ITAT Remands Ecoboard Industries’ Appeals for Fresh Decision observing Consultant’s Error and Financial Distress [Read Order]

The Pune bench of the Income Tax Appellate Tribunal (ITAT) condoned the delay and remanded the appeals filed by Ecoboard Industries’ observing consultant’s error and financial distress, while stating that rejecting substantive claims on technicalities could compromise the delivery of justice.

The assessee, Ecoboard Industries Ltd., is engaged in the manufacturing of particle boards using bagasse (a by-product of sugar processing).

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For the year 2017-18, the assessee filed its return of income declaring a loss of ₹9,50,99,095. The case was later selected for scrutiny under the Computer Aided Scrutiny Selection (CASS) system.

Based on the Tax Audit Report, the Assessing Officer (AO) made disallowances under sections 36(1)(va), 40(a)(ia), 40A(7), 40A(9), and 43B of the Income Tax Act, 1961, along with adjustments for bad debts, slow-moving inventory, etc.

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A penalty of ₹92,94,216 was levied under section 270A(2) of the Act for underreporting of income, and additional penalties were imposed for violations of sections 269SS and 269T, relating to acceptance and repayment of loans through non-permissible modes.

Aggrieved by the orders, the assessee moved to the Commissioner of Income Tax ( CIT(A) ) with considerable delays of 775, 366, 363, and 979 days, respectively. CIT(A) refused to condone the delays and dismissed all the appeals.

Thereafter, the assessee filed appeals before the ITAT.

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Sharad A. Vaze, the counsel representing the assessee, argued that the delay was not deliberate and occurred due to the company's financial crisis, including staff attrition, non-payment of salaries, and the consultant’s failure to pursue the case.

The counsel submitted financial statements to substantiate their claims.

Sandeep P. Sathe, the departmental representative, did not object to the remand of the matters for adjudication on merits.

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After considering the parties' arguments, the bench comprising Astha Chandra (Judicial Member) and Dr. Manish Borad (Accountant Member) noted that the CIT(A) dismissed the appeals without considering the merits and that the dismissal was solely on account of the delay.

The bench referred to the Supreme Court’s decision in Collector Land Acquisition v. Mst. Katiji (1987), which held that when substantial justice and technical considerations clash, the former should prevail.

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The bench observed that litigants derive no advantage from delayed appeals and that rejecting substantive claims on technicalities could compromise the delivery of justice.

The Tribunal thus set aside the case by remanding all matters to the CIT(A) for a fresh decision. It also advised the assessee to remain vigilant and avoid unnecessary adjournments.

To Read the full text of the Order CLICK HERE

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