MR BIMAL H. KIRI, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX. CIRCLE 19(1), MUMBAI

ITA 1335/MUM/2023

AI Insights

Mr. Bimal H. Kiri appealed against the order of the National Faceless Appeal Centre (NFAC) which was passed ex-parte, alleging that he was not given sufficient opportunity to be heard, contrary to the principles of natural justice. The primary contention was the CIT(A)'s decision was made in haste and without proper consideration of the delay in filing the appeal, which was nearly 5 years and 10 months, attributed to the late receipt of the assessment order. The Assessing Officer had made several additions and disallowances to the assessee's income, which were contested. The Tribunal found merit in the assessee's arguments, particularly noting the genuine reasons for the delay and the absence of willful negligence, and thus decided to condone the delay and remand the case for a fresh hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300183 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 19-04-2023
• Other Referred Cases: Vijay Vishin Meghnani & Anr Vs. DCIT & Anr, B. Madhuri Goud v. B. Damodar Reddy, Collector, Land Acquisition Vs. MST Katiji & others
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.M BRINDHA
• Keywords: Unexplained cash credit; Condonation of delay
• Section: 68; 271(1)(c); 143(3); 142(1); 250; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 1335/Mum/2023 (A.Y: 2011-12) Mr. Bimal H. Kiri, 29-A, Saraswati Bldg, Kennedy Bridge Road, Opera House, Mumbai-400004. Vs. ACIT, Circle-19(1), 203, 2 nd Floor, Matru Mandir, Mumbai- 400007. PAN/GIR No. : AEBPK2298D Appellant .. Respondent Appellant by : Shri Neelkanth Khandelwal & Shri Poojan Mehta.AR Respondent by : Ms. R.M Brindha.DR Date of He aring 24.08.2023 Date of P ronounceme nt 04.09.2023 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of National Faceless Appeal Centre (NFAC) Delhi/ CIT(A) passed u/s 143(3) and 250 of the Act. The assessee has raised the following grounds of appeal: 1. The Commissioner of Income-tax (Appeals) at the National Faceless Appeal Centre (hereinafter referred to as the CIT(A)) erred in framing an ex-parte order. ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 2 - The appellant contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have framed an ex parte order. The appellant further, contends that on the facts and in the circumstances of the case and in law, the CIT(A) framed the impugned order in utter haste, without providing sufficient of opportunity of being heard which is against the principles of natural justice and as such, the impugned order ought to be quashed. The appellant further, contends that on the facts and in the circumstances of the case and in law, the CIT(A) framed the impugned order on the presumption that the appeal is f iled belatedly without any application for condonation of delay of nearly 5 years and 10 months, considering the date of assessment order being 27.03.2014 without appreciating that the appellant received the assessment order only on 23.01.2020. 2. The CIT(A) erred in not deciding the following grounds of appeal on merits- "1. On the facts and in the circumstances of the case, the Ld. Income Tax Officer ward 16(3)(4) Mumbai has erred in law to add a sum of Rs. 30,14,714/- as unexplained cash deposited in to bank as a undisclosed income. 2. On the f acts and in the circumstances of the case, the Ld. Income Tax Officer ward 16(3)(4) Mumbai has erred in law to add a sum of Rs. 49,504/- a unexplained cash credit. 3. On the f acts and in the circumstances of the case, the Ld. Income Tax Officer Ward 16(3)(4) Mumbai has erred in law to add a sum of Rs. 37,284/- disallowance of expenditure on estimated basis. ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 3 - 4. On the f acts and in the circumstances of the case, the Ld. Income Tax Officer Ward 16(3)(4) Mumbai has erred in law to add a sum of Rs. 5,78,069/- as credit card payment. 5. On the f acts and in the circumstances of the case, the Ld. Income Tax Officer Ward 16(3)(4) Mumbai has erred in making disallowance of Rs. 1,50,000/ from House. 6. On the f acts and in the circumstances of the case, the appellant craves leave to add, alter amend modify or correct the grounds of appeal at or before the time of hearing." The appellant craves leave to add to, alter or amend the aforestated grounds of appeal. 2. The brief facts of the case are that, the assessee is an individual and engaged in the business of optical glasses and spectacles. The assessee has filed the return of income for the A.Y 2011-12 on 29.09.2011 disclosing a total income of Rs.5,16,550/-. