2019 (2) TMI 1661 - AT - Income Tax

Condonation of delay - delay of 510 days from the date of receipt of the assessment order by the ex-employee of the assessee to the filing of the appeal by the assessee - sufficient cause for not filing the appeal within the period of limitation - HELD THAT - When there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay in filing the appeals before the CIT(A). In case the delay was not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in our opinion, the delay in filing the appeals before the CIT(A) has to be condoned and the appeals of the assessee have to be admitted and disposed of on merit. We condone the delay in filing the appeals before the CIT(A) and remit the issue to the file of the CIT(A) to decide the issue on the merit of the additions made by the AO. Since the assessment order was passed ex parte u/s. 144 the CIT(A), if required, may call for the remand report from the Assessing Officer and confront the same to the assessee before deciding the appeals. We also make it clear that if the CIT(A) or the AO relied on any statement of the third parties so as to frame the impugned assessments on an earlier occasion, the same is to be confronted to the assessee and if the assessee requires any cross examination of the parties concerned, the same is to be provided. With these observations, we remit the issue to the file of the CIT(A) to decide the issue afresh regarding the merit of the additions.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Ex-parte assessment and additions based on statements of third persons without cross-examination.
3. Remand of the case to the assessing officer for fresh consideration.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The primary issue was whether the delay of 510 days in filing the appeal should be condoned. The assessee argued that the delay was due to reasons beyond their control, including the abandonment of the company by the Managing Director, the non-resident status of the other director, and procedural delays in obtaining a digital signature and PAN. The CIT(A) found these reasons frivolous and held that the delay was willful, thus refusing to condone it. However, the Tribunal considered the date of receipt of the assessment order by the husband of Smt. Susan Thomas as the effective date, reducing the delay to 71 days. The Tribunal emphasized that substantial justice should be preferred over technicalities and cited various judicial precedents to support the condonation of delay.

2. Ex-parte Assessment and Additions Based on Statements of Third Persons Without Cross-examination:
The assessee contended that the ex-parte assessment was based solely on statements of third persons without providing an opportunity for cross-examination, which was against the principles of natural justice. The Tribunal acknowledged that the original assessment order was passed ex-parte under section 144 of the IT Act and noted the non-cooperation from the company post-search. The Tribunal emphasized the need for substantial justice and held that the assessee should be given an opportunity to cross-examine the third parties whose statements were relied upon by the Assessing Officer.

3. Remand of the Case to the Assessing Officer for Fresh Consideration:
The Tribunal decided to remit the case back to the CIT(A) to decide the issue on the merits of the additions made by the Assessing Officer. The Tribunal directed that if the CIT(A) or the Assessing Officer relied on any statement of third parties, the same should be confronted to the assessee, and if the assessee requires any cross-examination, it should be provided. The Tribunal emphasized the need for a fresh adjudication, considering the principles of natural justice and the right to a fair hearing.

Conclusion:
The Tribunal condoned the delay in filing the appeals, emphasizing the need for substantial justice over technicalities. It remitted the case back to the CIT(A) for fresh consideration, ensuring that the assessee is given an opportunity for cross-examination of third parties and a fair hearing. The decision underscores the importance of procedural fairness and the right to a just adjudication in tax matters.