Delay Should Be Condoned if Explanation is Unrefuted: ITAT

The Income Tax Appellate Tribunal (ITAT), Mumbai, has ruled that the delay in filing an appeal should be accepted if the reasons given for the delay are not challenged by the tax authorities.

The assessee, Sharda Marketing, filed its income tax return (ITR) for AY 2017-18 and declared an income of Rs 3,200. However, the Income Tax Department later assessed its income at Rs 4,93,32,567. Accordingly, additions were made towards cessation of liability under section 41(1), disallowance of expenses and excess payments to partners.

The assessee company filed an appeal before the CIT(A) with a delay of 796 days. The assessee filed a petition for condonation of delay, explaining that it did not receive the assessment order on time, their accountant had died during COVID, and the assessee came to know about the order when penalty proceedings were started.

The CIT(A) rejected the appeal, saying the delay was too long and the assessee did not establish sufficient cause as per section 249(3) of the Income Tax Act. Therefore, the assessee approached the ITAT.

The ITAT examined the matter and agreed that the delay was bona fide and unavoidable. The tribunal also noted that some portion of the delay occurred during COVID-19, when deadlines for filing appeals were relaxed by the Supreme Court. Additionally, it was noted that the assessment was done without giving the assessee a proper chance to explain its case.

The Tribunal upheld a Supreme Court ruling that if the cause of delay given by the appellant is not refuted, the delay should be condoned. The ITAT also criticised CIT(A) for rejecting the appeal without considering the merits of the case.

Therefore, the ITAT set aside the CIT(A)’s order, citing substantial justice. The matter was restored to CIT(A), ordering the authority to condone the delay and hear the case on its merits.