Sea Castle An Ayurvedic And Leisure Hotel Vs ITO (Kerala High Court)
Appeal Dismissed for 588-Day Delay Gets Fresh Life – Assessee to Pay Rs.3 Lakh Cost- Technicalities Cannot Defeat Merits -Natural Justice Prevails
The appellant, Sea Castle an Ayurvedic & Leisure Hotel, challenged the orders of CIT(A) & ITAT which had dismissed its appeals relating to AYs 2010-11, 2011-12 & 2012-13. The dispute concerned disallowance of interest & bank charges claimed on loans from Kerala Financial Corporation. AO held that deduction u/s 43B was not allowable since the interest was unpaid even at the time of assessment, and issued rectification/demand orders in March 2018.
Assessee filed appeals before CIT(A), but failed to appear or file submissions despite repeated opportunities. The appeals were dismissed in limine on 27.02.2023. Subsequently, appeals were filed before ITAT with a delay of 588 days. The explanation offered was that Assessee was out of station & later became aware only in December 2023. ITAT refused to condone the delay and dismissed the appeals on 25.03.2025 without going into merits.
Before the High Court, it was argued that though the delay was long &the explanation weak, the AO’s order itself was vitiated for lack of natural justice, as no effective opportunity of hearing was granted while disallowing the claim. Assessee offered to pay costs if given a chance to contest the matter on merits.