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with questionnaire are issued and the Ld.AR of the assessee appeared. The Assessing Officer (AO) as per the AIR information found that the assessee has made cash deposits of Rs.30,14,714/- in three bank accounts maintained i.e (i) Axis Bank (ii)Citi Bank and (iii) Kotak Mahindra Bank. Further there are cash ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 4 - deposits of Rs. 7,39,670/- in assessee account with the Punjab National Bank. Whereas the assessee was called to explain the sources of cash deposits and produce the relevant documents, but there was no proper compliance and the A.O has treated the cash deposits as unexplained and made the addition. 3 Further the AO found that, on verification of reconciliation of sundry creditors balances for F.Y 2010-11 and the summery of cash book furnished by the assessee, there is a difference of Rs.49,504/- and made addition as unexplained cash credit U/sec 68 of the Act. The third disputed issue, the AO found that the assessee has claimed Rs1,86,423/- in the profit & Loss account in respect of vehicle expenses, insurance, interest on car loan and telephone expenses, the A.O considering the personal usage element has made adhoc disallowance @20% of the claim,which works out to Rs.37,284/-.The fourth disputed issue, the AO found that the assessee has made credit card payments to the extent of Rs. 5,78,069/- and since no details were filed and the addition is made. Finally the AO has assessed the ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 5 - total income of Rs.41,96,121/- and passed the order u/s 143(3) of the Act dated 27-03-2014. 4. Aggrieved by the order, the assessee has filed an appeal before the CIT(A),whereas the CIT(A) has issued notice and there was no compliance by the assessee and also there is a delay in filling the appeal and which remained unexplained and the CIT(A) has dismissed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal. 5. At the time of hearing, the Ld. AR submitted that the CIT(A) has not considered the facts that the assessee has received the A.O order on 23-01-2020 and has filed the appeal before appellate authorities and the delay was not wanton. Further the Ld. AR has substantiated with the affidavit of the assessee for non appearance before the CIT(A) and the facts of death of the Authorized representative of the assessee. Further the Ld.AR emphasized that the assessee has good case on merits and demonstrated the evidences in paper book consisting of financial statements, the cash deposits and cash withdrawals ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 6 - in respect of deposits made in three bank accounts of the assessee, bank statements, and the interest certificate received from the bank. The Ld.AR mentioned that the evidences goes to roots of the case and play a vital role in the decision making and prayed for an opportunity to substantiate with the material evidences before the lower authorities. Contra, the Ld. DR supported the order of the CIT(A). 6. Heard the rival submissions and perused the material on record. Prima-facie, the CIT(A) has passed the order considering the fact that there is no proper compliance by the assessee in spite of providing adequate opportunity of hearing and the delay in filling the appeal was not explained with the reasonable cause. Whereas the assessee has raised grounds of appeal challenging the additions of the A.O and there could be various reasons for non appearance which cannot be overruled. The Ld. AR emphasized that there are genuine reasons of the assessee for non appearance before the CIT(A) and the delay was not wanton Act. The Ld.AR substantiated the facts with the affidavit of the ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 7 - assessee and it is appropriate to refer to the affidavit as under: 1. Bimal Kiri, aged 55 years, residing at 29A, Saraswari Building, Kennedy Bridge Road, Opera House, Mumbai 400 004 do hereby solemnly affirm and state as under: 1. that the Income-Tax Officer, 16(3)(4), Mumbai (hereinafter referred to as the Assessing Officer) by an order framed under section 143(3) of the Act dated 27.03.2014 for income-tax assessment year 2011-12 made several additions and disallowances. 2. that the Assessing Officer by two separate orders, both dated 26.09.2014 levied penalty under section 271(1)(c) and 271(1)(b) of the Act of Rs 11,27,000 and Rs 60,000, respectively 3. that I f iled an appeal against the order of the Assessing Officer under section 143(3) dated 27.03.2014, and also against penalty orders under section 271(1)(c) and 271(1)(b) of the Act both dated 26.09.2014, with the Commissioner of Income (Appeals) (hereinafter referred to as the CIT(A)) on 1st February, 2020; and the CIT(A) by separate orders dated 27.02.2023 dismissed my said appeal(s) ex parte, without giving sufficient opportunity of hearing and primarily for the reason that I could not justify the delay in filing the appeal(s) considering the date of orders being 27.03.2014 and 26.09.2014 and date of filing appeal being 01.02.2020 4. that I submit that there is no delay in filing the appeals inasmuch as the orders dated 27.03.2014 and 26.09.2014 are received by me on 23rd January, 2020 ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 8 - and as such, the appeal is filed within the time allowed under the Act and there is no delay-in filing the appeal. 