Construction Firm’s Appeals Restored by ITAT After Delay of Up to 700 Days; CIT(A) Directed to Rehear Disallowance and Bad Debt Issues

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has come to the rescue of Shri Maruti Infrastructure Developers by restoring its appeals for Assessment Years 2013-14, 2014-15 and 2015-16 to the CIT(A) for fresh adjudication.

The Income Tax Department had made various additions and disallowances which were challenged by the partnership firm engaged in the business of construction and development. These included disallowed labour charges, bad debts, written off sundry balances and unabsorbed depreciation losses. The assessee challenged the levy of interest under sections 234A and 234B for Assessment Year 2013-14.

The Tribunal had to deal with a preliminary question, namely the long delay in lodging the appeals. Appeals were filed after delays of 700 days, 365 days and 700 days respectively. Affidavits giving reasons for delay have been filed by the assessee. The Tribunal heard the explanations and was satisfied that the delay was not intentional and that there was good cause for it. The Tribunal condoned the delay and admitted all the three appeals for hearing, depending on the decision of Supreme Court.

During the hearing, the counsel for the assessee informed the Tribunal that the firm could not appear before the CIT(A) and could not file the requisite submissions during the appellate proceedings. As a result, the appeal for Assessment Year 2013-14 was dismissed, while the appeals for Assessment Years 2014-15 and 2015-16 were decided without any effective representation from the assessee.

On perusing the records, the Tribunal observed that the assessee was not able to put its case properly before the first appellate authority. Observing that in the interest of justice and fairness, the assessee deserves to be given an opportunity to establish its claims and arguments, the Bench said:

Hence ITAT has set aside the orders of CIT(A) for all the three assessment years and remanded the matters to CIT(A) for fresh adjudication. The Tribunal directed the CIT(A) to give proper opportunity of hearing to the assessee and pass a reasoned and speaking order as per the provisions of Section 250(6) of the Income-tax Act.

At the same time, the Tribunal advised the assessee to remain vigilant during the fresh proceedings and to avoid seeking adjournments except where justified by reasonable cause.

As a result, all three appeals were allowed for statistical purposes.