ITAT Condones 796-Day Delay in Rs 4.93 Crore Tax Addition Case After Accountant’s Death

The ITAT Mumbai ruled that it was not appropriate to dismiss the appeal due to delay. The tribunal condoned the delay of 796 days and held that there were genuine and reasonable reasons behind it, especially considering the impact of the COVID period. Therefore, the ITAT set aside the order of the CIT(A) and sent back the case for a rehearing so that the case could be decided on the merits.

Important information related to the appeal

The appeal has been filed by Sharda Marketing against the Income Tax Department and was filed in the Income Tax Appellate Tribunal (ITAT), Mumbai. This matter pertains to the assessment year 2017-18. This appeal was filed to challenge the order passed by the CIT(A) dismissing the appeal on the ground of delay. The order was issued by the National Faceless Appeal Centre (NFAC). The appeal was primarily against the order refusing to condone the delay of 796 days.

Sharda Marketing had filed its income tax return for the assessment year 2017-18, in which it had shown its income as only Rs 3,200, and the department found this figure suspicious; hence, the case has been selected for scrutiny. During scrutiny, the department sent several notices, but the firm could not respond to them properly, and after this, the officer completed the ex parte assessment under section 144 without listening to the firm and increased the income to Rs 49,332,567.

After this, the firm had to appeal against this order to the CIT (A), the last date of which was January 2020, but in the meantime, the accountant of the firm died during COVID, and the work was completely affected, due to which the firm could not appeal on time, and later the appeal was filed in February 2022, which was delayed by 796 days. CIT(A) did not consider the delay a sufficient reason and dismissed the appeal without considering the merits of the case, whereas even before this, the assessment of the case was ex parte; the firm was not given a full opportunity to present its case at any stage.

The matter then went to ITAT, where the tribunal found that the major part of the delay had occurred in the Covid period and the time limit relief had also been given by the Supreme Court at that time, and also the reasons, like the death of the accountant, were genuine and serious, and ITAT also held that the firm never got the opportunity of a fair hearing earlier and hence justice. It was necessary to forgive the delay in the interest of ultimately the ITAT accepted the delay of 796 days, set aside the order of the CIT(A) and sent the case back for a rehearing so that the case could now be decided on its facts.