Case Law Details
Jagdishbhai Karamshibhai Bodra Vs DCIT (ITAT Surat)
ITAT Surat held that delay in filing of an appeal before CIT(A) since the assessee was displaced from his office due to attachment of office on account of some purported fraud committed by him is sufficient cause. Accordingly, matter remitted back.
Facts- Post completion of assessment, AO found that a case had been registered against the assessee for bank fraud amounting to Rs.128 crores. AO issued various notices including notice u/s 148, 142(1) and show cause notice which are detailed in the table at para 2 of the assessment order. The assessee neither filed return in response to notice u/s 148 nor filed details or explanation in response to the other statutory and show cause notices. Since assessee was not responsive, AO tried to track the notices and found that they have been returned with remark “Not Delivered ADDRESSEE MOVED”. Thereafter, AO added Rs.6,61,70,712/- as assessee’s undisclosed income from other sources and total income was determined at Rs.7,24,90,152/- against the earlier assessed income of Rs.63,19,440/-. The AO also initiated penalty proceedings u/s 271(1)(c) for concealment of income and penalty u/s 271(1)(b) for noncompliance of notice issued u/s 142(1).
CIT(A) dismissed the appeal since the same was filed belatedly. Accordingly, being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee was displaced from his office due to attachment of office on account of some purported fraud committed by him. As the assessee and his staffs were not working in the address given in the ITR, it might be possible that he did not receive the order in time and actually received the order late, as contended by the ld. AR. However, he has filed the appeal within 30 days from receipt of the order. Considering totality of facts and submission of the assessee, and that the delay was rather not long, we are of the considered view that there was sufficient cause for not presenting the appeal to the CIT(A) within the prescribed period. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would be met in case the AO re-examines the entire issue afresh subject to payment of cost of Rs.15,000/- (Rupees fifteen thousand only) by the assessee to the credit of the ‘Gujarat High Court Legal Aid Authority’ within two weeks from receipt of this order.
FULL TEXT OF THE ORDER OF ITAT SURAT
These four appeals by the assessee emanate from the orders passed under section 250 of the Income-tax Act [in short, ‘the Act’] of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘the CIT(A)’], for the assessment years (AYs) 2013-14 & 2014-15.
Two appeals are against order u/s 147 r.w.s. 144 passed by the Assessing Officer (in short, ‘AO’) for AY.2013-14 and 2014-15 and the other two appeals are against the penalty orders u/s 271(1)(c) for the same assessment years. Since facts are same, with consent of the parties, the cases were heard together; and a common order is passed for the sake of convenience and brevity. The grounds of appeal and facts narrated in ITA No.836/Srt/2024 for AY.2013-14 have been taken into consideration for deciding the above appeals.
2. The grounds appeal raised by the assessee in ITA No.836/SRT/2024, ‘lead case’, are as follows:
“1. The Ld. CIT(A) has erred and was not just and proper on the facts of the case and in law in considering the APPEAL as DELAYED and not admitting the same.
