2022 (5) TMI 1666 - AT - Income Tax

Condonation of delay - appeal of assessee is time barred by 689 days - as contended by the assessee that the delay in submission of the appeal occurred due to the fact that the assessee was totally in dark about the fate of the appeal pending before the CIT(A) which to assesse s knowledge only upon receipt of the penalty notice u/s. 271(1)(c) issued by the NFAC - HELD THAT - As the assessee immediately took steps to submit the appeal before the ITAT which was done on 02.02.2022. Also vide order 2022 (1) TMI 385 - SC ORDER by the Hon ble Supreme Court, the period from 15.03.2020 to 28.02.2022 is to be excluded for the purpose of computing the limitation period during the COVID-19 Pandemic. Considering the facts and the explanation of the assessee, we condone the delay in filing the appeal and admit it for adjudication. Ex parte order passed by CIT(A) without affording reasonable time to the assessee to comply with the hearing notice issued - HELD THAT - Keeping in mind the provision of sections 250 and 251 of the Act and the decision of Tin Box Ltd. 2001 (2) TMI 13 - SUPREME COURT is incumbent upon the Ld. CIT(A) to pass a speaking order on the merits of the case by examining, verifying and analyzing the material on record. Since there are no meritorious finding given by the Ld. CIT(A) on the submissions made by the assessee and also considering the grounds raised by the assessee where the Ld. CIT(A) has passed an ex parte order without giving opportunity of being heard, we find it fit to remit the matter back to the file of the Ld. CIT(A) for his objective and meritorious observations and findings on the submissions made by the assessee. Appeal of assessee is allowed for statistical purpose.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment are:

• Whether the delay of 689 days in filing the appeal by the assessee should be condoned.
• Whether the ex parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] without affording reasonable opportunity of being heard to the assessee was justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Condonation of Delay

• Relevant Legal Framework and Precedents: The relevant legal provisions include Section 253(5) of the Income-tax Act, 1961, which allows the Tribunal to admit an appeal after the expiry of the prescribed period if sufficient cause for the delay is shown. The Indian Limitation Act, 1963, Section 5, also provides for condonation of delay. The judgment refers to precedents like Collector Land Acquisition Vs. Mst. Katiji & Others and N. Balakrishnan Vs. M. Krishnamurthy, which advocate a liberal interpretation of "sufficient cause" to advance substantial justice.
• Court's Interpretation and Reasoning: The court emphasized that the judiciary should prioritize substantial justice over technical considerations. The expression "sufficient cause" should be liberally construed to prevent injustice due to procedural delays.
• Key Evidence and Findings: The assessee claimed ignorance of the appeal's status due to not receiving the penalty notice until January 2022. The Supreme Court's order excluding the period from March 2020 to February 2022 due to the COVID-19 pandemic was also considered.
• Application of Law to Facts: The court found that the delay was not deliberate and that the reasons provided by the assessee were sufficient to condone the delay.
• Treatment of Competing Arguments: The court balanced the need for timely justice with the potential injustice of dismissing a meritorious appeal due to procedural delays.
• Conclusions: The delay in filing the appeal was condoned, allowing the appeal to proceed for adjudication.

Issue 2: Ex Parte Order by CIT(A)

• Relevant Legal Framework and Precedents: The powers and procedures for the CIT(A) are outlined in Sections 250 and 251 of the Income-tax Act, 1961. The judgment cites Tin Box Company vs. CIT, where the Supreme Court emphasized the necessity of providing a fair opportunity to the assessee.
• Court's Interpretation and Reasoning: The court found that the CIT(A) failed to provide a reasonable opportunity for the assessee to be heard, which is a fundamental requirement for a fair assessment process.
• Key Evidence and Findings: The CIT(A) issued notices for hearings, but the assessee claimed not to have received adequate notice or opportunity to present their case.
• Application of Law to Facts: The court noted that the CIT(A) did not fully consider the submissions made by the assessee, nor did it provide a reasoned order as required by law.
• Treatment of Competing Arguments: The court acknowledged the department's reliance on the CIT(A)'s order but prioritized the need for a fair hearing process.
• Conclusions: The court set aside the ex parte order and remanded the matter back to the CIT(A) for a fresh decision, ensuring the assessee is given a reasonable opportunity to be heard.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The words 'sufficient cause' under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice." The court emphasized the importance of a justice-oriented approach in interpreting procedural rules.
• Core Principles Established: The judgment reinforces the principle that procedural delays should not obstruct substantial justice and that parties must be given a fair opportunity to present their case.
• Final Determinations on Each Issue: The delay in filing the appeal was condoned, and the ex parte order by the CIT(A) was set aside, with directions for a fresh hearing to ensure a fair opportunity for the assessee.

The judgment highlights the importance of balancing procedural rules with the need for substantive justice, ensuring that parties are not unduly prejudiced by technicalities. The case is remanded for a fair hearing, emphasizing the judiciary's role in rectifying procedural oversights and ensuring justice is served.