Delay in filing of an appeal condoned due to reasonable cause shown: ITAT Pune

Ecoboard Industries Ltd. Vs DCIT (ITAT Pune)

ITAT Pune held that delay in filing of an appeal before CIT(A) condoned due to company’s financial position and non-pursuing of appeals by tax consultant. Accordingly, matter remitted to file of CIT(A) for denovo adjudication.

Facts- The assessee is a company engaged in the business as manufacturer of particle Boards which are made from Bagasse (dry waste from sugar factory). The case of the assessee was selected for complete scrutiny and various additions/ disallowances were made.

AO also initiated proceedings u/s.270A(2) of the Act and issued show cause notices to the assessee to which there was no compliance from the side of assessee. In the event, ld. AO vide order dated 27.10.2021 levied penalty of Rs.92,94,216/- u/s.270A(2) for underreporting of income. AO also levied penalty of Rs.1,71,33,560/- on the various loans received by it through modes other than mode specified u/s.269SS of the Act invoking the provisions of section 271D. AO also levied penalty of Rs.1,75,10,751/- on the ground that the assessee repaid loans/deposits to various parties through modes other than the modes specified u/s.269T of the Act.

CIT(A) dismissed the appeal by not condoning the delay. Being aggrieved, the present appeal is filed.

Conclusion- Held that there was ‘reasonable cause’ which prevented the assessee in presenting the appeals with respectively delays mentioned above, we condone the delay occurred in preferring the appeals before the ld.CIT(A) in respect of penalty appeals as well as quantum appeal filed before us. In view thereof, without dwelling into merits of the case and considering the submissions of ld. Counsel for the assessee, the issues on merit are being remitted to the file of ld.CIT(A) for denovo adjudication of the above appeals. The assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld. CIT(A) shall be free to proceed in accordance with law. Finding of the ld. CIT(A) is set aside and effective grounds of appeal raised by the assessee are allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT PUNE

In this batch of four appeals, ITA Nos.1148 to 1150/PUN/2024 pertain to Assessment Year 2017- 8 and are directed against the orders framed by National Faceless Appeal Centre, Delhi (in short ‘NFAC’) confirming the penalties levied u/s.270A, 271A and 271E of the Act. ITA No.1151/PUN/2014 pertain to Assessment Year 2018-19 and is directed against the order framed by NFAC, Delhi in relation to quantum addition.

All these appeals are being disposed of by this consolidated order for the sake of convenience as in all these appeals ld.CIT(A) has not condoned the delay and dismissed the appeals in limine.

2. Facts of the case in ITA 1148/PUN/2024 are that assessee is a company engaged in the business as manufacturer of particle Boards which are made from Bagasse (dry waste from sugar factory). Current Loss of Rs.9,50,99,095/- was furnished in its return of income for the A.Y. 2017- 8 filed on 31.10.2017. The case selected for complete scrutiny under CASS followed by issuance of statutory notices through ITBA portal u/s.143(2)/142(1) of the Act. Based on the Tax Audit Report and other details, ld. AO made the following additions :

Ld. AO also initiated proceedings u/s.270A(2) of the Act and issued show cause notices to the assessee to which there was no compliance from the side of assessee. In the event, ld. AO vide order dated 27.10.2021 levied penalty of Rs.92,94,216/- u/s.270A(2) for underreporting of income.

3. Similarly, AO also levied penalty of Rs.1,71,33,560/- on the various loans received by it through modes other than mode specified u/s.269SS of the Act invoking the provisions of section 271D. Ld. AO also levied penalty of Rs.1,75,10,751/- on the ground that the assessee repaid loans/deposits to various parties through modes other than the modes specified u/s.269T of the Act.

4. Dissatisfied assessee contested the penalty orders before the CIT(A) with a delay of 775, 366, 363 and 979 days. Before the ld. CIT (A), the assessee submitted that the notices of hearing were sent on email id of the consultant who failed to pursue the case. It is also a fact that the company suffered huge losses and was under acute financial crunch and its management was under pressure to improve its operations. The assessee enclosed its financial statements to indicate the company’s position. It was also submitted that staff from the accounts department left the job due to delay in payment of salary etc. Assessee relied on various decisions for condonation ld. CIT(A) dismissed the appeals in limine by not condoning the delay.

5. Facts in brief in respect of ITA 1151/PUN/2024 for A.Y. 2018-19 are that the assessee filed the return declaring loss. The case selected for scrutiny through CASS and assessment was completed u/s.143(3) determining total income of assessee at Rs.5.43 crore. Assessee preferred appeal before the ld.CIT(A) with delay of 979 days who dismissed the appeal in limine by not condoning the delay.

6. Now the assessee is in appeals before the Tribunal against the aforesaid impugned orders.

7. We have heard both the sides and perused the record placed before It is as admitted position that all the appeals before us have been dismissed by the ld.CIT(A) in limine by not condoning the delay and During the course of present hearing, Ld. Counsel for the assessee at the outset submitted that assessee could not represent its case in the penalty appeals for A.Y. 2017-18 as well as quantum appeal for A.Y. 2018-19 before the authorities for the reasons submitted before the authorities about its company’s financial position and non- pursuing of the appeals by the tax consultant. However, the submissions were brushed-aside by the ld.CIT(A) and dismissed the appeals without dealing on merits of the issues, thereby confirming the penalties levied under the Act. It is therefore prayed for remanding the issues on merit to the file of ld.CIT(A) so that the assessee is in a position to substantiate its case. Ld. Departmental Representative has no objection for remanding the matters to the file of ld.CIT(A) for denovo adjudication.

8. On the ground of delay, we would like to quote the judgment of Hon’ble Supreme Court in the case of Collector Land Acquisition MST Katiji (1987) 167 ITR 471 SC . In the said Judgment, their Lordships have given certain principles based on which, the issue with regard to the delay can be approached and the said portion of the order of the Judgment cited supra is reproduced hereunder:

1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being As against this when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.

3. Every day’s delay must be explained does not mean that a pedantic approach should be Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, common sense and pragmatic manner.

4. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.

5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.

6. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

In the light of above and considering that there was ‘reasonable cause’ which prevented the assessee in presenting the appeals with respectively delays mentioned above, we condone the delay occurred in preferring the appeals before the ld.CIT(A) in respect of penalty appeals as well as quantum appeal filed before us. In view thereof, without dwelling into merits of the case and considering the submissions of ld. Counsel for the assessee, the issues on merit are being remitted to the file of ld.CIT(A) for denovo adjudication of the above appeals. The assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld. CIT(A) shall be free to proceed in accordance with law. Finding of the ld. CIT(A) is set aside and effective grounds of appeal raised by the assessee are allowed for statistical purposes.

9. In the result, all the appeals of the assessee are allowed for statistical purposes.

Order pronounced on this 17th day of January, 2025.