ITAT imposes ₹2k cost for unexplained delay in filing appeal and remands matter to AO for fresh adjudication of disallowance issue [Read Order]

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has imposed a cost of ₹2,000 on M/s. Udai Lal Mahabir Prasad for failing to explain the delay in filing its appeal and remanded the disallowance issue to the Assessing Officer (AO) for fresh adjudication.

The assessee, Udai Lal Mahabir Prasad, has appealed an order passed under section 143(1) of the Income Tax Act, 1961, for Assessment Year (AY) 2018–19.

The Commissioner of Income Tax (Appeals) ( CIT(A) ) dismissed the appeal as time barred, noting a delay of 1,401 days in filing. The CIT(A) recorded that the assessee had failed to furnish sufficient cause for condonation of delay, particularly for the period from 18.11.2022 to 30.03.2023, and had also not produced any material evidence to establish that the intimation under section 143(1) was not served.

The assessee contended that it became aware of the demand only when checking its account on the Income Tax Portal and also claimed to have attempted to file a rectification petition under section 154 before the AO, but could not submit it online due to technical issues.

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The dispute concerned the disallowance of ₹3,62,264 paid to partner Shikhar Chand Jain in his individual capacity, though he was representing his Hindu Undivided Family (HUF) in the firm. The assessee argued that this payment had been accepted in scrutiny assessment for the immediately preceding year and urged for a decision on the merits.

The bench comprising Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) noted that there was no convincing explanation or supporting evidence for the delay, and therefore agreed that the delay was unexplained.

The Tribunal also observed that the disallowance issue required adjudication on merits. In the interest of justice, it set aside the order of the CIT(A) and remanded the matter to the file of the AO for a fresh decision.

The tribunal made the remand conditional upon the assessee depositing a cost of ₹2,000 in the Prime Minister’s National Relief Fund (PMNRF) and directed that the AO should consider the matter afresh after giving the assessee a reasonable opportunity of being heard.

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The appeal was thus partly allowed, with the issue restored to the AO for fresh adjudication and a cost imposed for the unexplained delay.

Tanuj Agarwal represented the assessee, while the revenue was represented by Gautam Singh Choudhary.

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