ITAT Remands Ex Parte Tax and Penalty Appeals citing delays and denied opportunity [Read Order]

This case deals with the Rajesh Babulal Shah appeal against various tax orders issued for the assessment year 2018-2019.The appeals were made after the orders passed by the National Faceless Appeal Centre (NFAC)Delhi which had originated from the earlier order by the National E-Assessment Centre (NeAC)Delhi. The initial orders included actions taken under section 144 read with section 144B and section 272A(1)(d) and section 271AAC(1) of the Income Tax Act,1961. During the hearing the assessee was absent and had not requested an adjournment this led the tribunal to issue an ex parte order.

Complete practical guide to Drafting Commercial Contracts, Click Here

All the appeals were dismissed by the CIT(A) due to delay in filing ( 682 days ,568 days, 416 days ) which contravened section 249(2) of the Act. This case was taken for scrutiny under e-AssessmentScheme, 2019 and the reasons include unsecured loan and the export and import data. The assessing officer

found that the assessee had received an unsecured loan amount to Rs.1,26,61,834.

A notice was issued under section 142(1) of the Act demanding the source of income of the assessee and no response was received Finally, the order was passed ex parte and the entire unsecured loan amount was added back under section 68 of the Act as unexplained cash credit amount to Rs.1,26,61,834 and the tax was computed under section 115BBE of the Act. The penalty was imposed on assessee in relation to alleged addition under section 271AAC(1).The submissions were heard and the documents were also reviewed. The assessee has challenged both the quantum addition and the penalty imposed.

Tax Planning For NRIs - Click Here

A reference was made from the case of Collector, Land Acquisition v. Mst. Katiji & Ors. [(1987) where the Supreme court held that the judiciary’s purpose is to remedy in justice and not to uphold technicalities the court emphasized that a justice oriented approach when considering delays stressing that all litigants including the state warrant equal treatment . It recognised that delays by the state often arise from bureaucratic processes

The court must interpret sufficient cause for delays with the goal of providing even handed justice on merits and prioritize this over technical dismissals . In that particular case the court found a sufficient reason for the delay, condoned it and returned the matter for a decision based on its merits . Relying on the principle established by the supreme court the delay in filing the appeal should have been condensed .

The assessee explained the delay which appeared to be an attempt to mitigate tax liability. However the CIT(A) dismissed the condonation application on a mere technicality without viewing the factual context or providing a proper hearing opportunity .

The assessee will be given a reasonable opportunity to be heard during the remanded proceedings. Simultaneously, the assessee is expected to act diligently and cooperate fully to ensure the appeal is disposed of quickly.

Want a deeper insight into the Income Tax Bill, 2025? Click here

The tribunal ordered the remand of all three appeals concerning penalties under Sections 272A(1)(d) and 271AAC(1) back to the CIT(A). This decision was made because the underlying quantum addition had also been remanded for re-adjudication making the penalty appeals consequential.

The tribunal explicitly directed the CIT(A) to condone the delays in filing which it found to be adequately explained by the assessee and to re-adjudicate the appeals by issuing reasoned orders.

The ITAT comprising Anikesh Banerjee ( Judicial Member) and Vikram Singh Yadav (Accountant Member) ordered all three appeals for statistical purposes.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates