Delay in filing appeal before CIT(A)/NFAC due to non-communication of order; tribunal condones roughly 85-day delay and sets aside CIT(A) order.

Decision addresses delay in filing an appeal before CIT(A)/NFAC where the assessee claimed non-communication of an order under section 154 and filed appeal after learning of it. The tribunal accepted an affidavit of non-notification and applied the exclusion of pandemic suspension of limitation to reduce the delay, leaving approximately 85 days. Finding the delay was not deliberate, grossly negligent, or intentional and that sufficient cause existed, the tribunal preferred substantial justice over technical rejection and condoned the delay; consequently the impugned CIT(A) order was set aside.

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Issues: (i) Whether delay in filing appeal before the Commissioner of Income Tax (Appeals)/NFAC should be condoned; (ii) Whether the disallowance made under Section 40(a)(ia) is maintainable or the assessee is entitled to benefit under the proviso to Section 201.

Issue (i): Whether delay in filing appeal before the Commissioner of Income Tax (Appeals)/NFAC should be condoned.

Analysis: The appeal against the rectification/order under Section 154 was filed after the assessee asserted it came to notice on 20/05/2020 and appeal was filed on 09/06/2020. A portion of the intervening period fell within the period excluded by the Suo Moto order (15/03/2020 to 28/02/2022). The remaining delay was limited (about 85 days). The delay was found not deliberate, intentional, or due to gross negligence and the circumstances furnished (non-receipt/knowledge of communication) were held to constitute sufficient cause to prefer substantial justice over technical limitation.

Conclusion: Delay in filing the appeal is condoned in favour of the assessee.

Issue (ii): Whether the disallowance under Section 40(a)(ia) is maintainable or the assessee is entitled to benefit under the proviso to Section 201.

Analysis: The original appellate authority dismissed the appeal on limitation without adjudicating the merits. The assessee has pleaded that recipients included the amounts in their returns, paid tax, and furnished requisite evidence (returns, Form 26AS, certificate as per prescribed format) meeting the conditions of the proviso to Section 201. Because the appeal was dismissed in limine, the merits were not decided and require adjudication on the supplied materials and submissions.

Conclusion: The question of sustainment of disallowance under Section 40(a)(ia) or entitlement under proviso to Section 201 is restored for fresh adjudication in favour of allowing the assessee an opportunity to be heard; merits to be decided by the Commissioner of Income Tax (Appeals)/NFAC.

Final Conclusion: The appellate delay is condoned and the appellate authority's order is set aside; the merits of the disallowance are remitted to the Commissioner of Income Tax (Appeals)/NFAC for fresh, reasoned adjudication after permitting the assessee to place on record necessary details and evidence.

Ratio Decidendi: Where delay is short, not deliberate or due to gross negligence and exclusionary relief (e.g., sui moto suspension of limitation) applies, courts/tribunals may condone delay to secure substantial justice and remit matters dismissed in limine for adjudication on merits.

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