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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
O R D E R
Per Shri Duvvuru RL Reddy, Judicial Member :
This appeal is filed by the assessee against the order of the Commissioner of Income Tax [in short, [CIT(A)]-6, Hyderabad in Appeal No.10357/2018-19/A3 CIT(A)-6 dated 03.12.2018 for the Assessment Year (A.Y.) 2011-12.
Brief facts of the case are that the assessee is an individual, carrying on business in the sale of Indian Manufactured Foreign Liquor, filed his return of income for the A.Y.2011-12 on 25.09.2011, declaring a total income of Rs.3,28,950/-. The case was selected for scrutiny, accordingly, notices u/s 143(2) / 142(1) of the Income Tax Act, 1961 (in short ‘Act’) were issued and served on the assessee, calling for information. However, neither the assessee appeared nor filed information called for. Hence, the Assessing Officer (AO) completed the assessment as per the material available on record u/s 144 of the Act. During the year relevant to the A.Y.2011-12, the assessee had lifted stock of liquor worth Rs.79,04,022/- as per the information provided by APBC Ltd., IML Depot-1, Visakhapatnam, but the assessee failed to furnish any sources with proof for the purchases made, therefore, the AO proposed to add the amount of Rs.79,04,022/- as income of the assessee as unexplained investment and objections were called for. Since there was no response from the assessee, the AO added the amount of Rs.79,04,022/- as unexplained investment. It was further observed by the AO that the assessee introduced capital of Rs.13,12,299/- but has not furnished any sources with proof for the capital introduced, Hence, the AO made addition of Rs.13,12,299/- as unexplained investment. The assessee has also shown an amount of Rs.2,53,896/- as deposits under “Loans and Advances (Assets)’. However, the assessee has not furnished any sources with proof for the deposits made of Rs.2,53,896/-. Accordingly, the AO made the addition of Rs.2,53,896/- as unexplained investment. The AO assessed the total income at Rs.97,99,167/- after making the above additions to the income returned and passed assessment order u/s 144 of the Act on 20.03.2014.
Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) on 30.06.2016. The impugned order appealed against dated 20.03.2014 was served on the assessee on 30.03.2014 and the assessee ought to have filed appeal before the Ld.CIT(A) within 30 days of date of service of the demand notice along with assessment order / order appealed against on the assessee concerned. But the assessee filed appeal with the delay of 791 days. The Ld.CIT(A) stated that as per sub-section (3) of section 249 of the Act, CIT(A) has been empowered to admit an appeal which has been filed after the expiry of the stipulated period of 30 days, but subject to recording his satisfaction that the assessee had ‘sufficient cause’ for not filing the appeal within the said period. As such the CIT(A) is vested with the power of condonation of delay in filing the appeal. The Ld.CIT(A) observed that in the instant case, though the assessee has furnished certain grounds for delay in filing the appeal, he failed to file a formal petition for condonation of delay. Similarly, the assessee has not filed any affidavit along with supporting documentary evidence demonstrating ‘sufficient cause’ for 791 days delay in filing the appeal. The Ld.CIT(A) further observed that the assessee, even after lapse of 29 months from the date of filing the appeal till date i.e. from 30.06.2016 to 03.12.2018, the assessee has not filed the affidavit seeking condonation of delay. The assessee submitted before the Ld.CIT(A) in the grounds as contained in Form No.35 that the assessee is totally ignorant of the income tax matters, he entrusted all the matters to a tax practitioner, with the belief that he would take care of the income tax matters, but he failed to do so. The assessee submitted that the delay was neither intentional nor deliberate and it was only due to negligence and improper guidance of the tax practitioner, on whom the assessee totally relied upon for his tax matters. The Ld.CIT(A) observed that the adjudicating authority while condoning the delay has to keep in mind two important factors i.e.
Whether it is a minor delay of a few days or inordinate delay running into several months.
