Case Law Details
Mohammed Raza Hasnain Shaikh Vs ITO (ITAT Mumbai)
In this case, the appeal before the Income Tax Appellate Tribunal, Mumbai Bench, arose from an order of the Commissioner of Income-tax (Appeals) dismissing the assessee’s appeal in limine on the grounds of substantial delay and alleged defects in filing.
For the relevant assessment year, the assessee had not originally filed a return of income. Based on information received from the Investigation Wing regarding alleged transactions of ₹25 lakh in penny stock scrips, the Assessing Officer formed a belief that income had escaped assessment and initiated reassessment proceedings by issuing notice under section 148. The notice was duly served, but there was no compliance from the assessee at that stage. Subsequently, the assessee filed a return declaring total income of ₹68,343. Further notices under section 142(1) and a final show cause notice were also issued, but effective compliance was not made. Consequently, the assessment was completed ex parte under section 144 on 26 December 2019. The Assessing Officer made an addition of ₹25 lakh under section 68 as unexplained cash credit and a further addition of ₹75,000 under section 69C, being 3% commission allegedly paid for obtaining the accommodation entry.
The assessee filed an appeal before the Commissioner (Appeals) on 28 August 2024 against the assessment order dated 26 December 2019. The appellate authority noted that there was a delay of more than five years and seven months in filing the appeal. It was also observed that a certified copy of the assessment order had not been filed along with Form No. 35. The assessee explained that during the relevant period he was a non-resident and was unaware of the notices issued and of the delay in filing the appeal. However, the Commissioner (Appeals) treated the appeal as defective and time-barred. It was held that the appeal suffered from non-curable defects because the assessment order against which the appeal had been filed was not furnished, and there was no satisfactory explanation for the prolonged delay. On that basis, the appeal was dismissed in limine without examining the merits of the additions made in assessment.
Before the Tribunal, the assessee filed an affidavit stating that the assessment order had never been served upon him. It was submitted that he became aware of the assessment proceedings only when recovery action was initiated, after which he approached the department seeking a copy of the assessment order, but the same was not provided. It was further pointed out that even the Commissioner (Appeals), despite writing to the Assessing Officer on two occasions, was unable to procure a copy of the assessment order. This, according to the assessee, supported his claim that the order was not available despite efforts made to obtain it. The assessee also placed on record a copy of the assessment order that had been obtained after the appellate order was passed.
The Tribunal examined the two grounds on which the appeal had been dismissed—delay in filing and non-filing of the assessment order with Form No. 35. On the issue of delay, the Tribunal found that the explanation supported by affidavit, namely that the assessee was non-resident during the relevant period and faced difficulty in obtaining the assessment order, indicated that the delay was caused by non-service and consequent non-availability of the order. The Tribunal noted that this position was reinforced by the Commissioner (Appeals)’ own observation that despite efforts, the assessment order could not be obtained from the Assessing Officer. In such circumstances, the Tribunal held that the delay could not be attributed to deliberate inaction or negligence on the part of the assessee and that sufficient and reasonable cause existed for the delay.
On the issue of defect in filing, the Tribunal held that absence of the assessment order at the time of filing the appeal could not be treated as a non-curable defect in the peculiar facts of the case, especially when the order was not available despite due diligence and had subsequently been obtained. The Tribunal observed that the appeal should not be rejected merely for such reasons. Accordingly, the impugned order of the Commissioner (Appeals) was set aside and the matter was restored to the appellate authority with directions to reconsider the application for condonation of delay in light of the affidavit and supporting material, admit the appeal if satisfied with the explanation for delay, and thereafter adjudicate the issues on merits after giving adequate opportunity of hearing. Since the matter was restored for fresh adjudication, the Tribunal did not examine the additions made under sections 68 and 69C on merits at this stage. The appeal was allowed for statistical purposes.
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