ITAT condoned delay due to Dire Financial Stress & Difficulties – Remanded matter back to CIT(A)

First STP Pvt. Ltd. Vs ITO (ITAT Chennai)

ITAT note that the assessee’s holding company, M/s. IVRCL Infrastructures & Projects Ltd., is undergoing insolvency proceedings before the Ld. NCLT, Hyderabad Bench, and the assessee was facing problem with the management as well as facing severe finance stress. It was brought to our notice that the assessee’s relevant files pertaining to the issues raise in the appeal in respect of Income Tax got misplaced, since the officers handling this portfolio left job and did not hand over the documents to the assessee. Therefore, the assessee was not able to trace the files and couldn’t give it timely to the Ld.AR of the assessee. Coupled with the aforesaid facts, the key persons suffered from serious health issues, which prevented them from supervising the litigations and giving instructions to the Ld.AR of the assessee, which facts caused non­representation/compliance before the Ld. CIT(A). Having gone through the contents of the affidavit in support of contents raised before us and the undertaking given by the Ld.AR, Mr. T. Chaitanya Kumar, Adv., that he will personally appear before the Ld. CIT(A)/file written submissions as well as Paper Book in support of grounds of appeal raised by the assessee, for the ends of the justice and fair play, we set aside the impugned order of the Ld. CIT(A) and restore the matter back to the file of the Ld. CIT(A) for fresh adjudication of appeals and the assessee not to seek adjournment without just cause.

ITA No.722/Chny/2022 for the AY 2014-15:

2. This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax (Appeals)-6, Chennai, dated 18.09.2019, for the Assessment Year (AY) 20 14-15.

3. At the outset, the Ld.AR of the assessee brought to our notice that the impugned order of the CIT(A) dated 18.09.2019 as well as the order of the AO dated 31.10.2016 are ex-parte orders and therefore, prayed that since the assessee did not get proper opportunity, the matter may be restored back to the file of the AO for de-novo assessment and for that relied on the decision of the Hon’ble Supreme Court in the case of M/s Tin Box Company v. CIT reported in [2001] 249 ITR 216 (SC), wherein the Hon’ble Supreme Court has held that if the assessee did not get proper opportunity before the AO, then, the assessment has to be framed de-novo. The Hon’ble Supreme Court has held as under:

1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus :

“We will straightaway agree with the assessee’s submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard.”

2. That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being

3. Two questions were placed before the High Court, of which the second question is not pressed.

The first question reads thus:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee?”

4. In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the asses-see.

5. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded

to the assessing authority for fresh consideration, as aforestated. No order as to costs.

4. We note that the order passed by the Ld.CIT(A) is an ex-parte order and even the AO has passed order u/s.144 of the Act (best judgment assessment) without participation of the assessee. Since, the assessee did not get proper opportunity before the AO due to dire financial stress and difficulties noted (supra) during that time, for the ends of the justice and fair play, we set aside the impugned order of the Ld.CIT(A) and restore the matter back to the file of the AO for de-novo framing of assessment. Needless to say that the assessee may be given proper opportunity of hearing; and the Ld.AR of the assessee has undertaken before us that the assessee would be diligent and will participate during the course of assessment proceedings, and if advised to do so, file relevant evidences/documents to substantiate its claim as well as file written submissions to support its claim. The AO is directed to frame assessment in accordance to law.

5. In the result, appeal filed by the assessee is allowed for statistical

ITA No.721/Chny/2022 for the AY 20 11-12:

6. This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax (Appeals)-6, Chennai, dated 16.09.2019, for the Assessment Year (AY) 2011-12.

