M/s Krishna Cylinders, Ambala City V. ITO, Ward -2(1), Chandigarh

ITA 389/CHANDI/2022

AI Insights

This case involves M/s Krishna Cylinders appealing against the order of the Commissioner of Income Tax (Appeals)-1, Chandigarh, which was passed ex-parte. The appeal was initially delayed by 1058 days due to internal family disputes among the partners and external factors like the COVID-19 pandemic. The Tribunal found that the assessee was prevented by sufficient cause from filing the appeal in time and thus condoned the delay. The primary grievances included the lack of a proper hearing and unjustified additions to the assessee's income as per the physical survey findings compared to the books. The Tribunal directed the CIT(A) to re-examine the case on its merits, ensuring adherence to the principles of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127812 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 26-04-2022
• Other Referred Cases: S. Velu Palandar Vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Reasonable cause; Assessment record

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 389/CHD/2022 नधा रण वष / Assessment Year : 2014-15 M/s Krishna Cylinders, Village Nasirpur, Hissar Road, Amabala City, Hayana Vs. बनाम The ITO, Ward-2(1), Chandigarh थायी लेखा सं./PAN NO: AADFK9534C अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Sh. Tej Mohan Singh, Advocate राज व क ओर से/ Revenue by : Smt.Amanpreet Kaur, Sr.DR स ु नवाई क तार$ख/Date of Hearing : 23.05.2023 उदघोषणा क तार$ख/Date of Pronouncement : 26.05.2023 आदेश/Order Per Vikram Singh Yadav, A.M.: This is Assessee’s appeal against the order dated 22.03.2019 of the ld. Commissioner of Income Tax (Appeals)-1, Chandigarh [in short, ‘CIT(A)’], for assessment year 2014-15. 2. There is a delay of 1058 days in filing the appeal. The Assessee, vide its Application dated 06.06.2022 for condonation of delay, has submitted detailed reasoning, the contents of which are reproduced as follows:- 389-Chd-2022 – M/s Krishna Cylinders, Amabala 2 “Application for condonation of delay. Respectfully submitted as under: - 1. That the assessee firm is in receipt of a defect memo wherein it is mentioned that the appeal filed is late by 1058 days. 2. That the Income Tax Appeal against the order dated 22.03.2019 received on 05.04.2019 of the Commissioner of Income Tax (Appeals)-l, Chandigarh "relating to assessment year 2014-15 was filed on 27.04.2022 before the Hon'ble Income Tax Appellate Tribunal which was late by 1058 days. 3. That the facts in brief are that the assessee firm had three partners namely S/Shri Arun Kumar Aggarwal, Gulshan Kumar Aggarwal and Akhil Aggarwal. During the pendency of income tax cases the mother of partners Arun Kumar Aggarwal and Gulshan Kumar Aggarwal expired on 29.08.2014. 4. That after her death, there arose a family dispute between partners of the firm. None of the partners attended to the business and the various proceedings continuing against the firm before the Income Tax Authorities diligently. 5. That the ITR for AY 2014-15 was filed on 22.09.2014. The return was taken in scrutiny and assessment order was passed on 26.12.2016. Thereafter, the Commissioner of Income Tax (Appeals) passed an ex-parte order as due the dispute between the partners, information could not be provided to the counsel. 6. That in the meantime, the family went into arbitration proceedings under the arbitrator Sh. R.K. 389-Chd-2022 – M/s Krishna Cylinders, Amabala 3 Mittal Sr. Advocate, which started on 16.05.2015. After approx 40 hearings, arbitration award was pronounced vide orders dated 12.10.2015. Copy of the order is annexed herewith at pages l-16. 7. That the aggrieved partner Sh. Gulshan Kumar Aggarwal went into an appeal before The Session Court, Chandigarh on 02.11.2015. During this period of dispute, all the factories run by the family were closed but the same were reopened only at the intervention of the session court vide its orders dated 09.11.2015. Copy of the order is annexed herewith at Pages 17-22. 8. After a number of hearings, the session court pronounced i final judgment on 24.02.2020. Copy of the order is annexed herewith at Pages 23-62. 9. Thereafter the undersigned being the aggrieved partne1 Gulshan Kumar Aggarwal went into an appeal before the Honorable High Court, Chandigarh on 26.11.2020, which is still pending in the court till the filing of this appeal. Order of the appeal filed before the Hon'ble High Court are annexed at Pages 63-67. 10. That the assessee firm received an order u/s 271(l)(c) on 23.02.2022 for the same Assessment year i.e. 2014-15 dated 22.02.2022. On receipt of the order, it came to light that the appeal against the order passed in the quantum proceedings by the Commissioner of Income Tax (Appeals) was yet to be filed. 11. That a consensus was reached by the partners that an appeal which was missed to be filed before the Hon'ble ITAT be filed immediately. 12. That corrective measures were initiated, and the appeal was filed though belatedly on 27.04.2022. 389-Chd-2022 – M/s Krishna Cylinders, Amabala 4 It is, therefore, respectfully prayed that the delay be condoned there being a reasonable cause and in the in interest of substantial justice, the appeal be heard on merits.” 