The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) condoned a 355-day delay in appeal due to a serious dispute among partners and remanded the matter for fresh assessment with costs.
The assessee, M/s. Akshaya Builders Developers Promoters is against the orders passed by the Commissioner of Income Tax ( Appeals ) [ CIT( A ) ] for the assessment years 2017-18 and 2018-19.
It was requested by the assessee that the delay of 355 days may be condoned due to reasonable cause as it was due to a serous dispute between the parters of the firm.
Law and Procedure for Filing of Appeals
The assessee, which is a real estate firm, failed to file its returns for the assessment years in dispute when the assessing officer ( AO ) took up the case of the assessee and directed the assessee to file income tax returns by issuing notice under Section 142( 1 ) of the Income Tax Act, 1961. The assessee filed the return of income for both years and tried to explain the source of the cash deposit, but after this, there was no response from the assessee’s side, due to which the AO declared the returns invalid and finalized assessments against the firm.
Although the firm had appealed to the CIT( A ) it failed to appear for the hearings, due to which the appeals were dismissed ex parte and the AO‘s decision was upheld.
The bench considered the company’s plea that the delay was due to partner disputes and condoned the delay. The ITAT also reached a conclusion that the assesee had not taken the tax compliance as a vigilant citizen and imposed a cost of Rs. 50,000 for each assessment year, which the firm was instructed to deposit under the “Others” category and submit proof to the AO. The bench, comprising Shri Prakash Chand Yadav ( Judicial Member ) and Shri Laxmi Prasad Sahu ( Accountant Member ) remanded the matter back to the AO for a fresh assessment, providing the firm with a final opportunity to present and stated that if the firm fails to cooperate during the remand proceedings, no further leniency will be granted.
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