Chandrakant Babaladas Patel Vs ACIT (ITAT, Mumbai)
1,289 Days Late, Yet Not Too Late for Justice – Mumbai ITAT Condones Huge Appeal Delay; Non-Communication of Tax Orders Constitutes Sufficient Cause
Summary: The assessee’s appeals before the CIT(A) were delayed by a whopping 1,289 days in the quantum proceedings u/s 153A r.w.s. 144 & 1,166 days in the penalty proceedings u/s 271F. The CIT(A) refused to condone the delay & consequently dismissed both appeals without adjudicating them on merits.
The assessee explained that after the search, his employer was handling his tax affairs, and the mobile number & email ID linked with his Income-tax profile belonged to the employer. Consequently, the notices & orders issued by the Department were not effectively communicated to the assessee, and he came to know about the proceedings only subsequently, after which steps were taken to obtain the orders & file appeals.
The Mumbai ITAT held that an explanation for delay cannot be rejected merely because the delay is substantial. Considering the peculiar circumstances, non-communication of the orders & the employer’s role in handling the tax matters, the Tribunal held that the assessee had demonstrated “sufficient cause warranting condonation of delay”.
Accordingly, the ITAT condoned the delays of 1,289 & 1,166 days, set aside the CIT(A)’s orders & restored both appeals for fresh adjudication on merits, including all legal & jurisdictional grounds, after providing an effective opportunity of hearing. The Tribunal, however, expressly clarified that it had not expressed any opinion on the merits of the quantum addition or the penalty u/s 271F.
The message is clear: length of delay by itself is not decisive — where tax orders never effectively reach the assessee & the surrounding circumstances establish sufficient cause, even a delay exceeding three years should not shut the doors of appellate justice.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
1. These two appeals filed by the assessee for Assessment Years 2013-14 and 2014-15 arise from the respective orders passed by the learned Commissioner of Income-tax (Appeals), Mumbai [“learned CIT(A)”]. ITA No. 5129/Mum/2026 is directed against the order passed by the learned CIT(A) in relation to the penalty imposed under section 271F of the Income-tax Act, 1961 (“the Act”) for Assessment Year 2013-14, whereas ITA No. 5134/Mum/2026 is directed against the order passed by the learned CIT(A) in relation to the assessment framed under section 153A read with section 144 of the Act for Assessment Year 2014-15. Since the appeals arise from the same set of search-related proceedings and involve a common issue relating to the condonation of delay in filing the appeals before the learned CIT(A), the appeals were heard together on the same date and are being disposed of by this consolidated order for the sake of convenience and consistency.
2. The facts giving rise to the present appeals are substantially similar to those considered by us in the consolidated order passed in the assessee’s appeals for Assessment Years 2015-16, 2016-17, 2017-18 and 2019-20. In the said order, we have considered in detail the circumstances in which the appeals came to be filed belatedly before the learned CIT(A), the explanation furnished by the assessee in support of the applications seeking condonation of delay, the circumstances relating to the non-communication of the assessment and penalty orders to the assessee and the interconnection of the assessee’s case with the cases of his employer and the proprietrix of M/s Mectec. Upon consideration of the totality of the facts and circumstances, we had condoned the delay and restored the matters to the file of the learned CIT(A) for adjudication on merits.
3. In the present appeals also, the assessee had filed the appeals before the learned CIT(A) belatedly. As recorded in the order of the learned CIT(A), the assessment order under section 153A read with section 144 of the Act for Assessment Year 2014-15 was passed on 22.09.2021 and the appeal was filed on 03.04.2025, resulting in a delay of 1,289 days. In respect of the penalty appeal for Assessment Year 2013-14, the penalty order under section 271F of the Act was passed on 27.01.2022 and the appeal was filed on 07.04.2025, resulting in a delay of 1,166 days. The learned CIT(A), therefore, first examined the question whether the delay in filing the respective appeals could be condoned before proceeding to consider the substantive grounds raised by the assessee. However, having rejected the applications for condonation of delay, the learned CIT(A) dismissed the appeals without adjudicating the issues raised on merits.
4. The assessee had explained that, subsequent to the search proceedings, his employer, Shri Kamlesh Rajnikant Shah, had been handling his tax-related affairs. It was specifically submitted that the mobile number and e-mail ID associated with the assessee’s Income-tax profile were those of Shri Kamlesh Rajnikant Shah and, consequently, the notices and orders issued by the Department were not effectively brought to the knowledge of the assessee. The assessee further explained the circumstances in which he subsequently came to know of the assessment and penalty proceedings and thereafter took steps to obtain the relevant orders and file the appeals. The same explanation was placed before the learned CIT(A) in respect of the connected assessment years. The assessee had also raised substantive issues concerning the validity of the assessments and the ownership of the cash found and seized during the search. In particular, it was contended that the cash seized during the search was being held by the assessee in a fiduciary capacity as an employee of M/s Mectec and that he could not be regarded as the owner of the seized cash.
5. While the case was posted for hearing before us on 18.08.2026, none appeared on behalf of the assessee. The learned Departmental Representative (“ld.DR”), on the other hand, relied upon the orders of the learned CIT(A) and submitted that the delay was substantial and that the assessee had failed to establish sufficient cause before the first appellate authority.
6. We have considered the material available on record. As noted above, the issue before us at this stage is confined to the correctness of the action of the learned CIT(A) in refusing to condone the delay and consequently dismissing the appeals without adjudicating the substantive issues raised by the assessee. We have already considered the very same issue in detail in our consolidated order passed in the assessee’s appeals for Assessment Years 2015-16, 2016-17, 2017-18 and 2019-20. In that order, we have examined the circumstances relating to the non-communication of the assessment and penalty orders to the assessee, the role of the assessee’s employer in handling the assessee’s tax matters, the explanation furnished by the assessee for the delay and the interconnection of the assessee’s case with the cases of the employer and M/s Mectec. For the detailed reasons recorded therein, which we do not consider necessary to reproduce in the present order, we had held that the explanation furnished by the assessee could not be rejected merely on the ground that the delay was substantial and that, having regard to the peculiar facts and circumstances of the case, the assessee had demonstrated sufficient cause warranting condonation of the delay.
7. The facts relating to the present appeals do not warrant a different conclusion. On the contrary, the explanation furnished by the assessee in respect of the present assessment years is substantially the same as the explanation considered by us in the aforesaid consolidated order. The learned CIT(A) himself has recorded that the assessee had advanced identical submissions in support of the applications for condonation of delay in the connected appeals and had applied the same reasoning across the assessment years. The learned CIT(A) has specifically observed that the arguments seeking condonation of delay in the appeals relating to Assessment Years 2014-15 to 2019-20 were identical to those considered in the appeal for Assessment Year 2013-14 and, accordingly, the findings recorded in respect of Assessment Year 2013-14 were applied mutatis mutandis to the other assessment years.
8. We therefore see no reason to depart from the view already taken by us in the consolidated order for Assessment Years 2015-16, 2016-17, 2017-18 and 2019-20. Following the said decision, we hold that the delay in filing the appeals before the learned CIT(A) for the present assessment years also deserves to be condoned. Accordingly, in ITA No. 5134/Mum/2026 relating to Assessment Year 2014-15, we condone the delay in filing the appeal before the learned CIT(A). Consequently, the impugned order of the learned CIT(A) is set aside and the matter is restored to his file for adjudication afresh on merits in accordance with law. The learned CIT(A) shall adjudicate all the grounds raised by the assessee, including the legal and jurisdictional grounds, after affording reasonable and effective opportunity of hearing to the assessee.
9. In ITA No. 5129/Mum/2026 relating to Assessment Year 2013-14, the appeal concerns the penalty imposed under section 271F of the Act. Since the learned CIT(A) dismissed the appeal without adjudicating the substantive grounds raised by the assessee, consequent upon rejection of the application for condonation of delay, we deem it appropriate to restore the matter to the file of the learned CIT(A) for adjudication afresh on merits. The learned CIT(A) shall consider the grounds raised by the assessee against the levy of penalty under section 271F and decide the same in accordance with law, after affording reasonable and effective opportunity of hearing to the assessee.
10. We make it clear that we have not expressed any opinion on the merits of the quantum addition for Assessment Year 2014-15 or on the validity or leviability of the penalty under section 271F for Assessment Year 2013-14. All such issues are left open for adjudication by the learned CIT(A) in accordance with law. The assessee shall extend full cooperation in the appellate proceedings and shall furnish all relevant documents and explanations as may be called for by the learned CIT(A). The learned CIT(A) shall decide the appeals independently and in accordance with law, without being influenced by any observations made in the present order on issues other than the question of condonation of delay.
11. In the result, the delay in filing the appeals before the learned CIT(A) is condoned. The impugned orders of the learned CIT(A) are set aside and the matters are restored to the file of the learned CIT(A) for adjudication afresh on merits in accordance with law. Accordingly, ITA No. 5129/Mum/2026 and ITA No. 5134/Mum/2026 are allowed for statistical purposes.
Order pronounced in the open court on 31.08.2026.