5. that the necessary facts to corroborate that the abovementioned orders are received by me on 23rd January, 2020 are as under- (a) I authorised Mr James Kantilal Shah, Chartered Accountant (hereinafter referred to as the Authorised Representative) to appear on my behalf before the Assessing Officer in connection with the assessment proceedings for income-tax assessment year 2011-12. (b) The Authorised Representative during the course of assessment proceedings filed several details with the Assessing Officer; however, I had no knowledge that the assessment is completed by order dated 27.03.2014 making several additions and disallowances. Further, the Assessing Officer has also levied penalty under sections 271(1)(c) and 271(1)(b) of the Act by orders dated 26.09.2014. (c) Officer. I have not received any of the aforesaid three orders framed by the Assessing (d) Sometime in the month of January 2020, I received a call from the Income-tax Department for recovery of the outstanding demand for the year under reference. I, immediately contacted my Authorised Representative who af ter making necessary inquiries, obtained a copy of the orders dated 27.03.2014 and 26.09.2014 on 23rd January, 2020 and thereafter, immediately filed appeal with the CIT(A) against all the three orders. ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 9 - (e) My Authorised Representative, however, on 23rd June, 2020 breathed his last and as such, the explanation required by the CIT(A) could not be furnished immediately as the relevant facts and documents were available only with my Authorised Representative. 6. Thereaf ter, I was in the process of appointing another Chartered Accountant to look after my case. However, was unable to do so due to various reasons including the long stretched Covid-19 pandemic and as such, the matter got delayed and, in the meanwhile, the CIT(A) framed the impugned order(s) dismissing my all the three appeals on 27.02.2023. I further state that whatever stated hereinabove is true to the best of my own knowledge and belief and I believe the same to be true. 7. Considering the facts, provisions and the contents of the affidavit found that there is a reasonable cause explained and there is no benefit is derived in causing delay in filing appeal before the CIT(A). Further the Honble High Court Of Bombay in the case of Vijay Vishin Meghnani & Anr Vs. DCIT & Anr (398 ITR 0250)(Bombay) has observed under; Appeal-Condonation of Delay-Claim for deduction under Section 80-0 made by Assessee was disallowed by AO for Assessment Year 1993-94 and confirmed by the Commissioner of Income Tax (Appeals)-Against order of Commissioner, assessee preferred appeal before Tribunal- Tribunal restored matter back to file of AO for Assessment Year 1993-94-AO passed order allowing claim under that ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 10 - section of the I.T. Act, 1961-Assessee preferred rectif ication application to AO to rectify his order for Assessment Year 1994-95 and Assessment Year 1996-97- Rectif ication application was rejected by AO-CIT(A) upheld order of AO-Assessee filed application for condonation of delay in filling appeal against order of CIT(A)—Tribunal held that assessee simply put responsibility for delay on Revenue- Tribunal dismissed two appeals filed by assessee holding that same as barred by limitation-Tribunal held that delay of 2984 days in filling appeal could not be condoned-Held, Supreme Court in case of Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi and others held that legal advice tendered by a professional and litigant acting upon it one way or other could be sufficient cause to seek condonation of delay and coupled with other circumstances and factors for applying liberal principles and then said delay can be condoned-None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority found that litigant deliberately and intentionally delayed filing of appeal-Tribunal though aware of these principles but possibly carried away by f act that delay of 2984 days was incapable of condonation-In process Tribunal went about blaming assessee and professionals and equally Department-Tribunal's order did not meet requirement set out in law-Tribunal completely misdirected itself and had taken into account factors, tests and considerations which had no bearing or nexus with issue at hand- Tribunal, therefore, erred in law and on facts in refusing to condone delay-Explanation placed on affidavit was not contested nor Court found that from such explanation, High Court could not arrive at conclusion that assessee was at fault, he intentionally and deliberately