ITAT Restores Appeal Dismissed In Limine Due to Delay; Directs Adjudication on Merits

ITAT Restores Appeal Dismissed In Limine Due to Delay; Directs Adjudication on Merits

Issue

Whether the Commissioner (Appeals) [CIT(A)] was justified in dismissing the assessee’s appeal at the threshold (in limine) solely due to a delay of 45 days in filing, without adjudicating the substantive addition of Rs. 18.47 Lakhs made by the Assessing Officer regarding cash deposits.

Facts

• Assessment: The Assessing Officer (AO) framed the assessment under Section 147 read with Section 144B (Faceless Reassessment) on 10-03-2023.
• The Addition:The AO made an addition of Rs. 18.47 Lakhs on account of unexplained cash deposits found in the assessee’s bank account.

• Appellate Stage: The assessee filed an appeal before the CIT(A), NFAC. However, the appeal was filed with a delay of 45 days.

• Dismissal: The CIT(A) dismissed the appeal in limine (summarily) for want of condonation of delay, refusing to entertain the case on its merits.

• Assessee’s Plea: Before the Tribunal, the assessee requested that the delay be condoned and the appeal be decided on merits, stating they are able to substantiate the source of the cash deposits.

Decision

• The ITAT allowed the appeal for statistical purposes.

• Principles of Natural Justice: The Tribunal emphasized that the principles of natural justice require that a litigant be given a fair chance to present their case, especially when the delay (45 days) is not inordinate.

• Restoration: The Tribunal set aside the CIT(A)’s dismissal order and restored the appeal back to the file of the Ld. CIT(A).

• Specific Direction: The Tribunal explicitly directed that the issue of delay would not be raised again by the CIT(A). The delay stands condoned. The CIT(A) must now adjudicate the addition of Rs. 18.47 Lakhs on its merits.

Key Takeaways

• Substantive Right vs. Procedural Lapse: Courts and Tribunals generally prefer disputes to be resolved on their merits rather than being dismissed on technical grounds like limitation, provided the delay is not due to malafide intent.

• “In Limine” Dismissal: Dismissing an appeal at the threshold without hearing the merits is discouraged, particularly in tax matters where substantial financial liability is imposed on the assessee.

• De Novo Adjudication: The assessee has effectively been granted a fresh opportunity to prove the genuineness of the cash deposits before the First Appellate Authority.