The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) held that an assessee cannot be penalized for the fault of their Chartered Accountant ( CA ) and accordingly condoned an exorbitant delay of 1430 days in filing an appeal against an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre ( NFAC ), Delhi.
The appeal was filed by Mukhtiyarodin Ajimodin Malek, challenging the CIT(A) order dated 19.10.2023. The original assessment order under Section 143(3) of the Income Tax Act, 1961, assessed the total income at Rs.90,974/-. Subsequent orders under Sections 147 and 263 significantly increased the assessed income to Rs.34,82,500/-, treating the entire transport receipt of Rs.33,91,530/- as income without allowing deductions for business expenses.
The grounds of appeal included that the CIT(A) ( NFAC ) erred in rejecting the prayer for condonation of delay in filing the appeal and dismissed it without considering its merits. Additionally, the CIT(A) dismissed the appeal on technical grounds without adjudicating the merits of the case. Furthermore, the CIT(A) failed to adjudicate the ground concerning the determination of the entire transport receipt as income without allowing for business expense deductions.
The assessee, represented by B.T. Thakkar, argued that the delay was not deliberate but due to the negligence of the previous CA Gopal Shah. The assessee only became aware of the orders when HDFC Bank informed him about the attachment of his bank account for an outstanding demand of Rs.33,12,029/- on 29.11.2019. After obtaining the orders, the assessee promptly filed an appeal within 15 days. The Covid-19 pandemic further delayed proceedings as the subsequent CA, Nazir Malek, passed away in March 2020.
The Revenue, represented by C.S. Sharma, opposed the delay, arguing that the delay of over 1430 days was exorbitant and unjustifiable.
The Tribunal found that the delay was due to exceptional circumstances beyond the assessee’s control. The Tribunal noted that the negligence of the previous CA and the subsequent death of the new CA during the pandemic were substantial reasons justifying the delay.
The two-member bench, comprising Judicial Member Suchitra Kamble and Accountant Member Narendra Prasad Sinha, emphasised that the assessee acted promptly upon discovering the orders and that the delay should not impede the assessee’s right to contest the appeal on its merits.
The bench condoned the delay and remanded the matter back to the CIT(A) for adjudication on merits, ensuring due process and adherence to principles of natural justice. The CIT(A) will decide the matter on merit as per due process of law and will provide the assessee with an opportunity of hearing, following the principles of natural justice.
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