delayed matter and had no bona fide or reasonable explanation ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 11 - for delay in filing proceedings-High Court condoned delay of 2984 days in filing appeals-Assessee's Appeals allowed. Held : In Concord of India Insurance Co. Ltd.Vs. Smt. Nirmala Devi and others, the Hon'ble Supreme Courthas held that a legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay and coupled with the other circumstances and factors for applying liberal principles and then said delay can be condoned. Eventually, an overall view in the larger interest of justice has to be taken. None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority f inds that the litigant has deliberately and intentionally delayed filing of the appeal, that he is careless, negligent and his conduct is lacking in bona fide. 8. Similarly the Hon’ble Supreme Court in B. Madhuri Goud v. B. Damodar Reddy (2012) 12 SCC 693, has held that the following principles must be kept in mind while considering the application for condonation of delay; (i) There should be a liberal, pragmatic, justice oriented, non- pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice. (ii) The terms “sufficient cause” should be understood in their proper spirit, philosophy and purpose regard being had to the ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 12 - fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact-situation. (iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. (iv) No presumption can be attached to deliberate cause of delay but, gross negligence on the part of the counsel or litigant is to be taken note of. (v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact. (vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice. (vii) The concept of liberal approach has to encapsulate the conception of reasonableness and it cannot be allowed a totally unfettered free play. (viii)There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation. (ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach. ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 13 - (x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such litigation. (xi) It is to be borne in mind that no one gets away with fraud, is representation or interpolation by taking recourse to the technicalities of law of limitation. (xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception. (xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude.” 9. The Hon'ble supreme court in the case of Collector, Land Acquisition Vs. MST Katiji & others (167 ITR 471) (SC) has observed as under : “ The legislature has conferred the power to condone delay by enacting s. 5 of the Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on "merits". The expression "sufficient cause" employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice—that being the life-purpose of the existence of the institution of Courts. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the "State" is the applicant praying for condonation of delay. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 14 - appeal) and the inherent bureaucratic methodology imbued with the note-making, file- pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community does not deserve a litigant non grata status. The Courts, therefore, have to be informed of the spirit and philosophy of the provision in the course of the interpretation of the expression "sufficient cause". So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even- handed justice on merits in preference to the approach which scuttles a decision on merits.” 10. Respectfully follow the observations and ratio of the decisions of Hon’ble Supreme Court and Honble High Court and find that the delay in filing the appeal before the CIT (Appeals) by the assessee is supported with sufficient cause and pragmatic approach should be considered for condonation of delay and accordingly the delay is condoned. Further there could be various reasons for non submission of details which cannot be overruled. Hence considering the principles of natural justice shall provide with one more opportunity of hearing to the assessee to substantiate the case along with the evidences referred. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the Assessing officer to adjudicate afresh on merits. The ITA No. 1335/Mum/2023 Mr. Bimal H. Kiri, Mumbai. - 15 - assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information expeditiously and allow the grounds of appeal of the assessee for statistical purposes. 11. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 04.09.2023. Sd/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER Mumbai, Dated 04.09.2023 KRK, PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT (Judicial) 4. The PCIT 5. DR, ITAT, Mumbai 6. Guard File आदेशानुसार/ BY ORDER, सत्यापित प्रपत //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai her Member...