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Facts
The assessee, an individual involved in crane hiring, faced a reopened assessment under Section 147 where the AO made additions for estimated commission income (Rs. 31,32,616/-) on sale of imported cranes and unexplained cash deposits (Rs. 19,26,382/-) under Section 69A. The CIT(A) dismissed the assessee's appeal ex-parte, confirming the additions, citing the assessee's failure to respond to notices despite having condoned the initial delay in filing the appeal. The assessee appealed to the ITAT, explaining the delay was due to limited education and reliance on a tax practitioner, leading to unawareness of online notices.
Held
The ITAT condoned the 49-day delay in filing the appeal, acknowledging the assessee's genuine reasons based on his educational background and dependence on a practitioner. It observed that the CIT(A) had confirmed the additions without adequately examining the merits, such as the justification for the 12% estimated commission or further inquiry into the cash deposits. Consequently, the ITAT set aside the entire appeal to the CIT(A) for re-adjudication, directing that the assessee be given a proper opportunity of hearing.
Key Issues
Whether the delay in filing the appeal to the ITAT should be condoned; and whether the CIT(A) erred in confirming additions related to estimated commission income and unexplained cash deposits without providing adequate opportunity of hearing and considering the merits of the assessee's explanations.
Sections Cited
Section 143(1), Section 143(3), Section 147, Section 148, Section 133(6), Section 271B, Section 131, Section 69A, Section 250
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI SUNIL KUMAR SINGH, JM
Mr. Rahul Gangaram Kanagandula for A.Y. 2010-11, against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 28th July, 2023, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) read with
The assessee is in appeal before us raising following grounds of appeal:-
“1. The order of the learned Assessing Officer, in the facts and circumstances of the case, is not justifiable both on facts and in law.
2. The Ld. CIT(A) erred in not giving sufficient opportunity to the assessee before deciding the appeal.
3. The Ld. CIT(A) ought to have ensured that the notices for hearing was properly served before concluding that the assessee had not responded to the notices.
4. The Ld. CIT(A) ought to have seen that the addition of Rs.31,32,616/- being 12% commission estimated by the AO is very excessive.
The Ld. CIT(A) ought to have seen that the addition of Rs.19,26,382/- being undisclosed money u/s 69A is not sustainable on facts or in law.
The appellant may be permitted to add, delete, amend any ground with approval of the Hon'ble tribunal.”
Brief facts of the case shows that assessee is an individual carrying on activity of Crane hiring and labour charges. He filed its return of
Assessee aggrieved with the same filed appeal before the learned CIT (A), wherein the assessee was asked for delay in filing of appeal. As per the contention request filed by the assessee such delay was condoned. However, on 5 occasions the assessee was issued notice of hearing but no submission was filed, therefore, the learned CIT (A) decided the issue on the merits of the case. The learned CIT (A) also held that the assessee is not able to discharge his duty of pursuing the appeal and therefore, as assessee could not submit further details, he dismissed the ground of appeal and confirmed both the additions. Aggrieved, by that assessee preferred the appeal before us.
It was found that appeal filed by the assessee is late by 49 days. For 05. this delay assessee submitted a request for condonation of delay. The reasons of delay in filing of the appeal was that assessee has studied only up to 10th Class and could not look at ITBA portal and was dependent on small time tax practitioner for its tax compliance. The notice was posted on ITBA portal and therefore, assessee was not aware about that. When the appellate order of the learned CIT (A), the Income Tax Department asked for payment of tax, he came to know about the order and accordingly, short delay has occurred. He
6. The learned Departmental Representative vehemently objected to the same and stated that the assessee has neither appeared before the learned Assessing Officer except under summons and nor appeared before the learned CIT (A) despite several notices and further, the appeal is also filed late, there is no sufficient cause in condoning the delay of 49 days.
We have carefully considered the rival contentions and find that the appeal before the learned CIT (A) was decided ex parte, dismissing the appeal of the assessee and issue of six notices are remained uncomplied with. The assessee gave the reason that he is educated only up to 10th class and does not know how to navigate ITBA portal and thus, not aware of the order of the learned Commissioner of Income-tax (Appeals). He came to know only about this when the tax demand arising out of this order, were pursued by the Revenue Authorities. We find that look to this background of the assessee, there is a sufficient cause in not filing of the appeal within time.
Honourable supreme court in Sheo Raj Singh (Deceased) through L.Rs. and Ors. vs. Union of India (UOI) and Ors. (09.10.2023 - SC) : MANU/SC/1098/2023 held that "Condonation of delay being a discretionary power available to courts, exercise of discretion must necessarily depend upon the sufficiency of the cause shown and the degree of acceptability of the explanation, the length of delay being immaterial. Sometimes, due to want of sufficient cause being shown or an acceptable explanation being proffered, delay of the shortest range may not be condoned whereas, in certain other cases, delay of
Therefore looking to background of the assessee, his education, level of business and causes shown before us, we find it more of an explanation then excuse and hold that there is a sufficient cause in not filing of the appeal within time. Accordingly, we condone the delay and admit the appeal on the merits of the case.
Aggrieved, by that assessee preferred the appeal before us, wherein ground nos. 1 to 3, it was submitted that no proper opportunity of hearing was granted.
The learned Authorized Representative pressed first three grounds of appeal about the opportunity to the assessee and submitted that the
Ld DR Relied up on the orders of lower authorities.
We have carefully considered the rival contentions and perused the orders of the lower authorities. In the present case due to non service of assessment order, the appeal before CIT (A) was also not filed in time which is recorded in appellate order as under :-
"In this regard, the appellant submitted following request for condonation of delay:- “As per the A.O., the notice was served on time but the same was not received by the assessee. On written application made on 16/03/2018, a copy of the order was handed over against which the appeal is preferred.” 2.2 I have considered the grounds for condonation of delay submitted by the appellant, and I am of the view that the appellant be not denied an opportunity to be heard on merits and the cause of natural justice is upheld, considering the totality of facts and circumstances of the case,
Thus it is a facts that notices during assessment proceedings, notices were served on the email id but assessee did not got access to it so appeal was filed delay and such delay was condoned. Before CIT (A) Vide notices dated 07/01/2021, 11/06/2021, 29/12/2022, 19/04/2023 and 07/07/2023 the appellant was requested to file its reply. However, no submissions were made during the entire appellate proceedings. The ld CIT (A) held that "Notices u/s 250 of the Act were issued to the appellant during the appellate proceedings to provide it opportunities to furnish relevant documentary evidence in support of its grounds of appeal. However, the appellant failed to submit any response. No documentary evidence or justification has been submitted by the appellant in order to corroborate its grounds of appeal so far" .This resulted in exparte Appellate Order.
15. However while deciding the appeal , ld CIT (A) has confirmed the action of the ld AO. It is a fact from statements of facts filed before him that assessee submits import bill and submits that his profit percentage in old cranes is merely 3 to 5 % however ld AO took it 12 % and ld CIT (A) confirmed it. There is no justification that why the profit in this business is 12 %, there is neither a comparison nor illustrative cases. For the addition of cash deposit, assessee submits that same is advance against sale for sale of crane, ld AO disbelieved it without asking assessee to show about receipt of advances. Further assessee is carrying small labour work and also withdrew cash over a period of time, so this explanation of assessee has not been considered by the dl CIT (A) on merits. Therefore we set aside the whole of the appeal to the file of Ld CIT (A), with a direction to
In the result, Appeal of assessee is allowed with above directions.
Order pronounced in the open court on 31.05.2024.