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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD
Before: SHRI LALIET KUMAR & SHRI RIFAUR RAHMAN
O R D E R PER LALIET KUMAR, J.M. The appeal of the assessee for A.Y. 2017-18 arises from the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dt.27.10.2023 invoking proceedings under section 143(3) of the Income Tax Act, 1961 (in short, “the Act”).
The grounds raised by the assessee reads as under :
“1. The appellant is assessed under the status of 'Partnership Firm' and is regularly filing income tax returns for more than 10 years.
2. The appellant is in the business of Manufacturing of stainless utensils and other stainless-steel products. 3 The appellant is maintaining regular books of accounts and the same are being audited by a Chartered Accountant u/s. 44AB of the Income Tax Act, 1961 4.On 18.09.2017, the appellant had filed the return of income for the AY 2017-18 declaring total income of Rs.7,88,340/-. 5.On 10.09.2018, the appellant's case was selected for scrutiny and notice u/s. 143(2) was issued to the appellant by the Learned Assessing Officer. 6.On 26.09.2018, in response to notice u/s. 143(2) dated 10.09.2018, the appellant had filed income tax return acknowledgement, computation of income, financial statements and Form 26AS 7.On 11 01 2019 and 24.06.2019, the Learned Assessing Officer issued a notice u/s 142(1) requiring the appellant to furnish the details relating to cash deposits in bank accounts were called for. 8. On 21 01.2019 and 10 07 2019, in response to notice u/s 142(1) dated 01.2019 and 24 06 2019 respectively. the appellant had filed copes of bank statements, bank ledgers. purchase and sales register 9. 9.1 On 16 12 2019, the Learned Assessing Offcer issued a show cause notice asking the appellant to furnish the details of cash deposited in bank accounts and to produce the books of accounts 9.2 Date and time of signing of notice was 17.12.2019 11:09AM and hearing date and time was 18.12 2019 11:30AM Apparently, only 24 hours were given for submitting the response. 9.3 It was mentioned in the show cause notice that the said notice shall be treated as final opportunity and that the pending assessment proceedings shall be completed without making any further correspondence.
10. 10.1 On 23.122019, another show cause notice was issued wherein details of closing balances of Unsecured Loan Creditors as on 31.03 2017 amounting to Rs.85,34,105/-, were asked for. 10.2 Hearing Date and Time was 26.12.2019 11.45AM. Effectively, only two days were given to the appellant to submit the response as one of the days 25.12.2019 was a public holiday.
On 29.12.2019, Assessment Order was passed u/s. 143(3) of the Income-tax Act, 1961 for AY 2017-18, raising a demand of Rs.1,33,13 853/- 12. In the aforesaid assessment order, following additions were made i. huge addition of Rs.43,69,000/- was made towards alleged unexplained cash deposits. ii. Another huge addition of Rs 85.34.105/- was made alleging that the unsecured loan creditors are unexplained. The said additions were considered as cash credits u/s 68 and the income was assessed at an exorbitant figure of Rs.1,36,91,440/-. The assessed income is 17 times more than the returned income. 13. On 21.02 2020, aggrieved by the aforesaid assessment order, we had filed an appeal before the CIT (A), National Faceless Appeal Centre. 14. 14.1 On 06.10.2023, a hearing notice u/s. 250 was issued to the appellant by the Hon'ble CIT (A), NFAC for the appellant to furnish ground-wise written submissions. The due date for submission of response was 13.10.2023 14.2 Insufficient time i.e., only 5 working days were given to the appellant for furnishing complete and elaborate ground-wise written submissions in response to the said hearing notice. 15. On 11.10.2023, the appellant had sought for an adjournment in response to aforesaid hearing notice dated 06.10.2023, since gathering of material for the purpose of furnishing complete written submissions was taking time. Hence, the adjournment was granted upto 28.10.2023.
16.1 On 27.10.2023, surprisingly, the Hon'ble CIT (A) passed an order dismissing the appeal on the ground that the delay in filing of appeal IS not condonable The Hon'ble CIT (A) has not adjudicated the grounds of appeal. 16.2 The aforesaid order was passed without granting the appellant, an opportunity of being heard before rejecting the condonation of delay. 16.3 The aforesaid order was against the principles of natural justice since it was passed before the date up to which the adjournment was granted.”
Facts of the case, in brief, are that assessee being the firm filed its return of income for A.Y. 2017-18 on 18.09.2017 admitting income from Business at Rs.7,88,340/- and declared a gross turnover of Rs.10,33 99,097/-. Thereafter, the assessee’s case was selected for scrutiny under CASS on 10.09.2018 and consequently, necessary statutory notices u/s 143(2) and 142(1) of the Act were issued calling for information. Further, notice u/s 142(1) of the Income Tax Act, 1961 dated 11.01.2019 was also issued to assessee firm, for which assessee submitted its response on 21.01.2019. On perusal of the submissions of the assessee, Assessing Officer noticed that assessee had not made any efforts to explain the generation of Cash from it's business activity by submitting written explanation and relevant documentary evidence for verification. Hence, issued a show cause notice dated 16.12.2019. As the assessee did not respond to the show cause notices also finally, the cash deposits to an extent of Rs.43,69,000/- made by the assessee during the demonetization period considered for addition under section 68 of the Income Tax Act.
3.1 Further, in the absence of any information with respect unsecured loan credits for the closing balances mentioned at Rs.22,23,935/- and Rs.53,50,000/- as on 31.03.2017, totaling to Rs.85,34,105/- was also considered by the Assessing Officer for addition u/s 68 of the Income Tax Act. Thus, Assessing Officer completed the assessment interalia making an addition of Rs.1,29,03,105/- (Rs.43,69,000/- + Rs.85,34,105/-) to the total income of the assessee and passed order dt.29.12.2019 u/s 143(3) of the Act.
Feeling aggrieved with the order of Assessing Officer, assessee filed an appeal, which was later migrated to the ld.CIT(A), NFAC, Delhi, who dismissed the appeal of assessee by holding as under :
“3. I have examined facts of the case as also gone through the request for condonation of delay. The appeal in the present case has been filed late by 24 days and the appellant has requested for condonation of delay in filing of appeal. The appellant has requested for condoning delay In filing of appeal on the ground of Its unawareness in the matter of filing appeal. The unawareness does not confer on it any relaxation in adherence to the time-limit. So the delay in filing of appeal, is not condonable. Considering all this, delay in filing of appeal is not condoned and the appeal is dismissed.”
Before us, ld.AR submitted that though the assessee explained the reason for delay of 24 days before the ld.CIT(A), the ld.CIT(A) has not condoned the delay in filing the appeal and thereby dismissed the appeal of assessee.
In this regard, Ld.AR relied upon the direction of Hon’ble Supreme Court in the Suo Motu proceedings in the case of M.A.No. 21/2022 in M.A.No. 665/2021 in SMW(C) No.3 of 2020 by order dated 10/01/2022 wherein it was held that in cases, where the limitation would have expired during the period between 15/03/2020 and 28/02/2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01/03/2022, and in the event of actual balance period of limitation remaining with effect from 01/03/2022 is greater than 90 days, that longer period shall apply. He further submitted that assessee has a good case on merit and therefore, the merit should not be pitted against the non-condonation of delay by the ld.CIT(A).
Per contra, the ld.DR has not raised any objection for remanding the matter back to the file of lower authorities.
We have heard the rival submissions and perused the material on record. In this connection, the assessee has stated that the delay in prosecution of the appeal and filing of the present appeal was due to lock down imposed by the central government as preventive measures to control the spread of Covid-19 from 23/03/2020, caused the impugned delay in filing the appeal belatedly. Further, as referred by ld. AR, the Hon’ble Supreme Court in the case of M.A.No. 21/2022 in M.A.No. 665/2021 in SMW(C) No.3 of 2020 by order dated 10/01/2022 had extended the period of limitation. In view of the above circumstances and respectfully following the direction of Hon’ble Supreme Court and relying upon the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Ors, 1987 AIR 1353 (SC) and University of Delhi Vs. Union of India, Civil Appeal No. 9488 & 9489/2019 dated 17 December, 2019, we hold that such a delay in filling the appeal was supported by cogent reasons and hence, deserves to be condoned so as to make way for the cause of substantial justice. Thus, the limitation period applicable to the appeal is covered by the above said decision and therefore, the appeal shall be treated as filed within the period of limitation.
As the ld.CIT(A) has not decided the appeal of assessee on merits, therefore, we are of the view that the ends of justice will be met if the matter may be sent back to the file of ld.CIT(A) with a direction to decide the issue after verifying all the documents/ evidence. The above said exercise be carried out after considering the documents available on record and affording the opportunities of hearing to the assessee in accordance with law. The assessee shall be at liberty to file documents, if any, as required for proving its case and the ld.CIT(A) shall consider the evidences, if any, filed by the assessee. Needless to say the ld.CIT(A) shall examine those documents / evidence filed by the assessee and also the other documents available on record. After considering the documents filed by the assessee and the submissions made by the assessee, the ld.CIT(A) shall pass a detailed speaking order dealing with the contentions of the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 20th February, 2024.