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Facts
The assessee, engaged in retail trade, faced reassessment proceedings under section 147 for AY 2016-17 due to unexplained bank credits and lack of a tax audit report, leading to an income addition. The CIT(A) dismissed the assessee's first appeal, filed with a 17-day delay, on grounds of non-maintainability or untenable reasons for delay, despite stating it was disposed of on merits and purportedly condoning the delay. The assessee also faced penalty proceedings under sections 271(1)(b) and 271F.
Held
The Tribunal found that the CIT(A) failed to adjudicate the appeal on merits and dismissed it with contradictory reasons regarding the delay. Noting the minor, explained delay and the department's no-objection, the Tribunal remanded the quantum appeal and two associated penalty appeals back to the CIT(A) for fresh consideration and adjudication on merits, granting the assessee a reasonable opportunity to be heard.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution or on limitation grounds despite previously condoning delay and failing to adjudicate on merits, and whether the quantum and penalty appeals should be remanded for fresh consideration.
Sections Cited
250, 147, 144B, 271(1)(b), 271F, 246A, 44AB, Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
The above three appeals has been preferred by the assessee against the orders of the ld. CIT(A) NFAC, passed u/s 250 of the Act, 1961, all dated 26/08/2024, which has emanated from the order of the AO (AU), passed u/s 147 (r.w.s. 144B) dated 04/03/2024, passed u/s 271(1)(b) dated 27/06/2024 and passed u/s 271F dated 27/06/2024, respectively.
ITA 579/Asr/ 2024:
The grounds of appeal taken by the assessee in form 36 are as follows:
“1. The action of the learned Commissioner of Income Tax (Appeals) - NFAC in passing the order under section 250 of the Income Tax Act, 1961 against the assessee, is unjust, arbitrary, without application of mind and violates the principles of natural justice and deserves to be quashed.
2. That on the facts and circumstances of the case, the order passed by the learned CIT (A) under Section 250 and by the Ld. AO under section 147 of the Act is bad in the eyes of law, is against the judicial pronouncements already set as a precedent, having been passed without giving the assessee a proper opportunity of being heard and is in violation of principle of natural justice.
3. That In view of the section 250(4) and 250(5) of the Act, the Ld CIT(A) has acted in contravention of the law while dismissing the case for non-prosecution, without discussing/adjudicating the merits of the case.
4. BECAUSE, even after observing in the appellate order that the appeal has been taken up for decision on merits but the Ld. CIT(A) has not at all considered the grounds (Ground No.: 02 to (07).
5. That the Id. CIT(A) had first condoned the delay in filing the appeal but strangely while deciding the appeal on merits (as claimed), had dismissed the appeal on the reason of limitation. In view of the same, the order of the Id. CIT(A) is not correct since he had already condoned the delay and therefore, he has no authority to dismiss the appeal on the ground of limitation while passing the final order.
That the Ld. CIT(A) has acted in a contradictory manner while dismissing the appeal on the reason that "the reason for delay is not found to be tenable" while passing the order u/s 250 but has not pointed out the same issue during the appeal proceedings.
to 581/Asr/2024 Assessment Year: 2016-17 7. The ld. CIT(A) has erred in law and on facts in not appreciating that there was a reasonable cause in filing the appeal under section 246A belatedly.
8. Assessee craves right to add, alter or modify any grounds of appeal before or at the time of hearing of the appeal.”
The brief facts emerging from records are that the assessee is engaged in the business of retail trade of readymade garments at Anantanag, J & K, and total credits in bank during FY 2015-16 amounted to Rs. 1.25 crores (including cash deposit of Rs. 1.14 crores and balance Rs.10.99 lakhs being credit other than cash).
In absence of any return on record, proceedings were initiated u/s 147, and the assessee responded with a returned income of Rs.3.42 lakhs on a disclosed turnover of Rs.1.19 crores.
Though some submissions were filed in course of assessment proceedings but in absence of any tax audit report u/s 44AB of the Act, coupled with disclosed net profit rate of only 2.85%, the AO was not satisfied with the financials and explanations of the assessee and determined total income at Rs. 11.98 lakhs (with an addition of Rs.8.56 lakhs) which is under appeal.
The matter carried in appeal before the Ld. first appellate authority, being belated by seventeen days (being filed on 24th April after expiry of due date on 7th April), has been dismissed as non-maintainable, even though in paragraph -9 of the order, it is stated as disposed on merits. that notice of hearing was never received by the assessee from the office of the Ld. first appellate authority and as such no representation was possible because notice was not issued in the email as stated in form –35. He submitted that the delay of seventeen days in filing the first appeal was because of his counsel who was fully occupied with religious rituals during ramjan and eid.
He further submitted that all documentary evidences and particulars including trade license, bank statements and other financials were filed before the AO and are on assessment record, but the same has not been considered and the appeal has not been adjudicated on merits on the grounds contained in the memo of appeal. He prays for a fresh opportunity of hearing for explaining his case to the satisfaction of the Ld. first appellate authority with necessary documents.
The ld. DR relied on the order of the first appellate authority but has no objection if the matter is remanded.
We have heard the rival contentions and seen the materials on record and we find that the issues contained in the grounds of appeal has not been decided on merits of the case on the basis of materials in assessment records, and the minor delay of seventeen days has been explained by the assessee. first appellate authority for adjudication on merits on the grounds contained in the memorandum of appeal and we direct the assessee to file all evidences and explanations in support of his case and to fully cooperate in appellate proceedings.
The assessee will be allowed reasonable opportunity of being heard.
In the result, the appeal is allowed for statistical purpose.
ITA No : 580/Asr/ 2024 (against penalty u/s 271(1)(b)
AND ITA No : 581/Asr/ 2024 (against penalty u/s 271F)
Our observation in ITA No: 579/ ASR/ 2024applies mutatis mutandis to these two appeals. The minor delay of only seven days in filing of both the appeals before first appellate authority is condoned. Since we have remanded the appeal in ITA No:
579/ ASR/ 2024, back to the Ld first appellate authority for fresh consideration , on merits of the case, we also remand these two penalty appeals back to the Ld first appellate authority to be heard afresh in tandem with the quantum appeal. statistical purpose.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 18.08.2025.