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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 20.02.2023, pertaining to the assessment year 2014-15. The assessee has raised following grounds of appeal:
“1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in dismissing the appeal of the assessee in limine by refusing to condone the delay in filing the appeal by the assessee.
2. That order of Ld. Commissioner of Income Tax(Appeals) dismissing the appeal in limine may kindly be set aside with directions to hear appeal on merits. 3. (Without prejudice to above ground) That the interest on capital and remuneration to working partners of Rs 3,92,720 for which the addition has been made shall be allowed to the assessee as the said amount has been claimed in due compliance of the provisions of Section 40(b) of the Income Tax Act 1961.
Assessee has every right to make, add, delete, modify or alter any grounds of appeal at the time of hearing.”
2. Apropos to the grounds of appeal, learned counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the assessee are reproduced as under:
“1. Issue involved:- 1.1 Condonation of delay sought by Nav Bharat Stone Crusher ("hereinafter referred to as appellant assessee") was rejected by the CIT(A) in limine without considering the merits of the case. 1.2 Addition of interest on capital and remuneration, which has, however been claimed by the appellant assessee in compliance of provision u/s 40B of the Income Tax Act, 1961.
Brief Facts:- 2.1 Nav Bharat Stone Crusher is a partnership firm carrying on the business of running a stone crusher etc. comprising of Two partners in A.Y. 2014-15 as mentioned below: 1. Tarun Kumar Jain
2. Anil Kumar Jain 2.2 The return for the A.Y. 2014-15 was filed declaring Nil income, which was derived after claiming the interest of Rs 2,42,756/- i.e. calculated at the rate of 12% on the capital of partners of firm and remuneration of Rs 1,49,959. However, return was e-processed with addition of Rs 3,92,720 and appellant assessee didn't receive the intimation or correspondence regarding the same and the said addition first came to the knowledge of appellant assessee only when the notice of demand u/s 221(1) dated 27.01.2022 was received. 2.3 Appellant assessee, then contacted the concerned Assessing officer for the details of the outstanding demand for A.Y. 2014-15 and the officer provided the screenshot of Demand processing through email dated 27.04.2022. 2.4 The appellant assessee filed an appeal before the Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC) on 21.05.2022 for allowing the claims made by assessee. Also, in reply to the further deficiency letters issued by CIT(A) the condonation for delay was also requested. 2.5 The commissioner of Income Tax (Appeals) made an order pertaining to the said appeal on 20/2 / 2023 under section 250 of the Income Tax Act, 1961 wherein the Ld. CIT(A) rejected the assesse's claim.
Submissions in respect of Issues involved: 3.1 Submissions against rejection of condonation of delay 3.1.1 It is reiterated that the addition first came to the knowledge of the assessee only when the notice of demand u/s 221(1) dated 27.01.2022 was receive by the assessee. Whereupon further enquiry, the copy of the intimation was provided by concerned Assessing officer through email on 27.04.2022 Appeal to the CIT(A) was filed on 21 deg May 2022. 3.1.2 On the Income tax portal, in the "View Filed Returns" tab, for A.Y. 2014 15. it depicts that return has been Processed on June 4, 2015 and date of order is given as 04th June 2015 but there is no information mentioned against the "Date of SM S^ - and "Date of Email" ie, both are blank. Even
"Email ID" and "Details of speed post" information is blank. (Screenshot of same has been attached as Annex-I). 3.1.3 When the Signature properties of the Digital signature on the Intimation u/s 143(1) which is currently available on the portal, were examined, it can be clearly noticed that Signing time is mentioned a_{3} - 2023/1 / 26 08:07:34 5 deg * 30 deg = Le the date of signature on the intimation is 26 deg January 2023. (Screenshot of same has been attached as Annex-I). 3.1.4 No other evidence of delivery of the intimation or any notice/order in respect of the demand has been provided by the revenue. Only general contentions has been raised by the revenue questioning the diligence of the assessee. 3.1.5 Similar situation of "Date of service" and "Mode of service" column being nil was considered in the case of Koshambh Charitable Trust Vs ACIT. by the Hon'ble SMC Bench of the ITAT Ahmedabad, wherein it was held that: "8. We have given our thoughtful consideration and perssed the materials available on record, as well as the Paper Book filed by the assessee. As it can be seen from page no. 32 of the paper book which is the screenshot of the Income Tax portal wherein for the Assessment Year 2016 - 17 the assessment is completed under 143(T)(a) with the DIN No. 2017201637086922336T on which demand raised as 21.02.2018. We also notice that the next two columns namely "date of service" and "mode of service" as Nil and no dates or details mentioned in those columns. The Id. DR. appearing for the department could not give any information namely the date of service of 143(1)(a) order, as well as mode of such service to the assessee. In absence of the same, it cannot be considered the so called demand rised on 21.02.2018 was properly served on the assessee. so that the assessee has to take appellate remedy against such an order. Though this plea was raised by the assessee before the NFAC, however, we find the same was not considered and NFAC passed a detailed order stating that sufficient cause was not shown by the assessee for the delay in filing such an appeal. This clearly shows that the id. NFAC has not considered the factual situation and passed an order on the point of limitation only, without going into the merits of the case.
