ITAT Directs CIT(A) to Condone 4-Day Delay and Adjudicate Kerala State Drugs and Pharmaceuticals Ltd.'s Appeal on Merits [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) Cochin Bench has ruled in favor of Kerala State Drugs and Pharmaceuticals Ltd. and directed the Commissioner of Income Tax (Appeals) CIT(A) to condone a four-day delay in filing the appeal. The tribunal held that the delay was due to unavoidable circumstances and should not prevent the assessee from having its case heard.

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Kerala State Drugs and Pharmaceuticals Ltd. is a government undertaking engaged in the manufacturing and distribution of pharmaceutical products. The company filed its income tax return for Assessment Year (AY) 2012-13 on September 29, 2012, declaring nil income. The Assessing Officer (AO) completed the initial assessment under Section 143(3) of the Income Tax Act, 1961, and accepted the return as filed. Later, the AO found that income had escaped assessment because the company failed to disclose Rs.18,75,111(18.75 lakhs) under Section 115JB of the Act. The AO issued a notice under Section 148 on March 29, 2019, after obtaining approval from the Chief Commissioner of Income Tax (CCIT). In response, the company filed a revised return, again declaring nil income. However, the AO reassessed the book profit at Rs.98,40,521(98.4 lakh) under Section 115JB.

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The company appealed against the reassessment order before the CIT(A) but filed the appeal with a delay of four days. The CIT(A) refused to condone the delay, stating that the assessee failed to provide a sufficient reason for the delay. The CIT(A) considered the delay inordinate and dismissed the appeal. The company then challenged this decision before the ITAT Cochin Bench.

The company explained that the delay occurred because its authorized representative was occupied with time-sensitive assessments and the Managing Director was out of station. The company also stated that the days before the due date included public holidays due to Christmas, making it difficult to file the appeal on time.

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ITAT accepted these explanations and found no reason to doubt the reasons given by the appellant. The tribunal held that a four-day delay was minor and should not prevent the assessee from receiving a fair hearing. It also stated that the principle of natural justice requires cases to be decided on merits rather than dismissed on technical grounds.

ITAT Cochin Bench comprised of  Inturi Rama Rao (Accountant Member) and Keshav Dubey (Judicial Member) set aside the CIT(A)’s order and directed it to condone the delay. The CIT(A) was instructed to hear the appeal on merits and provide the assessee with an opportunity to be heard.

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In Conclusion, The ITAT Cochin Bench ruled in favor of Kerala State Drugs and Pharmaceuticals Ltd. by directing the CIT(A) to condone the four-day delay and hear the appeal on its merits.

To Read the full text of the Order CLICK HERE

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