ITAT Condones 450-Day Delay in Income Tax Appeal Filing Due to Former CA's Oversight [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) condoned  a delay of 450 days in filing an appeal, attributing it to the negligence of the former Chartered Accountant (CA) in failing to inform the assessee.

Redstone Textile Pvt. Ltd., the assessee, was engaged in the textile business and was subjected to proceedings under Section 153C of the Income Tax Act 1961. These proceedings were initiated based on a search and seizure conducted on 17 January 2018 in the case of the Deesan Group. During the course of the search, certain documents relating to the assessee were found at the premises of Deesan Texfab Pvt. Ltd.

Later, a notice under Section 153C of the Act was issued to the assessee on 31.03.2021 for Assessment Years (AYs) 2014-15 to 2018-19. Assessment orders were passed on 10.05.2021.

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The assessee had engaged a CA firm to handle the assessment and appellate matters. However, due to poor follow-up and lack of communication, the assessee did not receive any notices of hearing from the office of the Commissioner of Income Tax (Appeal) ( CIT(A) ). The notices were reportedly not received at the email address mentioned in Form 35.

The CIT(A) passed ex parte orders on 13.09.2023 for all five assessment years under consideration. The assessee remained unaware of these developments due to the consultant’s failure to inform them.

The assessee remained unaware of the appellate proceedings until the appointment of a new  CA consultancy firm. While reviewing the assessee’s income tax portal, the new consultants discovered the ex parte orders passed by the CIT(A).

Aggrieved by the ex parte orders, the assessee moved before the tribunal with a delay of 450 days beyond the statutory due date.

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Tarang Mehta, counsel representing the assessee, argued that the delay was caused by genuine and unavoidable circumstances. It was submitted that the former CA neither communicated the notices nor ensured proper representation.

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Meanwhile, Sanyogita Nagpal, counsel representing the revenue, countered that the delay was excessive and that the assessee had shown no diligence in tracking the appeal process.

The bench comprising Girish Agrawal (Accountant Member) and Amit Shukla (Judicial Member) considered the facts and found merit in the assessee’s explanation. The tribunal observed that the delay was not intentional but resulted from a bona fide oversight by the previous CA.

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The tribunal referred to the principles laid down by the Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others (1987), highlighting that justice should prevail over procedural technicalities. It held that there was sufficient cause to condone the delay.

Thus, the ITAT condoned the 450-day delay and returned the case to the CIT(A) for fresh consideration.

To Read the full text of the Order CLICK HERE

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