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Facts
The assessment was reopened under Section 147 due to unexplained cash deposits of Rs. 89,85,000. The AO completed an ex-parte assessment under Section 144, raising a demand of Rs. 66,75,959. The CIT(A) dismissed the assessee's appeal in limine under Section 249(4)(b) for non-payment of advance tax, without considering the merits. The assessee filed an appeal to the ITAT with a 497-day delay, citing non-receipt of the CIT(A)'s order due to communication issues and health concerns as a senior citizen.
Held
The Tribunal condoned the 497-day delay, finding sufficient cause. It held that the CIT(A) erred in dismissing the appeal on a technical ground without adjudicating the merits or considering the assessee's hardship. The matter was remanded to the CIT(A) for fresh de-novo adjudication, with directions for the assessee to file an application for exemption from advance tax payment, subject to depositing Rs. 3,000 as costs.
Key Issues
Condonation of delay in filing appeal before ITAT; validity of CIT(A) dismissing appeal in limine for non-payment of advance tax under Section 249(4)(b) without considering merits or hardship.
Sections Cited
Section 147, Section 144, Section 249(4)(b)
AI-generated summary — verify with the full judgment below
Order PER LALIET KUMAR, J.M: This appeal filed by the assessee is directed against the order dated 23.11.2023 passed by the Ld. CIT(A)/ NFAC, Delhi for Assessment Year 2015-16.
At the outset, it is noticed that the appeal is barred by limitation by 497 days. The assessee has moved an application supported by affidavit seeking condonation of delay. It has been explained that though the assessee had filed appeal before the CIT(A), all the notices and the impugned order were communicated at the old email address of the earlier counsel and not at the updated email address furnished in the income-tax records. Consequently, the assessee remained unaware of the dismissal of the appeal and came to know about it only when recovery proceedings were initiated. Immediately thereafter he consulted his counsel and steps were taken to file the present appeal. It has further been submitted that the assessee is a senior citizen suffering from hypertension and diabetes and due to medical complications and stress caused by recovery proceedings, the appeal could not be filed earlier. The assessee pleaded that the delay was neither intentional nor due to negligence but occurred due to circumstances beyond his control.
The Ld. DR relied upon the orders of the lower authorities but could not controvert the factual position regarding the lack of effective service of the order.
Considering the totality of facts and the settled principle that substantial justice should prevail over technicalities, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within time. Accordingly, the delay of 497 days is condoned, and the appeal is admitted for adjudication.
Briefly stated, the facts of the case are that the assessee is an individual and the assessment was reopened under section 147 on the basis of information that cash deposits amounting to Rs.89,85,000/- were made in his bank account during the relevant financial year. The assessee had not filed a return of income and had also not responded to the statutory notices issued during the reassessment proceedings.
1. 5.1 Consequently, the Assessing Officer completed assessment ex-parte under section 147 read with section 144 determining income at Rs.75,54,200/- and raised demand of Rs.66,75,959/-.
In appeal, the Ld. CIT(A) did not examine the additions on merits and dismissed the appeal in limine by invoking section 249(4)(b) on the ground that since no return of income had been filed, the assessee was required to pay an advance tax equivalent amount before filing the appeal and in the absence thereof, the appeal was not maintainable.
Before us, the Ld. Counsel for the assessee submitted that the appeal was wrongly dismissed on a technical ground without granting effective opportunity. It was contended that there was no admitted tax liability and therefore provisions of section 249(4) were wrongly invoked.
7.1 It was further submitted that the assessee never received the appellate order and came to know of it only through recovery proceedings; therefore, the matter deserves restoration for proper adjudication after granting an opportunity.
The Ld. DR, on the other hand, supported the orders of the lower authorities and submitted that the assessee failed to comply with statutory notices and therefore the authorities were justified in passing an ex parte order and dismissal of the appeal.
We have heard the rival submissions and perused the material available on record. We find that the Ld. CIT(A) dismissed the appeal on a technical ground without adjudicating the issues on merits. Being a quasi- judicial authority, the Ld. CIT(A) is expected to decide the controversy substantively, particularly where substantial additions have been made in an ex-parte assessment. Under the scheme of section 249, the assessee is required to deposit the taxes as prescribed and, in case of hardship, is required to seek exemption by making an appropriate application. In the present case, we are of the considered view that the assessee must first make out a case for exemption from such deposit in accordance with law.
1. 9.1 Accordingly, the assessee is directed to file an appropriate application before the Ld. CIT(A) seeking exemption from payment of advance tax. Upon such application being filed, the Ld. CIT(A) shall examine the issue of non-deposit of advance tax in respect of the disputed demand as well as any other grounds raised by the assessee and decide the matter in accordance with law. It is expected that the Ld. CIT(A) shall consider the application judiciously so as to advance the cause of substantial justice.
1. 9.2 Further, the explanation of the assessee regarding non-communication of the order and consequent denial of opportunity has not been controverted. In the interest of natural justice, the matter requires fresh consideration. At the same time, the conduct of the assessee has contributed to prolongation of litigation. Therefore, balancing the equities, we set aside the impugned order and restore the matter to the file of the Ld. CIT(A) for fresh de-novo adjudication after affording adequate opportunity of being heard.
9.3 The restoration is subject to the assessee depositing a cost of Rs.3,000/- in the Poor Patient Relief Fund, PGIMER, Chandigarh within 30 days from receipt of this order and furnishing proof before the Ld. CIT(A). In case of default, the Ld. CIT(A) shall be at liberty to proceed in accordance with law.
In the result, the appeal is allowed for statistical purposes.