2024 (7) TMI 218 - AT - Income Tax

ITAT condones 1170-day delay citing Covid-19 and farmer protests, sets aside section 68 assessment for violating natural justice

The ITAT Delhi condoned a 1170-day delay in filing an appeal, accepting explanations of Covid-19 pandemic and farmer protests as sufficient cause. The ... Delay in filling appeal before ITAT - delay is 1170 days - cause for delay is stated to be Covid-19 pandemic and roads and highways were closed down by the farmers - cause for non-appearance before the lower authorities is stated to be non-receipt of statutory notices and also stated that the person who used to look after the accounts, failed to file Income Tax Return and did not apprise the assessee about the developments - HELD THAT:- The law is well-settled that if the litigant is prevented by sufficient cause for not approaching the Court within the time as prescribed under law, the Tribunal/Court would be justified in condoning the delay. Looking to the explanation offered by the assessee, we are of the considered view that there was reasonable cause that prevented the assessee in filing the present appeal. Undisputedly, in recent part country has witnessed unprecedented events of Covid-19 and thereafter, farmer’s agitation. Taking a liberal approach as mandated by Hon’ble Supreme Court in catena of judgement, we hereby condone the delay and admit the appeal for deciding it on merit. Assessment order passed ex-parte to the assessee - No opportunity provided by lower authorities - Addition of undisclosed cash u/s 68 - HELD THAT:- AO did not make any inquiry and made additions in a mechanical manner. It is well-settled that section 144 of the Act casts an obligation on the Assessing Authority for making necessary inquiry qua the nature of transaction before proceedings for making disallowances/additions. CIT(A) sustained the findings of AO, treating the Income Tax Return of the assessee as invalid without assigning any reason. Therefore, we hereby, set aside the impugned order and restore the assessment to the AO for making assessment afresh after providing adequate opportunity of being heard. Ground raised by the assessee are accordingly, allowed for statistical purposes. Issues:1. Delay in filing the appeal2. Adequate opportunity not provided by lower authorities3. Addition of undisclosed cash under section 68Issue 1: Delay in filing the appealThe appeal was filed against an order passed by Ld.CIT(A) for the assessment year 2011-12. The appellant cited reasons for the delay, including the Covid-19 pandemic, shifting of business premises, and road closures due to farmer protests. The delay was 1170 days, but the Tribunal condoned it due to the exceptional circumstances. The Tribunal emphasized the need for a liberal approach in such cases and admitted the appeal for consideration on its merits.Issue 2: Adequate opportunity not provided by lower authoritiesThe appellant raised grounds 2 to 5, alleging that the lower authorities did not provide adequate opportunity to present their case. The authorities passed ex-parte orders due to the appellant's non-appearance and lack of supporting evidence. The AO made additions under section 68 without proper inquiry. The Tribunal found that the AO and CIT(A) did not follow due process and set aside the orders. The case was remanded to the AO for a fresh assessment after providing the appellant with a fair opportunity to be heard.Issue 3: Addition of undisclosed cash under section 68The AO added Rs. 25,89,000 as undisclosed cash under section 68 without conducting a proper inquiry. The CIT(A) upheld this decision without justification. The Tribunal held that the authorities did not follow the required procedures and principles of natural justice. The assessment was set aside, and the case was remanded to the AO for a fresh assessment, allowing the appellant a fair hearing. Grounds 2 to 5 raised by the appellant were allowed for statistical purposes.In conclusion, the delay in filing the appeal was condoned, the lack of adequate opportunity provided by lower authorities was noted, and the addition of undisclosed cash was set aside for a fresh assessment. The appeal was partly allowed, emphasizing the importance of following due process and natural justice in tax assessments.