Facts of the Case

The assessee is an Association of Persons (AOP) which did not file its income tax return for the assessment year 2011-12. During the relevant year, the assessee deposited cash amounting to ₹17,79,226 in its savings bank account. To verify the source of such deposits, the Assessing Officer issued notices calling for explanations and supporting evidence. As no reply was furnished, the Assessing Officer completed the assessment under sections 144 and 147 of the Income Tax Act, 1961, assessing total income at ₹17,79,226. The assessment order was passed ex-parte.

Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). However, the appeal was dismissed by the learned CIT(A) on the ground of limitation. Though the assessee sought condonation of delay citing medical reasons, the same was not accepted, and the appeal was treated as inadmissible without adjudication on merits.

 

Issues Involved

Whether the learned CIT(A) was justified in dismissing the appeal on the ground of limitation without condoning the delay under section 249(3) of the Income Tax Act and without deciding the appeal on merits.

 

Petitioner’s (Assessee’s) Arguments

The assessee contended that there existed sufficient cause for the delay in filing the appeal within the meaning of section 249(3) of the Act. It was further pleaded that there was no mala-fide intention behind the delay and that the assessment itself had been completed ex-parte without providing reasonable opportunity of being heard.

 

Respondent’s (Revenue’s) Arguments

The Revenue, represented by the Senior Departmental Representative, relied upon the orders passed by the lower authorities. No specific objection was raised on the aspect of remand, and the matter was left to the discretion of the Tribunal.

 

Court Order / Findings

The Hon’ble Income Tax Appellate Tribunal, Allahabad Bench, observed that the assessee had sufficient cause for not filing the appeal within the prescribed time limit as contemplated under section 249(3) of the Income Tax Act. The Tribunal held that the learned CIT(A) ought to have condoned the delay and admitted the appeal for adjudication on merits.

It was further noted that since the appeal was dismissed in limine on limitation, the CIT(A) did not examine the grievance relating to lack of reasonable opportunity during assessment proceedings. Considering that the CIT(A) is the first appellate authority, the Tribunal held that the matter should be decided at that stage on merits by passing a speaking order.

Accordingly, the impugned appellate order dated 17/01/2025 was set aside, and the learned CIT(A) was directed to condone the delay, admit the appeal, and pass a de novo speaking order in accordance with law.

 

Important Clarification

The appeal was partly allowed for statistical purposes. The Tribunal did not adjudicate upon the additions on merits and confined its decision to the procedural illegality in refusing condonation of delay, reiterating that a liberal approach must be adopted where sufficient cause is shown under section 249(3) of the Income Tax Act.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770875755_JAINSHIKSHAVIKASHSAMITISULTANPURVS.INCOMETAXOFFICEREXEMPTIONLUCKNOW.pdf  

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