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Facts
The assessee failed to file original returns for AY 2013-14 to 2015-16, leading to reassessment under section 147 r.w.s 144. The appeals were filed with a significant delay before both the CIT(A) and the Tribunal. The assessee cited a serious health issue (chronic liver disease) as the reason for the delay.
Held
The Tribunal held that the assessee's medical condition constituted a good and sufficient reason for the delay in filing the appeals. Citing Supreme Court precedents, the Tribunal prioritized substantial justice over technical considerations.
Key Issues
Whether the delay in filing appeals before the CIT(A) and the Tribunal can be condoned due to the assessee's serious health condition, and if so, whether the assessment orders should be remitted to the AO for fresh consideration.
Sections Cited
147, 144, 144B, 142(1), 250
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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI PRAKASH CHAND YADAV
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
These three appeals by assessee are directed against common order of CIT(A) dated 16.3.2024 for the assessment years 2013-14 to 2015-16. Grounds in all these appeals are common in nature. Hence, we consider the ground in which reads as follows: 1. “The Order of the Learned Assessing Officer is contrary to law. facts and circumstances of the case 2. The Assessee was suffering from a serious health issue for Chronic Liver Disease and was undergoing medical treatments from April 2022 onwards. The Health condition worsened from May 2023 onwards and the Assessee got admitted to hospital during May 2023 to March 2024, Due to this reason, the Assessee was not in a position to meet anybody and submit the necessary documents and evidences to his authorised representatives for submission to CIT (A) during the pendency of appeal proceedings. A Copy of the Medical Records is submitted herewith in Annexure-A ITA Nos.1161 to 1163/Bang/2024 Bhaskar Reddy Nandyala Hanumantha Reddygari, Bangalore Page 2 of 11 3. The Assessee humbly prays to condone the delay in filing of appeal before CIT (A) and non-compliances for submission of necessary documents during CIT(A) proceedings due the reasons cited in PARA 2 above,
4. Assessment Order passed by Ld, Assessing Officer u/s. 147 r.w,s 144 read with section 144B of the Income-tax Act on 23/03/2022 suffers from serious factual errors and addition to income being made without recording proper reasons for such additions.
5. For these grounds and such other grounds that may be adduced before or during the hearing Of the appeal, it is prayed that the Hon'ble Tribunal may be pleased to set aside the Order of CIT(A) and remit the file to CIT(A) / AO and/or provide such -relief as this Hon'ble Tribunal may deem fit.”
Facts of the case are that the assessee, a Director of Anish Projects Pvt. Ltd. and Triangle Realty Ventures Pvt. Ltd., in addition to being a partner in Vedavith Developers and the proprietor of Ayaan Projects, failed to file the original return of income for the relevant AYs. The case of the assessee was reopened by issuing notices u/s. 148 of the Income Tax Act, 1961 (in short “The Act”) for relevant AYs on 29.03.2021. The assessee did not respond to the notices issued. Consequently, the assessments u/s. 147 r.w.s 144 of the Act for relevant AYs were concluded as under: Income offered Income in return u/s Assessed in AY 148 Addition order passed by AO 2013-14 Not filed 2,58,24,252/- 2,58,24,252/- 2014-15 -- 5,73,93,727/- 5,73,93,727/- 2015-16 -- 4,00,01,726/- 4,00,01,726/- 2.1 The ld. CIT(A) observed that the appeals for the relevant AYs have been filed with a substantial delay of more than 1 year. The report of the ld. AO justifies that assessment orders for relevant AYs were delivered on the date of passing of assessment order for the relevant AYs. to 1163/Bang/2024 Bhaskar Reddy Nandyala Hanumantha Reddygari, Bangalore Page 3 of 11 2.2 Further, he observed that the reasons stated by the assessee in his submission dated 11.03.2024, that the assessment order passed for relevant AYs were not served either through post or through email. The assessee became aware of the proceedings upon receiving a departmental notice regarding the attachment of bank accounts. Subsequently, the assessee consulted its Chartered Accountant and was recommended by consultant to file an appeal for the relevant AYs.
2.3 The assessee’s claim regarding the non-receipt of assessment orders for the relevant AYs lacks substance. As per the AO's report, it clearly established the delivery of orders for the relevant AYs on date of passing of assessment order. This fact alone significantly undermines the grounds raised by the assessee in his submissions, demonstrating that the reasons provided do not possess any merits.
2.4 Moreover, he observed that in a submission dated 11.03.2024, the assessee mentioned obtaining a copy of the assessment order from the department and immediately initiated steps to file an appeal. However, the assessee's submission lacks specific details such as the exact date of receipt, communication with the AO, and any acknowledgement of receiving the assessment order from the AO, thereby rendering the claim unsubstantiated. 2.5 Hence, the ld. CIT(A) observed that it becomes evident that the assessee's assertions regarding the nonreceipt of the assessment orders do not hold ground. The established fact as per AO's report that the orders were served on time directly counters the basis of his delay in filing of appeal for relevant AYs. Furthermore, the lack of critical details in the assessee's subsequent submissions, such as precise timelines and documented communications with the AO, further diminishes the credibility of their claims. to 1163/Bang/2024 Bhaskar Reddy Nandyala Hanumantha Reddygari, Bangalore Page 4 of 11 2.6 Further, he observed that the assessee stated receiving a notice from the department that led to the freezing of their bank accounts. Despite this claim, they failed to provide this office with a copy of the Attachment Notice. Additionally, it was stated that assessee consulting its Chartered Accountant (CA) and was advised to appeal against the assessment orders for the relevant AYs, however no details in support of claim were filed during the appellate proceedings. The name and details of the Chartered Accountant/ consultancy firm was not submitted. Specifically, they did not furnish any appointment records or communications that would confirm the date and purpose of their visit to the CA, nor a written statement or affidavit from the CA stating that the assessee has consulted him and that the assessee was advised to consult a senior tax consultant. Furthermore, there was no evidence submitted regarding the consultation of the assessee with a senior tax consultant, such as name and address of the senior tax consultant, appointment bookings, emails, or any other form of communication, nor an affidavit or statement from the senior consultant confirming that advice was provided to the assessee on the Attachment Notice and the necessity for filing an appeal. 2.7 Additionally, he observed that the assessee did not present any documentation or correspondence with the AO that would illustrate their immediate actions following the consultations. The absence of a detailed timeline of events from receiving the Attachment Notice to filing the appeal, including significant dates and actions taken, and records of the appeal preparation process, such as drafting documents, collecting evidence, and consultations with legal or tax professionals, further weakens their case. This should have included name and address of the Chartered Accountant and the senior consultant, emails, notes, or invoices for services rendered during the appeal preparation, along with personal affidavits from the petitioner and any involved parties (CA, senior tax consultant) affirming the to 1163/Bang/2024 Bhaskar Reddy Nandyala Hanumantha Reddygari, Bangalore Page 5 of 11 sequence of events and the immediate actions taken upon receiving the Attachment Notice. 2.8 Further, he observed that the assessee even after filing of appeal with delay for the relevant AYs has not filed any condonation of delay application and affidavit, aiming to justify the significant delay of more than 1 year in filing the appeal for relevant AYs. Which shows that the assessee has not taken the necessary legal steps to rectify or provide a legitimate justification for the considerable delay in filing the appeal for the relevant AYs. This omission indicates a lack of diligence and responsibility on the part of the assessee in adhering to the prescribed timelines and procedures, underscoring a disregard for the statutory requirements. Consequently, this failure to file a condonation of delay application and affidavit further undermines the assessee's position and complicates their ability to seek relief for the delayed submission. 2.9 The ld. CIT(A) further observed that legal precedents underscore the critical nature of adequately substantiated affidavits in cases of delayed filings. For instance, in the case of Inderchand D. Kochar v. Assistant Commissioner of Income-tax, Central Circle11(2), Chennai, [2016] 73 taxmann.com 96 (Madras), it was held that filing of appeal before wrong forum on CA's advice doesn't justify three year's delay. Hence, the ld. CIT(A) has not admitted the appeal of the assessee in all these three appeals and dismissed. Against this assessee is in appeal before us.
Before us, assessee filed an affidavit dated 10.6.2024 along with a condonation petition all these three appeals explaining the delay in filing the appeals before ld. CIT(A) as follows:
3.1 Thus, there was a delay of 365 days in filing the appeals before ld. CIT(A). 3.2 Further, there was a delay of 25 days in filing the appeals before this Tribunal and assessee vide affidavit dated 10.6.2024 in all these three appeals prayed for condonation of delay. The ld. A.R. for the assessee also filed medical reports from Reela Hospital dated 15.3.2024 & 26.4.2024 stating that assessee has been suffering from acute liver problem being habitual alcoholic and he is having alcoholic liver disease, severe alcoholic hepatitis and he requires to 1163/Bang/2024 Bhaskar Reddy Nandyala Hanumantha Reddygari, Bangalore Page 9 of 11 medical care and prayed that the delay in filing the appeals before ld. CIT(A) as well as the Tribunal be condoned.
The ld. D.R. strongly opposed the admission of appeals stating that there was no reasonable cause.
We have heard the rival submissions and perused the materials available on record. The assessee is advancing medical reason for delay in filing the appeals before ld. CIT(A) as well as Tribunal. Admittedly, in this case, assessment order is passed ex- parte. Before ld. CIT(A) also, assessee has not participated properly. Hence, the ld. CIT(A) dismissed the appeals without admitting the same on the reason of delay. 5.1 Before us, assessee filed details of condonation petition along with medical reports praying for condonation of delay before ld. CIT(A) as well as before Tribunal. In our opinion, the assessee is a chronic alcoholic person suffering from disease connected to liver functioning as seen from the medical report. As such, the assessee have a good and sufficient reason to file the appeals belatedly before the lower authorities and before us. 5.2 In the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471), Hon’ble Supreme Court laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: “(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be to 1163/Bang/2024 Bhaskar Reddy Nandyala Hanumantha Reddygari, Bangalore Page 10 of 11 preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
5.3 Being so, when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. In our opinion, these appeals are fit case to condone the delay of 365 days before ld. CIT(A) and 25 days before Tribunal. Accordingly, delay in filing both the above appeals are condoned. Appeals are admitted for adjudication.
After condoning the delay, in our opinion, it is appropriate to remit the issue in dispute in all these appeals to the file of ld. AO since the assessment orders are ex-parte passed u/s 144 of the Act. Accordingly, all issues involved in all these appeals are remitted to the file of ld. AO for fresh consideration. The assessee shall properly cooperate with the department in disposing of his case.
In the result, all these appeals are partly allowed for statistical purposes.