ITAT Condones 724-Day Delay, Restores Income Tax Appeal for Fresh Hearing After Finding Reasonable Cause:

The Income Tax Appellate Tribunal (ITAT), Pune SMC Bench, has set aside the ex-parte order passed by the Commissioner of Income Tax (Appeals) and given C.B. Constructions another opportunity to present its case for Assessment Year 2013-14. The Tribunal directed the appellate authority to reconsider the matter after giving the assessee a reasonable opportunity to be heard.

At the outset, the Tribunal noted that the appeal had been filed 724 days late. The assessee explained the delay by filing an application and an affidavit saying that it had not received proper and timely advice from its tax consultant. The Tribunal accepted this explanation and found that there was reasonable cause for the delay and that it was not intentional. The judgments of the Supreme Court including Collector, Land Acquisition, Anantnag v. Mst. Katiji were relied upon. The delay was condoned and the appeal was admitted for hearing by the Tribunal.

C.B. Constructions, a firm engaged in the business of construction declared an income of Rs. 25,23,201 for the Assessment Year 2013-14. The Assessing Officer completed the scrutiny assessment u/s 143(3) of the Income Tax Act 1961 and made a disallowance of Rs. 5,98,897 u/s 40(a)(ia). The officer also disallowed Rs. 5,500 claimed as donation and Rs. 2,36,354 towards land-related expenditure because the assessee had not provided supporting evidence.

The first appellate authority of the assessee before the Commissioner of Income Tax (Appeals) was not successful on account of non-compliance of proceedings. Then it moved the ITAT against the order passed in the absence of effective participation on its behalf.

During the hearing, the counsel for the assessee submitted that the firm was prevented from participating in the earlier proceedings due to unavoidable circumstances. The counsel also referred to a paper book of 58 pages and submitted that the assessee would be able to prove its claims if given another opportunity. The Departmental Representative supported the order of the Commissioner of Income Tax (Appeals).

The Tribunal on consideration of the submissions held that the assessee should be given one more opportunity in the interest of justice. Without going into the merits of the disallowances of tax, it set aside the earlier order dated January 17, 2024 passed by the appellate authority and remanded all the issues to the Commissioner of Income Tax (Appeals) for fresh adjudication under Section 250(6) of the Act.

The Tribunal directed C.B. Constructions to update its correct email address and postal/communication address with the Commissioner of Income Tax (Appeals) and on the Income Tax Business Application (ITBA) portal. Upon receiving a hearing notice, the firm will also have to submit all relevant documents, details and written submissions. Unnecessary delays were to be avoided and cooperation with the proceedings of the Court of Appeal was to be given.

The Commissioner of Income Tax (Appeals) has been directed to reconsider the case in accordance with the law after providing the assessee a reasonable opportunity of being heard.

The ITAT allowed the appeal for statistical purposes.