited Vs. ITO, Ward-1(2), Raipur (C.G.) That if fraud is detected that will be within purview of tax evasion and in such case, fraud vitiates everything including natural justice. The person approaching the court has to come with clean hands and if hands of the assessee itself are tainted the principles of natural justice will not come to his/her rescue.
The application of principle of fraud was even considered by the Hon'ble Supreme Court in the case of Badami (deceased) by her LRs v. Bhali in Civil Appeal No.1723/2008, dated 22/05/2012 wherein the Hon'ble Supreme Court has held as follows:-
"20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and others AIR 1994 SC 853 this court commenced the verdict with the following words:- "Fraud-avoids all judicial acts, ecclesiastical or temporal"
It had been held that the courts of law are meant for imparting justice between the parties and one who comes to the court, must come with clean hands. A person whose case is based on falsehood has no right to approach the Court.
In another decision of the Hon’ble Supreme Court in the case of Smt. Shrist Dhawan v. M/s. Shaw Brothers AIR 1992 SC 1555, it has been held that fraud and collusion vitiates even the most solemn proceedings in any civilized system of jurisprudence including natural justice. Further, the Hon’ble Supreme Court in the case of Mc Dowell &
7 JDS Capital Markets Private Limited Vs. ITO, Ward-1(2), Raipur (C.G.) Company Ltd. Vs. CTO [1985] 154 ITR 148 (SC) has held that "Tax planning may be legitimate provided it is within the framework of law, Colourable devices cannot be part of tax planning....".
Therefore, in our considered view, in the present matter it is the responsibility of the revenue authorities to investigate the matter in detailed manner as per law whether there is tax planning or tax evasion as per the transactions entered into by the assessee. If tax evasion is determined by the revenue in such circumstances additions are to be sustained in the hands of the assessee.
As per the aforesaid terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20th day of June, 2025.