Gross Negligence of Accountant Not a Ground for Condonation: ITAT Dismisses Income Tax Appeal with 477-Day Delay [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) dismissed an appeal filed by a charitable trust with a delay of 477 days and ruled that gross negligence on the part of the accountant does not amount to sufficient cause for condonation under Section 253(5) of the Income Tax Act, 1961.

Shri Khambhat Taluka Sarvajanik Kelavani Mandal (assessee), a trust, did not file its return of income for Assessment Year (AY) 2017-18. The Assessing Officer (AO) received information under "Operation Clean Money" regarding cash deposits of Rs. 10,77,455 during the demonetization period.

Further inquiries revealed total cash deposits of Rs. 97,92,015 and other credits of Rs. 2,05,97,779 in bank accounts, which were treated as unexplained money under Section 69A, along with interest income of Rs. 89,470. The assessment was completed ex parte at a total income of Rs. 3,04,79,265.

Aggrieved by the AO’s order, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. Despite opportunities, no compliance was made, leading to dismissal of the appeal. Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT with a delay of 477 days, seeking condonation on grounds of the accountant’s negligence.

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The assessee submitted affidavits from its secretary and accountant, blaming the delay on the accountant’s gross negligence, including failure to comply before the AO and CIT(A).

The two-member bench comprising Sanjay Garg (Judicial Member) and Narendra Prasad Sinha (Accountant Member) observed that the assessee cannot escape by merely passing the blame for delay in filing the appeal to the accountant.

The bench held that condonation requires sufficient cause based on reasonableness. It noted gross negligence especially when the assessee failed to monitor proceedings. It observed that if the accountant was negligent before the CIT(A), then the assessee should have ensured timely filing of Present appeal.

The bench highlighted the assessee’s failure to file returns or respond to notices, reflecting poor conduct. The Tribunal dismissed the appeal as time-barred, without condoning the delay. The appeal of the assessee was dismissed.

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