2021 (4) TMI 196 - AT - Income Tax

Appeal allowed due to Covid delay & address change; emphasizes right to hearing and justice

The ITAT allowed the appeal, citing the justified delay in filing due to the Covid Pandemic situation and the change of address affecting receipt of ... Condonation of delay due to suspension of limitation - best judgement assessment / estimation in absence of compliance - ex parte assessment - principles of natural justice - right to opportunity of hearing - remand for fresh adjudication / restoration to file of Assessing OfficerCondonation of delay due to suspension of limitation - Delay in filing the appeal before the Tribunal was held excused by the Hon'ble Supreme Court's suspension/extension of limitation and the appeal was held to be in time. - HELD THAT: - The impugned CIT(A) order was communicated on 13.03.2020 and the appeal ought to have been filed on or before 13.05.2020; it was filed on 29.05.2020 resulting in a delay of 17 days. Having regard to the Hon'ble Supreme Court's suo motu proceedings which extended the period of limitation from 15.03.2020, the Tribunal concluded that the period of limitation was extended and therefore there was no delay in filing the appeal before the ITAT. [Paras 2]Delay condoned; appeal treated as timely filed.Ex parte assessment - principles of natural justice - right to opportunity of hearing - best judgement assessment / estimation in absence of compliance - remand for fresh adjudication / restoration to file of Assessing Officer - The Tribunal did not adjudicate the merits of the estimation/addition or alleged procedural defects but restored the matter to the Assessing Officer for fresh consideration after affording the assessee a reasonable opportunity of hearing. - HELD THAT: - The assessee avowed that notices and orders were not received due to a change of address and filed an affidavit explaining non-appearance before the AO and CIT(A). The assessment for AY 2015-16 was completed under section 143(3) read with section 144 as an ex parte best judgment assessment after non-compliance with notices. The CIT(A) dismissed the first appeal in limine for non-appearance. Having considered the affidavit and circumstances, the Tribunal exercised its discretion in the interest of justice and equity to grant the assessee another opportunity rather than deciding the disputed estimation on merits. The Tribunal directed the matter to be restored to the AO, instructed the AO to afford a reasonable hearing, required the assessee to cooperate and refrain from seeking unnecessary adjournments, and mandated that the AO decide the matter in accordance with law. [Paras 6, 8, 9]Appeal restored to the file of the Assessing Officer for fresh adjudication after affording opportunity of hearing; appeal allowed for statistical purposes.Final Conclusion: The Tribunal held the appeal to be timely in view of the Supreme Court's suspension/extension of limitation and, without deciding the merits of the estimation or procedural pleas, restored the case to the Assessing Officer for fresh consideration with directions to afford a reasonable opportunity of hearing; the appeal is allowed for statistical purposes. Issues:1. Timeliness of filing the appeal before ITAT2. Justification for delay in filing the appeal3. Change of address affecting receipt of notices4. Denial of opportunity of hearing by CIT(A)5. Validity of assessment order and jurisdiction6. Estimation of income at 20% of turnover7. Denial of interest charges under sections 234A, 234B, and 234CIssue 1: Timeliness of filing the appeal before ITATThe appeal was filed before the Tribunal 17 days after the due date. However, the appellant argued that due to the Covid Pandemic situation, the Hon'ble Apex Court had extended the period of limitation. The Hon'ble Supreme Court's judgment dated 23.03.2020 allowed an extension of the limitation period from 15.03.2020 until further orders. Consequently, the delay in filing the appeal was considered justified.Issue 2: Justification for delay in filing the appealThe appellant contended that the change of address led to non-receipt of notices from the Assessing Officer and CIT(A). An Affidavit was filed by the appellant affirming the change of address and the inadvertent failure to update the authorities. The appellant requested an opportunity to present necessary material before the Assessing Officer to ensure justice and equity.Issue 3: Change of address affecting receipt of noticesThe change of address by the appellant was claimed to be the reason for not receiving notices related to the assessment proceedings. The Affidavit detailed the circumstances leading to non-receipt of notices and the subsequent actions taken by the appellant upon becoming aware of the assessment orders.Issue 4: Denial of opportunity of hearing by CIT(A)The CIT(A) dismissed the appeal in limine due to the non-appearance of the appellant, without addressing the merits of the case. The appellant argued that the dismissal without providing an opportunity to be heard violated the principles of natural justice.Issue 5: Validity of assessment order and jurisdictionThe assessment for the appellant, an individual, was completed under section 143(3) r.w.s. 144 of the Income Tax Act, estimating the total income at Rs. 31,15,500. The appellant raised concerns regarding the jurisdiction of the authorities and the validity of the assessment order due to non-service of notices.Issue 6: Estimation of income at 20% of turnoverThe authorities proposed to estimate the income at 20% of the turnover due to non-compliance by the appellant. The appellant argued that the estimation was excessive and should be substantially reduced, claiming that the estimated income should not exceed 8% of the gross receipts.Issue 7: Denial of interest charges under sections 234A, 234B, and 234CThe appellant denied liability to be charged interest under sections 234A, 234B, and 234C of the Income Tax Act. The issue of interest charges was raised as part of the grounds of appeal, seeking relief from the imposition of interest.In conclusion, the ITAT allowed the appeal for statistical purposes, restoring the case to the Assessing Officer for further proceedings with the direction to grant the appellant a reasonable opportunity of hearing. The judgment emphasized the importance of justice and equity in addressing the issues raised by the appellant.