2. Whether the assessee has established his bonafides with regard to existence of sufficient cause which prevented from filing the appeal within the due date prescribed as per the provisions of the law. The Ld.CIT(A) observed that the assessee’s case falls under the category of inordinate delay of 791 days and the assessee has tried to shift the burden of delay in fling the appeal onto his tax consultant/ARs which seems to be an afterthought. Further the assessee has not explained the reasons for delay except stating that the first tax consultant /AR did not represent the case before the AO and the same cannot be considered as sufficient cause for delay in fling the appeal before the appellate authority. Accordingly, relying on various judicial precedents, the Ld.CIT(A) viewed that the assessee failed to prove his bonafides to establish with evidence that he was prevented by unavoidable circumstances from filing the appeal or there was ‘sufficient cause’ for not filing the appeal in time. Therefore, the Ld.CIT(A) held that this is not a fit case to condone the delay in filing the appeal as envisaged u/s 249(3) of the Act, and therefore, the appeal cannot be admitted, therefore, the question of adjudicating or deciding of the appeal on merits of the case does not arise. Accordingly, dismissed the appeal of the assessee in-limine.
On being aggrieved, the assessee preferred an appeal before the Tribunal and raised the following grounds :
The order of the learned Commissioner of Income Tax (Appeals)-6, Hyderabad, is contrary to Law and facts of the case. As the Commissioner of Income Tax (Appeals) is not justified in rejecting the Condonation Petition filed by the appellant without affording any opportunity to the appellant to explain his case and therefore, the appellant prays the Honourable Bench to kindly give necessary direction to the learned Commissioner of Income Tax (Appeals) accordingly. As not giving an opportunity to explain the case even for condonation Petition, is not in accordance with the principles of natural justice, the appellant prays the Hon'ble Bench, for relief. The Commissioner of Income Tax (Appeals)-6, Hyderabad, is not justified in rejecting the condonation petition filed by the appellant. As the appellant has given very genuine and justified reasons explaining his practical difficulty for the delay in filing the Appeal in Form-35, the learned Commissioner of Income Tax(Appeals) ought to have accepted reasons submitted by the appellant for the delay in filing the appeal in Form-35. As the mischief played by the Authorized Representative which was duly accepted by him; is to be considered as a reasonable cause under the facts and circumstances of the case and when such reasons covered the entire period, it is not necessary to explain each and every day for the same reason. Hence, the Appellate Authority ought to have accepted the genuine reasons for considering the condonation petition. Hence, the appellant prays the Honourable Bench to kindly direct the Appellate Authority to condone the delay and adjudicate the appeal on merits.
For these and other grounds that may be urged at the time of appeal hearing, the appellant prays for relief.
All the grounds of appeal are related to the condonation of delay before the Ld.CIT(A). The Ld.AR submitted that the Ld.CIT(A) has neither considered the grounds for condonation of delay as submitted in column No.14 & 15 of Form No.35 filed by the assessee nor afforded any opportunity to the assessee to explain his case. The Ld.AR further submitted that the appellate authority ought to have accepted the genuine reasons for considering the condonation petition and when such reasons covered the entire period, it is not necessary to explain each and every day delay for the same reason. He, therefore, prayed the Bench to direct the appellate authority to condone the delay and adjudicate the appeal on merits.
5. Per contra, the Ld.DR relied on the order of the Ld.CIT(A) and argued that the Ld.CIT(A) has rightly dismissed the appeal of the assessee in- limine. He prayed to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee.
We have heard both the parties and perused the material placed on record. It is apparent from the records that the assessee filed the appeal before the Ld.CIT(A) with the delay of 791 days. The Ld.AR submitted that the reason for delay was neither intentional nor deliberate and it was only due to negligence and improper guidance of the tax practitioner, on whom the assessee totally relied upon for his tax matters. It is observed that though the assessee has not filed any affidavit separately for condonation of delay before the first appellate authority, the assessee pleaded before the Ld.CIT(A) by citing reasons in column 14 and 15 of Form 35 for condonation of delay. Therefore, keeping in view the principles of natural justice, we set aside the order passed by the Ld.CIT(A) and remit the matter back to the file of the Ld.CIT(A) with a direction to examine the reasons mentioned in column 14 and 15 of Form 35 and pass speaking order.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 31st January, 2023.
Sd/- Sd/- (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 31.01.2023 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Palla Madhusudana Rao, Door No.14-6-7, Ramajogipeta, Visakhapatnam 2. रधजस्व/The Revenue – Income Tax Officer, Ward-1(2), Visakhapatnam 3. प्रधान आयकर आयुक्त /The Principal Commissioner of Income Tax-1, Visakhapatnam 4. आयकर आयुक्त / The Commissioner of Income Tax (Appeals)-6, Hyderabad 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam