ITAT Restores Appeal to CIT(A) for Adjudication on Merits; Condoning Delay of 207 Days

ITAT Restores Appeal to CIT(A) for Adjudication on Merits; Condoning Delay of 207 Days

Issue

Whether the Commissioner (Appeals) [CIT(A)] was justified in dismissing the assessee’s appeal in limine (at the threshold) solely on the ground of a 207-day delay in filing, without considering the merits of the addition made under Section 144 (Best Judgment Assessment) regarding unexplained cash deposits.

Facts

• Assessment: The Assessing Officer (AO) framed a best judgment assessment under Section 144 read with Section 147 for AY 2017-18 on 09.05.2023.

• The Addition: The AO made an addition of Rs. 20.31 Lakhs on account of unexplained cash deposits.

• Appellate Stage: The assessee filed an appeal before the CIT(A), NFAC. However, the appeal was filed with a delay of 207 days.

• Dismissal: The CIT(A) dismissed the appeal in limine due to the delay, refusing to condone it, and did not adjudicate the case on its merits.

• Assessee’s Prayer: Before the Tribunal, the assessee requested that the delay be condoned and the appeal be heard on merits, asserting they have evidence to substantiate the source of the cash deposits.

Decision

• The ITAT Chandigarh Bench allowed the appeal for statistical purposes.

• Principles of Natural Justice: Keeping in mind the principles of natural justice, the Tribunal was inclined to accept the assessee’s prayer.

• Restoration: The appeal was restored back to the file of the Ld. CIT(A) for de novo adjudication on merits.

• Specific Direction: The Tribunal directed that the issue of delay would not be raised again by the CIT(A). The delay is effectively condoned by the Tribunal. The assessee was directed to plead and prove its case forthwith.

Key Takeaways

• • Substantive Justice Prevails: Tribunals often condone delays (even significant ones like 207 days) to ensure that tax liability is determined on the merits of the case rather than confirmed by default.

  • De Novo Adjudication: When an appeal is dismissed on technical grounds (limitation) without touching the merits, the standard remedy is to remand it back to the first appellate authority to decide the actual issue (the cash deposit addition).

  • Opportunity to Prove: The assessee now gets a second chance to explain the source of the Rs. 20.31 Lakhs cash deposit to the CIT(A) to avoid the addition under Section 68/69A.