STAR BIOTECH,PANCHKULA V. INCOME TAX OFFICER, WARD- PARWANOO, HIMACHAL PRADESH

ITA 700/CHANDI/2024

AI Insights

The case involves Star Biotech, the appellant, contesting an order from the CIT(A) which had dismissed their appeal ex parte for want of prosecution. The dismissal was based on the non-compliance with procedural requirements despite multiple notices issued to the assessee. The primary contention was the improper service of the CIT(A)'s order, which was not communicated to the assessee's current email but to an unrelated one. The Tribunal found that the delay in filing the appeal was due to this service error and not a deliberate act by the assessee. The Tribunal also noted substantial legal issues regarding the disallowance of a deduction under Section 80IC and the treatment of unsecured loans and estimated profits, which warranted a re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396804 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Other Referred Cases: Munjal BCU Centre of Innovation and Entrepreneurship vs. CIT(E), Chandigarh [CWP No. 21028 of 2023 (O&M), dated 04.03.2024], B.N. Bhattacharjee and Another vs. Union of India (118 ITR 461)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: PARIKSHIT AGGARWAL; C.A
• Keywords: Condonation of delay; Set aside
• Section: 147; 144

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 700/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2013-14 Star Biotech SCO 6, 1st Floor, Sector-5, Mansa Devi Complex, Panchkula, Haryana बनाम The ITO, Ward-Pawanoo Himachal Pradesh ˕ायी लेखा सं./PAN NO: ABJFS3673D अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Parikshit Aggarwal, C.A राजˢ की ओर से/ Revenue by : Smt Kusum Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 27/05/2025 उदघोषणा की तारीख/Date of Pronouncement : 27/05/2025 आदेश/Order PER LALIET KUMAR, J.M: This appeal by the assessee is directed against the order dated 24.02.2023 passed by the Ld. CIT(A) / NFAC, Delhi, under Section 250 of the Income Tax Act, 1961, for the assessment year 2013–14. 2. At the outset, the appeal is delayed by 416 days. The assessee has filed a petition for condonation of delay supported by an affidavit dated 02.04.2025 explaining the reasons for the delay. It is stated that the impugned order of the CIT(A) dated 24.02.2023 was never served upon the assessee either physically or through the registered email address provided in Form 35, i.e., [e-mail]. Instead, notices and the appellate order were sent to an unrelated email ID linked to the previous counsel, which is not connected to the assessee’s e-filing profile or current representation. 2 3. The affidavit clarifies that the assessee remained genuinely unaware of the dismissal of the appeal by the CIT(A). The situation resulted in a bonafide and unintentional delay in filing the appeal before the Tribunal, which was filed only upon coming to know about the appellate outcome belatedly. In support, the assessee has relied upon the decision of the Hon'ble Punjab & Haryana High Court in Munjal BCU Centre of Innovation and Entrepreneurship vs. CIT(E), Chandigarh [CWP No. 21028 of 2023 (O&M), dated 04.03.2024], wherein it was held that uploading of orders or notices solely on the income tax portal, without proper physical or email service, does not amount to due service and cannot impute knowledge to the assessee. 4. In order to further verify the claim, the Bench had directed the Revenue to submit a report regarding recovery action on the demand raised in the assessment order dated 28.03.2016. The Assessing Officer, in his report dated 02.05.2025, categorically admitted that no steps were taken to recover the demand of Rs.1,85,24,940/- for more than four years since the order. This official admission reinforces the assessee’s plea that there was no awareness of the proceedings or the outcome thereof. 5. We are of the considered view that the delay has been satisfactorily explained and is neither deliberate nor motivated by gain. In fact, the record clearly shows that the assessee has not derived any benefit by remaining absent before the CIT(A). The delay has resulted in the denial of appellate remedy, which is fundamental under the scheme of the Income Tax Act. Accordingly, we condone the delay of 416 days in filing the present appeal, subject to the payment of cost of Rs.3,000/- by the assessee to the Revenue within 30 days of the date of this order. 6. We would also like to express our concern on the administrative failure on part of the Revenue authorities, especially the Assessing Officer, who despite raising a demand of Rs.1,85,24,940/-, failed to initiate any recovery or follow-up 3 action for more than four years. Such administrative lethargy undermines the credibility and efficiency of the Department. We direct the Ld. Pr. CIT having jurisdiction over the AO concerned to take note of this lapse and consider appropriate remedial or corrective measures to ensure accountability in such cases of prolonged inaction. 7. Coming to the facts of the case, the assessee filed its return of income for A.Y. 2013–14 declaring income of Rs. 75,000/- after claiming deduction of Rs.18,45,521/- under Section 80IC of the Act. The case was reopened under Section 147 and assessment was completed ex parte under Section 144 on 28.03.2016, making three additions: (i) disallowance of deduction under Section 80IC - Rs.18,45,521/- ii) addition of unsecured loans - Rs.4,08,38,847/- (iii) estimation of profit - Rs.12,90,226/- This led to assessed income of Rs.4,40,49,594 and corresponding tax liability. 8. The assessee filed an appeal before the CIT(A) on 26.04.2016. However, during the course of appellate proceedings, despite the issuance of seven notices by NFAC, there was no compliance. The CIT(A), relying on case law including B.N. Bhattacharjee and Another vs. Union of India (118 ITR 461), dismissed the appeal ex parte for want of prosecution. 9. On perusal of the record, we note that substantial legal issues are involved. The assessee’s claim under Section 80IC had been accepted in earlier years, and it was contended that the unsecured loans were carried forward from earlier years, not fresh credits. Further, the assessee challenged the duplication of additions—once by denying the deduction and again by estimating income afresh. These issues were not examined by the CIT(A), who dismissed the appeal summarily due to non-compliance, without addressing the merits. 4 10. Though the CIT(A) was justified in proceeding ex parte, considering the absence of the assessee, the fact remains that the lack of communication was not attributable to deliberate conduct by the assessee. Rather, it arose from miscommunication and service defects. Hence, we are of the opinion that the matter deserves to be re-adjudicated in the interest of justice. 11. Accordingly, the impugned order of the Ld. CIT(A) dated 24.02.2023 is set aside and the matter is restored to his file for de novo adjudication. The CIT(A) shall provide reasonable opportunity to the assessee and decide the appeal on merits in accordance with law. The assessee is also directed to fully cooperate and not seek unnecessary adjournments. 12. In the result, the appeal is allowed for statistical purposes with directions as above. Order pronounced in the open Court on 27/05/2025 Sd/- Sd/- क ृणवȶ सहाय लिलत क ुमार (KRINWANT SAHAY) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "