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 assessee also cited non-receipt of statutory notices and negligence by their accounts handler. The Tribunal found the AO made mechanical additions under section 68 without proper inquiry, and the ex-parte assessment order violated natural justice principles by denying adequate hearing opportunity. The CIT(A) improperly sustained the AO's findings without reasoning. The ITAT set aside the assessment order and remanded the matter to the AO for fresh assessment with proper opportunity of hearing, allowing the assessee's grounds for statistical purposes.

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Issues:
1. Delay in filing the appeal
2. Adequate opportunity not provided by lower authorities
3. Addition of undisclosed cash under section 68

Issue 1: Delay in filing the appeal
The 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 authorities
The 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 68
The 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.

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