3. The Ld. Counsel has submitted that after taking the required corrective measures the appeal was filed belatedly on 27.4.2022 and thus a delay of 1058 days has occurred in filing the appeal. It was also submitted that the period of delay includes the Covid period which need to be excluded in view of the decision of the Hon'ble Supreme Court. The Assessee prayed that as explained above, there being a reasonable cause and also in the interest of substantial justice, the delay be condoned and the appeal may be heard on merits. 4. We have considered the facts and detailed reasoning furnished by the Assessee. In view of the detailed explanation and reasoning given by the Assessee, finding that the Assessee was prevented by sufficient cause from filing the Appeal in time, the delay of 1058 days in filing the appeal is condoned and we proceed to heard the appeal on merits. 5. Following grounds have been raised by the Assessee:- 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in passing an ex-parte order without affording a proper opportunity of hearing 389-Chd-2022 – M/s Krishna Cylinders, Amabala 5 which is against the Principals of Natural Justice and as such the order passed is arbitrary and unjustified. 2. Without prejudice to the above, the Ld. Commissioner of Income tax (Appeals) has erred in upholding the addition of Rs.3,062/-being difference in cash as per books and that physically found at the time of survey which is arbitrary and unjustified. 3. That the Ld. Commissioner of Income tax (Appeals) has erred in upholding the addition of Rs.5,76,853/- being difference in scrap as per books and that physically found at the time of survey which is arbitrary and unjustified. 4. That the Ld. Commissioner of Income tax(Appeals) has erred in upholding the addition of Rs.74,841/- being difference in raw material as per books and that physically found at the time of survey which is arbitrary and unjustified. 5. That the Ld. Commissioner of Income tax (Appeals) has erred in upholding the addition of Rs.23,54,241/- being difference in cylinders (19 kg) as per books and that physically found at the time of survey which is arbitrary and unjustified. 6. That the Ld. Commissioner of Income tax (Appeals) has erred in upholding the addition of Rs. 14,20,800/- being difference in cylinders(14 kg) as per books and that physically found at the time of survey which is arbitrary and unjustified. 7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 389-Chd-2022 – M/s Krishna Cylinders, Amabala 6 8. That the order of the Ld. CIT (A) is erroneous, arbitrary, opposed to the facts of the case and thus untenable. 6. At the outset, it has been submitted by the ld. Counsel for the Assessee that though numerous grounds of appeals have been raised but the foremost grievance of the Assessee is that the ld. Commissioner of Income Tax (A) has concluded the proceedings by simply upholding the various additions made by the AO without proper perusal of the assessment record and passed an ex-parte order dated 22.03.2019 u/s 250(6) of the Act. It has further been submitted that the ex-parte order passed by the Ld. CIT(A) is opposite to the facts of the case and is untenable and that the Assessee has a fair case on merits. It is prayed that keeping in view the principles of natural justice, the Assessee may be given a reasonable opportunity of hearing of the appeal before the ld. Commissioner and the appeal may be directed to be decided on merits. 7. The ld. DR, on the other hand, has placed reliance on the orders of the authorities below. 8. Heard. We have gone through the order of the ld. CIT(A), and find that the appeal of the Assessee has been dismissed by passing an ex-parte order, merely on the basis of the non-prosecution. We find that the ld. Commissioner has dismissed the appeal without 389-Chd-2022 – M/s Krishna Cylinders, Amabala 7 considering the material available on record, as also without going into the merits of the case. We find that the Assessee was prevented by sufficient reasons for his non-appearance before the ld. CIT(A), as has been explained by him. As such, an opportunity of hearing requires to be given to the assessee to represent his case fully before the Ld. CIT(A) . Even otherwise, it is trite [‘S. Velu Palandar Vs. DCIT’ 83 ITR 683 (Mad.)] and incumbent on the authority to decide an appeal on merit. 9. In view of the above, finding force in the grievance raised by the Assessee, the matter is remitted to the file of the ld. CIT(A), to be decided afresh on merit, in accordance with law, on affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before the ld. CIT(A). All pleas available under the law shall remain so available to the assessee. Ordered accordingly. 10. In the result, for statistical purposes, the appeal is treated as allowed. Order pronounced on 26.05.2023. Sd/- Sd/- ( A.D. JAIN ) (VIKRAM SINGH YADAV) Vice President Accountant Member Dated : 26.5.2023 “आर.के.” 389-Chd-2022 – M/s Krishna Cylinders, Amabala 8 आदेश क त*ल+प अ,े+षत / Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकर आय ु 1त/ CIT 4. +वभागीय त न5ध, आयकर अपील$य आ5धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar