Case Law Details
Freeplay Energy India Pvt Ltd Vs ITO (ITAT Delhi)
The ITAT recently addressed a case involving the second round of litigation before the Tribunal. In the first round, the assessee appealed against the decision of the first appellate authority [CIT(A)], and the Tribunal remanded the matters back to the first appellate authority for a fresh decision. However, in the second round, the appeals were decided ex parte by the learned Commissioner (Appeals), confirming the additions, as the assessee failed to appear and represent the case. This was due to the company being under liquidation and the Official Liquidator being in charge, preventing the assessee from participating in the proceedings. However, subsequent to the proceedings, the company’s liquidation process concluded, and its status was restored to active.
Analysis: The ITAT recognized that the assessee, under the control of the Official Liquidator, was unable to access the online portal of the Income Tax Department and participate in the proceedings before the first appellate authority. As a result, the assessee did not have a fair opportunity to represent its case. Considering the circumstances beyond the assessee’s control and the subsequent restoration of the company’s status, the ITAT decided to set aside the first appellate authority’s orders and restore the matters for a fresh decision. The ITAT also directed the assessee to comply with the notice of hearing and cooperate in the finalization of the proceedings.
Conclusion: The ITAT’s decision in this case highlights the importance of providing a fair opportunity to taxpayers to represent their cases before the first appellate authority. When circumstances beyond their control prevent active participation, such as during a period of liquidation, it is essential to ensure a reasonable chance to present their arguments. The restoration of the matters for a fresh decision allows for a fair and just resolution of the case.
FULL TEXT OF THE ORDER OF ITAT DELHI
Captioned appeals by the assessee arise out of two separate orders, both dated 28.03.2018, of learned Commissioner of Income Tax (Appeals)-34, New Delhi, pertaining to assessment years 2009-10 and 2011-12.
2. Registry has notified delay of 407 days in filing the present appeals. The assessee has filed application dated 23rd July, 2021 explaining the reasons for delay in filing the appeals and seeking condonation thereof.
3. We have heard the parties on the issue of condonation of delay. In sum and substance, it is the say of the assessee that the company was under the process of liquidation by virtue of an order passed by the Hon’ble High Court. Since, during the continuation of liquidation proceedings the Official Liquidator was in-charge of the company, the assessee did not have any access to the Income Tax Department Portal. Hence, had no information about the culmination of proceedings before the first appellate authority and the orders passed by him. It is submitted, only after the assessee received show-cause notice for imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’), it could come to know that the appeals filed before the first appellate authority have been disposed of. Thereafter, the assessee took steps to get copy of orders passed by the first appellate authority and due to intervention of Covid- 19 was able to file the appeal with delay of 407 days. Thus, it was submitted that the delay is completely bona fide and not due to any negligence of the assessee.
4. Having considered rival submissions and perused the materials on record, we are convinced that the delay in filing the present appeals was due to reasonable cause. As explained by the assessee, the company was under the process of liquidation, hence, the Official Liquidator was in-charge of the company during the liquidation proceeding, which disabled the assessee from accessing the online portal of the Income Tax Department. In view of the aforesaid, we are inclined to condone the delay in filing the appeals and admit the appeals for adjudication on
5. As regards the appeals are concerned, the basic grievance of the assessee is against ex parte disposal of the appeals by learned Commissioner (Appeals).
6. Having considered rival submissions, we find that this is the second round of litigation before the Tribunal. In the first round, against the decision of first appellate authority, the assessee had come before the Tribunal and the Tribunal was pleased to restore the matters back to the first appellate authority for deciding afresh. In the second round, learned Commissioner (Appeals) decided the appeals ex parte by confirming the additions as none appeared on behalf of the assessee to represent the case. As discussed earlier, at the time of continuation of proceedings before the first appellate authority, the assessee company was under liquidation and the Official Liquidator appointed by the High Court was in-charge of the company. Therefore, the assessee had no control insofar as representation before the first appellate authority is concerned. It has been submitted before us that subsequently the liquidation process has ended and the status of the company has been restored and, as on date, the company’s status is active in the portal of Ministry of Corporate Affairs. Thus, the facts on record reveal that both in the first round as well as second round of litigation before the first appellate authority, the affairs of the company was under the control of the Official Liquidator. For that reason, the assessee was unable to access online portal of Income Tax Department and participate in the proceedings before the first appellate authority. Subsequently, the assessee regained its status as active company after proceedings concluded before the Commissioner (Appeals). Thus, in our view, the assessee did not get fair opportunity of representing its case before the first appellate authority, for circumstances beyond its control. That being the case, we are inclined to set aside the impugned orders of learned first appellate authority and restore the matters back to his file for deciding afresh after providing due and reasonable opportunity of being heard to the assessee. At the same time, we direct the assessee to comply with the notice of hearing to be issued by learned first appellate authority and cooperate in finalization of the proceeding. Grounds are allowed for statistical purposes.
7. In the result, the appeals are allowed for statistical purposes.
Order pronounced in the open court on 16th May, 2023
