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Facts
The assessee filed an appeal with a delay of 333 days, citing business closure, relocation from Ahmedabad to Bangalore, and unawareness of the appellate order as she was not checking her business email or IT portal. An addition of Rs. 9,55,400 related to unexplained credit card payments had been made in the original assessment by the AO, and upheld by the CIT(A), without providing the assessee an opportunity of being heard.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause and holding that non-condonation would result in grave injustice, aligning with Supreme Court principles on liberal interpretation for condonation. Consequently, the addition of Rs. 9,55,400 made without hearing the assessee was set aside, and the issue was restored to the Assessing Officer for a fresh hearing with a proper opportunity given to the assessee.
Key Issues
1. Whether the delay in filing the appeal should be condoned based on the assessee's explanation of business closure and relocation. 2. Whether the addition of Rs. 9,55,400 for unexplained credit card payments, made without granting the assessee an opportunity of being heard, was justified.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 5 of the Limitation Act
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SMT. ANNAPURNA GUPTA
The present appeal has been filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), ADDL/JCIT(A), Thane (hereinafter referred to as “CIT(A)”) dated 22.07.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2017-18.
The registry has reported a delay of 324 days in the filing of the present appeal. The assessee has filed an application seeking condonation of delay on the grounds of sufficient cause stating that when the appellate proceedings were going on, the assessee had wound up her small business in Ahmedabad of dealing in women wears, primarily online and also with walk in customers, and had subsequently shifted to Bangalore from Ahmedabad. Due to closure of her business she was not checking her Income Tax Portal nor the email ID where the notices of hearing were sent by the Ld. CIT(A) and, therefore, she was unaware of the passing of the Ld.CIT(A) order. That it was only subsequently, when she became aware of the passing of the CIT(A) order, she filed appeal against the same albeit with the delay of 333 days. An affidavit stating the above facts on oath was also filed before us.
Besides, sufficient cause for the delay adduced by the assessee as above, we have noted that addition made in the hands of the assessee in the assessment order passed by the AO related to the source of payment of credit card bills amount in all of Rs.9,55,400/- remaining unexplained that too on account no explanation offered by the assessee with respect to the same having not responded to the show cause issued to it by the AO. Before the Ld. CIT(A) also the assessee did not participate. The income returned by the assessee for the impugned year, the records reveal, amounted to Rs.3,18,750/- and the addition made by the AO was almost three times the returned income amounting to Rs.9.55 Lakhs. It is obvious that the addition has been made Satishkumar Kirpalani vs. ITO] A.Y. 2017-18 - 3 – without the assessee being heard on the issue. Even though the fault may lie at the assessee’s door, however, it cannot be denied that if the appeal is not entertained merely on the technical consideration of delay in the filing of the appeal before us, grave injustice would result to the assessee, since, it would be liable to pay taxes on income without being heard at all on the addition made to its income.
Ld. DR before us was unable to point out any infirmity in the sufficient cause adduced by the assessee before us. He was unable to point out any falsity in the explanation furnished by the assessee on oath that she was unaware of the passing the appellate order since her business had closed and she had shifted from Ahmedabad to Bangalore and she was not checking her email ID for any notice issued to her on her business email ID.
In view of the above, we find that the assessee has adduced sufficient cause for the delay and if the delay is not condoned, the addition to the income of the assesse would remain sustained without the assessee being heard.
The Hon'ble Apex Court in the case of Collector Land Acquisition, Anantnag & Another Vs. M/s Katiji and Others 1988 SC 897(7), while dealing with the aspect of condonation of delays has held that a liberal approach be adopted for condonation of delay based on the principle that the ultimate object / life-purpose of Courts is to advance justice and that merely for technical considerations of delay in the filing of appeals, the opportunity Satishkumar Kirpalani vs. ITO] A.Y. 2017-18 - 4 – for seeking justice should not be denied to an assessee particularly when the delay is not deliberate. The Hon'ble Apex Court has emphasized the importance of advancement of substantial justice stating that it would override technical considerations noting that the judiciary is respected not on account of its powers to legalize injustice on technical grounds, but because it is capable of removing injustice and is expected to do so. In the case of N. Balakrishnan Vs. M. Krishnamurthy (supra) AIR 1998 Supreme Court 3222, dated 03-09-1998 the Hon’ble apex Court held that prescribing limitation does not mean or is not meant to destroy the rights of the parties. The purpose of limitation, it was held was only to see that parties did not resort to dilatory tactics but sought their remedy promptly. The Hon’ble apex Court held that, there is no presumption that delays in approaching the Court is always deliberate. It has been reemphasized that the words “sufficient cause” under Section 5 of the Limitation Act should receive liberal construction so as to advance substantial justice. It was noted that there can be same lapse on the part of the litigant concerned causing the delay, but that alone is not enough to turn down his plea and shut the doors against him. That as long as the explanation offered for delay does not smack of mala fides or is not put forth as a dilatory strategy, the Court must show utmost consideration to the suitor.
Considering the principles laid down by the apex court for condonation of delays as above and finding the assesses case to fit squarely in the same having adduced sufficient cause for the delay and also having demonstrated that the non-condonation of Satishkumar Kirpalani vs. ITO] A.Y. 2017-18 - 5 – delay would cause grave injustice to the assessee, we condone the delay of 333 days in filing of the present appeal before us.
Having held so, we find that the addition made in the case of the assessee of the source of payment made for clearing credit card bills amounting to Rs.9,55,400/- remaining unexplained, has been made without the assessee being heard, the issue is therefore restored back to the file of the AO for hearing afresh after giving due opportunity of hearing to the assessee.
In the result, the appeal of the asessee is, allowed for statistical purposes.
This Order pronounced on 07/01/2026 Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 07/01/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,