2. PRAYER
2.1 The APPEAL may be directed to be admitted for consideration.
2.2 Personal hearing may be granted.
2.3 Any other relief that your honours may deed fit may be granted.
3. The assessee craves leave to add, amend, modify, alter or delete any of the grounds at the time of hearing.”
3. Brief facts of the case are that the assessee had filed return of income for the AY.2013-14 on 31.03.2015, declaring total income of Rs.37,73,940/-. The assessment in the case was completed u/s 143(3) of the Act on 31.03.2016, determining total income at Rs.63,19,440/-. Subsequently, the AO found that a case had been registered against the assessee for bank fraud amounting to Rs.128 crores. The assessee had forged signatures of his erstwhile partners and obtained a loan from SBI and siphoned off the loan amount. Thereafter, SBI Asset Management Branch, Ahmedabad has taken possession of the properties of Raj Infra-space Pvt. Ltd., of which the assessee is a director. It was revealed during enquiries that funds to the extent of Rs.6,61,70,712/- had been siphoned off by assessee through layers of bank accounts of several companies and firms managed by the assessee group. The transactions made by the assessee corresponding to the amount siphoned off are not genuine transactions but transactions made for benefit of the assessee, representing his undisclosed income. The AO issued various notices including notice u/s 148, 142(1) and show cause notice which are detailed in the table at para 2 of the assessment order. The assessee neither filed return in response to notice u/s 148 nor filed details or explanation in response to the other statutory and show cause notices. Since assessee was not responsive, AO tried to track the notices and found that they have been returned with remark “Not Delivered ADDRESSEE MOVED”. Thereafter, AO added Rs.6,61,70,712/- as assessee’s undisclosed income from other sources and total income was determined at Rs.7,24,90,152/- against the earlier assessed income of Rs.63,19,440/-. The AO also initiated penalty proceedings u/s 271(1)(c) for concealment of income and penalty u/s 271(1)(b) for noncompliance of notice issued u/s 142(1).
4. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) issued notice u/s 250 dated 23.01.2024, 22.05.2024 and 28.05.2024. However, no submission was made by the assessee. The appeal was, therefore, disposed of after considering the assessment order, statement of facts and position of law as discussed in para 2 to 5.7 of the appellate order. The CIT(A) found that there was delay of 177 days in filing the appeal. He noted that no application for condonation was filed along with Form No.35. He, therefore, held that there is no case made out for condonation of delay. The assessee is required to explain each days’ delay after the last date of limitation. The CIT(A) observed that it is a clear case of negligence for non-pursuing available remedy in time. He relied on the decision in case of DCM Ltd. vs. State of Tamil Nadu, (1995) 96 STC 263, 264 (Mad.), Madhu Dadha vs. ACIT, 317 ITR 458 (Mad.) and Collector, Land Acquisition vs. Mst. Katiji, 167 ITR 471 (SC) and held that no case has been made out by the assessee for existence of sufficient cause for delay of 177 days in filing appeal. He, therefore, did not admit appeal of the assessee and dismissed the same in limine.
5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted that facts of the case are similar to the facts for AY.2016-17 and 2017-18 which was decided by this Tribunal (In ITA Nos.750 & 751/SRT/2024) on 20.11.2024 and it was held that there was sufficient cause for not presenting the appeal to the CIT(A) within the prescribed period of 30 days. The order of CIT(A) was set aside and the matter was remitted back to the file of AO for fresh assessment. The ld. AR submitted that the order was received in November, 2023 and assessee filed appeal on 09.12.2023. He submitted that the assessee was under tremendous financial and mental stress. His office premises was closed and it was in fact attached by the SBI. Since the office was in possession of the Bank, no staff of the assessee was working and it was not possible to receive the notices and communicate with the Income-tax Department. The assessee actually received the order of AO in November, 2023 and filed the appeal in time on 09.12.2023. However, if the date of reassessment order i.e., 16.05.2023 is considered, there is delay of 177 days in filing appeal. It was further submitted that the delay was neither deliberate nor intentional and it was due to circumstances beyond the control of the assessee. Hence, the Ld. AR requested to condone the delay and set aside the matter to the AO to make the assessment on merit in accordance with law.
6. On the other hand, the learned Commissioner of Income-tax – Departmental Representative (ld. CIT-DR) of the revenue supported the order of lower authorities. He submitted that all notices were issued at the address given by the assessee. No intimation was given to the Department for change in address. However, he did not have any serious objection if the matter is remitted back to the file of AO with cost imposed on assessee.
7. We have heard both the parties and perused the materials available on record. The CIT(A) has refused to condone the delay and dismissed the appeal in limine without discussing the appeal on merit. An assessee may appeal to the CIT(A) against any appealable order detailed in section 246A of the Act. As per sub-section (2) of section 249 of the Act, the appeal shall be presented within 30 days from the date of service of the notice of demand relating to the assessment or penalty. However, sub-section (3) of section 249 of the Act permits the CIT(A) to admit an appeal after expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting the appeal within prescribed time limit. The notion of condonation of delay encompasses the discretionary power of an appellate authority to extend the prescribed time limit for filing an appeal or an application. It pertains to the mechanism by which the said appellate authority may grant clemency for delay in submitting an appeal. The discretion to condone the delay has to be exercised judicially based upon the facts and circumstances of the case. It has been held in a number of cases that the authority exercising such power should be judicious and be not guided by technical rules alone. In the present case, we find that the assessee was displaced from his office due to attachment of office on account of some purported fraud committed by him. As the assessee and his staffs were not working in the address given in the ITR, it might be possible that he did not receive the order in time and actually received the order late, as contended by the ld. AR. However, he has filed the appeal within 30 days from receipt of the order. Considering totality of facts and submission of the assessee, and that the delay was rather not long, we are of the considered view that there was sufficient cause for not presenting the appeal to the CIT(A) within the prescribed period. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would be met in case the AO re-examines the entire issue afresh subject to payment of cost of Rs.15,000/- (Rupees fifteen thousand only) by the assessee to the credit of the ‘Gujarat High Court Legal Aid Authority’ within two weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass de novo assessment order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be vigilant and furnish explanation and details as required by the AO without seeking adjournment bereft of valid reason.
8. In the result, appeal of the assessee in ITA No.836/SRT/2024 is allowed for statistical purpose.
ITA No.835/SRT/2024 (AY.2014-15):
9. As stated earlier, assessee has taken similar grounds of appeal for AY.2014-15. The CIT(A) has also dismissed the appeal in limine by not admitting the appeal, which was filed late by 177 days. The reasons given by the CIT(A) are similar to those for AY.2013-14, as discussed above in the order for AY.2013-14. The Ld. AR has also advanced the same reasons as was done for AY.2013-14. In fact, in Form No.35, the assessee has stated that he had closed down his business and there was no staff to assist in preparing the old data available in the computer system. After considering the entirety of the facts, we have set aside the order of CIT(A) in ITA No.836/SRT/2024 for AY.2013-14. Following the same reasons, the order of CIT(A) is for AY.2014-15 is also set aside and the issue is remitted back to the file of AO subject to payment of cost of Rs.15,000/- (Rupees fifteen thousand only) by the assessee to the credit of the ‘Gujarat High Court Legal Aid Authority’ within two weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass de novo assessment order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be vigilant and furnish explanation and details as required by the AO without seeking adjournment bereft of valid reason.
10. In the result, appeal of assessee in ITA No.835/SRT/2024 is allowed for statistical purpose.
ITA Nos.837 & 838/SRT/2024 (AYs.2013-14 & 2014-15):
11. These appeals are against the orders of CIT(A) u/s 250, sustaining the orders passed u/s 271(1)(c) of the Act by the AO for AYs.2013-14 and 2014-15. The CIT(A) has not admitted the appeals and dismissed them in limine by not condoning the delay of 14 and 10 days in filing of appeals for AYs.2013-14 and 2014-15 respectively. We have already decided the appeals against the orders of CIT(A) in respect of the quantum appeals for AY.2013-14 in ITA No. 836/SRT/2024 and AY.2014-15 in ITA No.835/SRT/2024. In the said appeals, the CIT(A) had also not admitted appeals of assessee and dismissed them in limine. After considering the facts and submissions of both parties, we have set aside the orders of CIT(A) and restored the matter back to the file of AO for fresh adjudication after giving reasonable and sufficient opportunity of being heard to the assessee. The assessee has also been directed to furnish all details and explanation as required by the AO. Since the addition made in the re-assessment orders, on the basis of which penalty for concealment was levied, have been restored to file of AO for fresh adjudication, there remains no basis at all for levying the penalty. Hence, penalty orders do not survive and the orders of CIT(A) are quashed. We make it clear that the AO may initiate proceedings u/s 271(1)(c) of the Act during the fresh assessment proceedings, if the conditions of the said section are satisfied.
12. In the result, both appeals of the assessee are allowed.
Order pronounced on 05/12/2024 in the open court.
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