2018 (5) TMI 1025 - AT - Income Tax

Additions towards unexplained share application money u/s 68 - maintainability of appeal - Held that - We are of the considered view that merely because the assessee has not filed the appeal in electronic form, the assessee s appeal cannot be dismissed on technical grounds that too during transition period. We, further, noticed that the Hon ble Supreme Court and various High Courts have already categorically stated that when technicalities and substantial justice is pitted against each other, the substantial justice deserves to be prevailed over technicalities. Therefore, we are of the considered view that the CIT(A) was erred in dismissing the appeal filed by the assessee as not maintainable, hence, we set aside the issue to the file of the Ld. CIT(A) and direct him to admit the appeal filed by the assessee by directing the assessee to file its appeal in electronic format and also to condone delay in filing such appeal in electronic format. We also direct the Ld. CIT(A) to decide the issues on merits. - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Non-filing of appeal electronically as per CBDT circular
2. Addition of unexplained cash credit under section 68

Analysis:
1. Non-filing of appeal electronically as per CBDT circular:
The appeal filed by the assessee was directed against the order of the Ld. CIT(A) and pertained to the assessment year 2010-11. The assessee had initially filed the appeal manually within the time limit but was later notified by the CBDT to file appeals electronically. The assessee claimed ignorance of this circular and requested condonation for non-filing electronically. However, the request was rejected, leading to the dismissal of the appeal by the Ld. CIT(A) on technical grounds. The Ld. CIT(A) cited the CBDT notification mandating electronic filing and dismissed the appeal as not maintainable and void ab initio. The Ld. A.R. for the assessee argued that the dismissal was unjust as the appeal was filed in time manually, and requested a review on merit grounds. The Ld. D.R. supported the dismissal based on the CBDT circular. The ITAT found merit in the assessee's argument, emphasizing that during the transition period, strict application of the notification should be avoided. The ITAT noted that the appeal was filed within the prescribed time and that substantial justice should prevail over technicalities. Consequently, the ITAT set aside the issue to the Ld. CIT(A) with directions to admit the appeal in electronic format and decide on merits.

2. Addition of unexplained cash credit under section 68:
The brief facts revealed that the assessment for the relevant year was completed under section 143(3), adding an amount under unexplained share application money. The assessee contested this addition in the appeal. However, the primary focus of the judgment was on the procedural aspect of filing the appeal electronically. The ITAT allowed the assessee's appeal solely for statistical purposes, without delving into the merits of the addition under section 68. The decision primarily revolved around the technical grounds of appeal filing and the subsequent dismissal by the Ld. CIT(A), with the ITAT emphasizing procedural fairness during the transition period regarding electronic filing requirements mandated by the CBDT.