7. We note that this is an ex-parte order passed by the Ld. CIT(A) without condoning thirteen days (13 days) delay. We note that even though, the assessee pleaded that it could not file the appeal due to intervening holidays like Pongal/Republic day, etc., the Ld. CIT(A) taking note that the assessment order was passed on 05.12.2017 and therefore, according to him, assessee ought to have filed the appeal on or before 17.01.2018 and did not accept the plea of the assessee to condone 13 days delay and he dismissed the appeal of the assessee. This action of the Ld. CIT(A) cannot be countenanced and after having gone through the contents of the application for condonation of delay, we condone the delay and admit the appeal and since, the Ld. CIT(A) has not passed order on merits in respect of grounds of appeal raised by the assessee, we set aside the impugned order of the Ld. CIT(A) and restore the appeal back to the file of the Ld. CIT(A) by condoning the delay, with a direction to decide the grounds of appeal raised by the assessee in accordance to sec.250(6) of the Act.

8. In the result, appeal filed by the assessee is allowed for statistical

ITA Nos.718, 719 & 720/Chny/2022 for the AYs 2007-08, 2008-09  & 2010-11:

9. The Ld.CIT(A)-6 has passed a consolidated order dated 17.09.2019, in respect of these three (3) appeals. The impugned order also is an ex­parte order. However, it is noted that the Ld.CIT(A) has given sufficient opportunities to the assessee which fact is discernable from the perusal of the impugned order. We note that the assessee had taken time and again adjournment on several occasions citing different reasons through several lawyers/ARs before the Ld.CIT(A). In such a scenario, the Ld.CIT(A) passing an ex-parte order per-se cannot be faulted. However, the Ld.AR appearing for the assessee, Mr.T.Chaitanya Kumar, Adv., has pleaded the assessee company as well as its holding company was going through dire financial constraints stress and there was certain severe health issues of the key persons of the assessee company which prevented proper supervision of the litigation, which omission caused failure to supply the relevant documents timely to the Ld.AR due to missing/misplacement of files. According to the Ld.AR, if one opportunity is given to the assessee, it would submit all relevant documents as well as its submissions before the Ld.CIT(A). The Ld.AR undertakes to be present himself before the Ld.CIT(A) or file written submissions as well as the Paper Book in support of its grounds of appeal regarding both issues i.e. (i) Earnest Money Deposit (EMD) (ii) the deduction u/s.80IA of the Act (iii) depreciation. Per contra, the Ld.DR opposes the restoration of the matter before the Ld.CIT(A). According to him, the assessee has been given several opportunities, but failed to comply, so the assessee should not be given another innings before the Ld.CIT(A).

10. We have heard both the parties and perused the material available on record. We note that the assessee’s holding company, M/s. IVRCL Infrastructures & Projects Ltd., is undergoing insolvency proceedings before the Ld. NCLT, Hyderabad Bench, and the assessee was facing problem with the management as well as facing severe finance stress. It was brought to our notice that the assessee’s relevant files pertaining to the issues raise in the appeal in respect of Income Tax got misplaced, since the officers handling this portfolio left job and did not hand over the documents to the assessee. Therefore, the assessee was not able to trace the files and couldn’t give it timely to the Ld.AR of the assessee. Coupled with the aforesaid facts, the key persons suffered from serious health issues, which prevented them from supervising the litigations and giving instructions to the Ld.AR of the assessee, which facts caused non­representation/compliance before the Ld. CIT(A). Having gone through the contents of the affidavit in support of contents raised before us and the undertaking given by the Ld.AR, Mr. T. Chaitanya Kumar, Adv., that he will personally appear before the Ld. CIT(A)/file written submissions as well as Paper Book in support of grounds of appeal raised by the assessee, for the ends of the justice and fair play, we set aside the impugned order of the Ld. CIT(A) and restore the matter back to the file of the Ld. CIT(A) for fresh adjudication of appeals and the assessee not to seek adjournment without just cause.

11. In the result, appeals filed by the assessee in ITA Nos.718, 719 & 720/Chny/2022 for the AYs 2007-08, 2008-09 & 2010-11 are allowed for statistical purposes.

12. In the result, all the appeals filed by the assesse in ITA No.721 & 722/Chny/2022 for the AYs 20 11-12 & 20 14-15 and the appeals filed by the assesse in ITA Nos.718, 719 & 720/Chny/2022 for the AYs 2007-08, 2008-09 & 2010-11 are allowed for statistical purpose.

Order pronounced on the 24^th day of March, 2023, in Chennai.