ORDER

Vijay Pal Rao, Vice-president.- This appeal by the Assessee is directed against the Order dated 04.02.2026 of the learned Addl./JCIT(A), Thane arising from Order passed by the Assessing Officer u/sec.201(1) and 201(1A) of the Income Tax Act [in short “the Act”], 1961, for the assessment year 2016-2017.

2. The assessee has raised the following grounds of appeal:

“On the facts and in circumstances of the case and in law, the learned CIT(A) has:

1. erred in dismissing the appeal in limine, filed by the Appellant as barred by limitation without appreciating the fact that the Appellant had challenged the underlying order under section 201(1) and 201(1A) r.w.s 195 of the Act passed on 14 December 2018 (received by the Appellant on 18 December 2018), by way of Writ Petition before Hon’ble Telangana High Court, which was dismissed vide order dated 21 June 2023 on the ground of alternate remedy available to the Appellant, and pursuant to said High Court order, the said appeal was filed before the CIT(A), with only delay of 2 days (beyond prescribed 30 days from receipt of High Court order), that too due to confusion on date of service of High Court order and was without any ulterior motive or with a view to taking undue advantage.

2. erred in violating the principles of natural justice by not providing the Appellant an opportunity of being heard by way of Video conferencing to explain the case.

3. erred in violating the provisions of section 250(6) of the Act by not adjudicating each of the grounds under appeal individually on merits.

4. erred in confirming the action of the learned AO in treating the Appellant as ‘assessee in default under section 201(1) of the Act for non-deduction of tax at source under section 195 of the Act in respect of payments amounting to INR 2,44,16,00,000 and INR 1,15,04,00.00 made to UCB Biopharma SRL, Belgium and UCB Farchim SA, Switzerland respectively.

5. erred in upholding the action of the Ld. AO in passing the order under section 201(1)/1(A) of the Act after one year from the end of financial year in which proceedings was initiated which is squarely covered by the decision of Mumbai Special bench in case of Mahindra & Mahindra Ltd.

6. erred in not adjudicating the ground on merits relating to the action of the Ld. AO in concluding that the payments made to UCB Farchim SA, Switzerland and UCB Biopharma SRL, Belgium qualify as ‘royalty under the Act and Double Taxation Avoidance Agreement (‘DTAA’) without appreciating that the payments were made towards transfer and assignment of ‘trademarks and taxable as capital gains exclusively in Switzerland and Belgium in terms Article 13(6) of the India-Switzerland and India-Belgium DTAA respectively.

The Appellant craves leave to add, amend, delete, rectify, substitute and modify any of the aforesaid grounds or add a new ground or grounds at any time before or at the time of hearing before the Hon’ble Income-tax Appellate Tribunal.”

3. In ground no.1 the assessee has raised the issue of violation of principles of natural justice.

4. The learned Counsel for the Assessee has submitted that the learned CIT(A) has dismissed the appeal of the assessee in limine on the ground of barred by limitation without giving an opportunity of hearing to the assessee. He has pointed out that the assessee has explained the cause of delay in Form-35 as well as in the application before the learned CIT(A). The reason for delay was duly explained by the assessee that initially the assessee challenged the Order of the Assessing Officer passed u/sec.201(1) and 201(1A) of the Act before the Hon’ble Supreme Court in WP No.1513/2019. He has further submitted that initially the Hon’ble High Court granted stay against the recovery arising from the said order passed by the Assessing Officer however, finally the writ petition of the assessee was dismissed by the Hon’ble Supreme Court vide Judgment dated 21.06.2023 by giving a liberty to the assessee to seek remedy as provided under the Act. Thereafter, the assessee filed an appeal before the learned CIT(A) challenging the Order of the Assessing Officer passed u/sec.201(1) and 201(1A) of the Act however, the appeal of the assessee was dismissed in limine. The learned Counsel for the Assessee has submitted that the assessee has filed reply to the notice issued by the learned CIT(A) and also demanded an opportunity of personal hearing virtually but despite the repeated the request the learned CIT(A) has not granted an opportunity of hearing to the assessee and dismissed the appeal on the ground of limitation. Thus, it is a clear violation of principles of natural justice. He has further submitted that even otherwise when the assessee was availing an alternative remedy before the Hon’ble High Court by filing writ petition, then the time taken in pursuing the said remedy shall be excluded for the purpose of limitation. In support of his contention, he has relied upon various judgments as under:

4.1. Thus, not granting a personal opportunity of hearing despite various requests made by the assessee renders the impugned order of the learned CIT(A) not sustainable in law and liable to be set aside. Learned Counsel for the Assessee has thus submitted that the assessee may be given an opportunity to present its case and explain the cause of delay before the learned CIT(A).

5. On the other hand, the learned DR has submitted that there is an inordinate delay of 1649 days in filing the appeal and assessee has failed to explain the sufficient cause for such an inordinate delay. The learned CIT(A) has given the finding that the assessee has taken a general plea without explaining the delay to the satisfaction of the learned CIT(A). Thus, he has objected to grant of further opportunity to the assessee. He has further contended that the assessee is a big corporate house and having the services of the legal as well as tax experts therefore, the assessee cannot take the plea that the appeal could not be filed before the learned CIT(A) due to alternative remedy pursued by the assessee before the Hon’ble High Court.

6. We have considered the rival submissions as well as relevant material on record. There is no dispute that there was a delay of 1649 days in filing the appeal before the learned CIT(A) and the assessee explained the cause of delay in Form-35 that the assessee was exploring alternative remedies and consequently, the assessee filed a writ petition before the Hon’ble High Court on 05.01.2019. Subsequently, the Hon’ble High Court stayed the demand vide Order dated 15.02.2019 however, finally the writ petition filed by the assessee was dismissed by the Hon’ble High Court vide Judgment dated 21.06.2023 and the same was communicated to the Assessing Officer and accordingly, the assessee filed the appeal before the learned CIT(A). The assessee has explained the cause of delay that assessee was exploring the alternative remedy before the Hon’ble High Court and time consumed in the proceedings before the Hon’ble High Court may be excluded from the limitation. Further, the delay is due to alternative remedies pursued before the Hon’ble High Court may be considered as ‘sufficient and justifiable cause’ and therefore, the same may be condoned. The learned CIT(A) has declined to condone the delay in filing the appeal and dismissed the appeal of the assessee in limine. At the outset, we note that the learned CIT(A) has given details of the notices issued by it to the assessee in Para no.3.1 and also acknowledged the response of the assessee made vide letters dated 21.02.2025, 12.03.2025 and 04.11.2025. In these letters as evident from the record the assessee requested for personal hearing virtually. However, the learned CIT(A) has not afforded the personal hearing to the assessee before passing the impugned order and therefore, the assessee was not given an opportunity to explain the cause of delay in filing the appeal before the learned CIT(A). The delay due to time consumed in pursuing the alternative remedy before the Hon’ble High Court by filing a writ petition can be considered as ‘sufficient cause’ depending upon the facts and circumstances of the case. However, the learned CIT(A) has not given any finding as to how the reasons explained by the assessee are not ‘reasonable or sufficient cause’ for the delay in filing the appeal. Since the Order was passed by the learned CIT(A) without giving an opportunity of personal hearing which was demanded repeatedly by the assessee vide their letters filed in response to the notices issued by the learned CIT(A) therefore, we find that the impugned order was passed in violation of principles of natural justice. For ready reference, we reproduce the relevant part of the reply of the assessee dated 21.02.2025 as under:

We request your Honour to kindly provide an opportunity of virtual hearing and video conferencing to the Appellant to enable the Appellant to explain its case and put forth arguments and contentions.”

6.1. Similarly, in other replies also the assessee has demanded an opportunity of virtual hearing through videoconference. Thus, it is manifest from the record that despite the repeated request the learned CIT(A) has not given an opportunity of personal hearing/virtual hearing and dismissed the appeal of the assessee. Accordingly, in the facts and circumstances of the case, without expressing any view either on the cause of delay explained by the assessee or on the merits of the matter, we are of the considered view that the learned CIT(A) is not justified in dismissing the appeal of the assessee in limine without affording an opportunity of hearing to the assessee. It is pertinent to note that even as per the e-appeals Scheme, 2023 Notified on 29.05.2023 the hearing shall be conducted through videoconference or videotelephone including use of any telecommunication application and a person shall not be required to appear either personally or through Authorised Representative but the appellant or his Authorised Representative may request for personal hearing so as to make his oral submissions or present his case before the Appellate Authority. The Appellate Authority shall allow the request of the personal hearing and communicate the date and time of hearing to the appellant provided in Para-13 of the said Scheme as under:

(1) A person shall not be required to appear either personally or through authorised representative in connection with any proceedings under this Scheme.

(2) The appellant or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the JCIT (Appeals) and the concerned JCIT (Appeals) shall allow the request for personal hearing and communicate the date and time of hearing to the appellant.

(3) Such hearing shall be conducted through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephone, to the extent technologically feasible, in accordance with the procedure laid down by the Board.

(4) Any examination or recording of the statement of the appellant or any other person shall be conducted by the JCIT (Appeals) under this Scheme, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.

(5) The Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the appellant, or his authorised representative, or any other person is not denied the benefit of this Scheme merely on the ground that such appellant or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end.”

6.2. Accordingly, in view of facts and circumstances as discussed above, the impugned order of the learned CIT(A) is set aside and the matter is remanded to the record of the learned CIT(A) for fresh adjudication of the appeal of the assessee after affording an opportunity of personal hearing to the assessee.

7. In the result, appeal of the Assessee is allowed for statistical purposes.