Therefore we hold that there is no delay in filing the above appeal by the assessee." (Emphasis Supplied) 3.1.6 Also, in the case of M.K. Hotels & Resorts Ltd.Vs. Assistant Commissioner of Income Tax, Circle-1, Amritsar, while considering the case wherein there was delay of 9 years, Hon'ble AMRITSAR BENCH of the ITAT Amritsar expressed that: "6. We heard the rival submission and relied on the documents available in the record. In fact, there is a delay of 9 years is a huge delay for adjudicating the appeal by the Id. CIT(A). But the assessee also submitted the "reasonable cause" for filing the appeal in delay. In fact, the revenue also not able to submit proof for any other mode of service of intimation to the assessee. However, through the Email there is huge confusion in relation to the service of intimation u/s 143(1) of the assessee." (Emphasis Supplied) Also, further it was held in the same case that: "6.1 We find that the assessee has a sufficient cause for non- submission of the appeal within due time. The merit was also not considered in appeal stage as it is decided in limine. Therefore, we remit back the issue to the ld. CIT(A) and direct to pass the order on merits, denovo. Needless to say. the assessee should get a reasonable opportunity of hearing in set-aside proceeding." (Emphasis Supplied) 3.1.7 Order of Hon'ble Supreme Court is also highlighted below for reference: 3.1.7.1 Hon'ble Supreme Court in the case of Senior Bhosale Estate (HUF) v. ACIT [2019] 112 taxmann.com 134 (SC): "Held that where revenue did not expressly refute stand taken by assessee that they had no knowledge about passing of order of Tribunal, dated 29-12-2003, until June, 2008, assessee's delay of 1754 days in filing appeal before Bombay High Court against Tribunal order was to be condoned. The brief facts of the case were 1754 days in filing appeals against order, dated 29-12-2003, passed by Tribunal. The assessee pleaded that it had no knowledge about passing of Tribunal's order, until it was confronted with auction notices in June, 2008, issued by competent authority, immediately upon which, assessee filed appeal with High Court. The High Court dismissed assessee's appeals holding that these were not fit cases in which inordinate delay of 1754 days in filin appeals deserved to be condoned. However, it was found the respondent revenue did not expressly refute stand taken by assesse that they had no knowledge about passing of order, dated 29-12-200 until June, 2008. The Supreme Court held that unless that fact was t be refuted by the Revenue, question of disbelieving stand taken b assessee on affidavit, could not arise and for which reason, High Cour should have shown sympathy to assessee by condoning delay in filing concerned appeal(s)." 3.1.7.2 Hon'ble Supreme Court in the case of State of West Bengal V Adm.1972 AIR 749 "It is not possible to lay down precisely as to what facts or matters would constitute 'sufficient cause' under s. 5 of the Limitation Act. But those words should be liberally construed so as to advance substantial justice when no negligence or any inaction or want of bona fides is imputable to a party; that is, the delay in filing an appeal should not have been for reasons which indicate the party's negligence in not taking necessary steps which he could have or should have taken." 3.2 Submissions against rejection of claim for interest on capital and remuneration claimed in accordance with provisions of Section 40b of the Income Tax Act, 1961:- 3.2.1 The assessee filed the ITR for A.Y. 2014-15 wherein the profits were computed on presumptive basis under Section 44AD. Proviso to Sub- Section 2 of Section 44AD as applicable for A.Y. 2014-15 is reproduced as below, in accordance with which the deduction of salary and interest was claimed in ITR:
"Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40." 3. Aggrieved by the assessment order the assessee had filed an appeal before the learned CIT(A) which was dismissed on the ground of delay. It was observed that the appeal was filed after a delay of 2512 days.
4. It is stated by the learned counsel for the assessee that even before the learned CIT(A) it was stated that no intimation u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) was received by the assessee. Learned counsel has also drawn my attention to the screen shot and submitted that the date of signature of intimation is January, 2023.
Learned DR opposed the submissions.
Considering the peculiarity of facts of the present case and claim of the assessee that the intimation u/s 143(1) of the Act was signed in the year 2023 and the assessee had not received any intimation, I deem it proper to set aside the order of learned CIT(A) and restore the matter to the file of learned CIT(A) to decide the issue of condonation of delay afresh after verifying the correctness of the claim of the assessee that the intimation was signed in the year 2023 and assessee had not received any intimation regarding processing of the return u/s 143(1) of the Act,
whereby the impugned addition/ demand of tax was generated. Grounds are allowed for statistical purposes.
Appeal of the assessee stands allowed for statistical purposes.
Order pronounced in open court on 18th December, 2023.