2025 (6) TMI 1617 - AT - Income Tax

Penalty levied u/s. 272A(1)(d) - appeals filed by the assessee to be non-maintainable only on the ground that appeals were belatedly filed and that too by five eight days - HELD HAT - It should be borne in mind that justice should not only be done but it must be seem to be done . In the instant case even if the Ld.CIT(A) felt that there was delay in filing of the appeal then he was not precluded from asking the assessee to file the reason for the delay which he has not done in this case. Therefore there is per-se violation of natural justice and hence the impugned action need to be interfered with and we do so by setting aside the impugned orders of the CIT(A) i.e. both the cases; and also we condone the delay of five (5) days eight (8) days in filing of appeals against the assessment order as well as penalty order; and direct the Ld.CIT(A) to decide the grounds of appeal raised by the assessee on merits as mandated by sub-section (6) of section 250 of the Act after hearing the assessee.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the appeals filed by the deceased assessee against the assessment order and penalty order were barred by delay, and if so, whether such delay was excusable.

- Whether the Learned Commissioner of Income Tax (Appeals) (Ld.CIT(A)) erred in dismissing the appeals without admitting them on the ground of alleged delay.

- Whether the assessment and penalty orders passed in the name of the deceased assessee were valid and legally sustainable.

- Whether the legal heirs of the deceased assessee are entitled to pursue the appeals in accordance with law.

- Whether the principles of natural justice were violated by the Ld.CIT(A) in dismissing the appeals without providing an opportunity to explain the delay.

2. ISSUE-WISE DETAILED ANALYSIS

Delay in Filing Appeals and Its Condonation

The relevant legal framework includes the provisions under the Income Tax Act, 1961, specifically the timelines for filing appeals before the CIT(A) and the power to condone delay in filing appeals. The Act mandates that appeals against assessment and penalty orders must be filed within prescribed periods, failing which they may be dismissed as barred by limitation.

The Court examined the dates of receipt of the assessment order under section 144 read with section 147 and the penalty order under section 272A(1)(d). The Ld.CIT(A) had dismissed the appeals on the ground of delay of five days and eight days respectively. However, the appellant's representative contended that the orders were actually received later than assumed by the Ld.CIT(A), resulting in no delay in filing the appeals.

The Court noted that the Ld.CIT(A) did not verify the actual date of receipt and proceeded to dismiss the appeals ex parte. The Tribunal emphasized that even if there was a delay, the Ld.CIT(A) was not precluded from seeking an explanation for the delay before dismissing the appeals, as per principles of natural justice.

Applying the law to the facts, the Tribunal found sufficient cause for the delay and accordingly condoned the delay of 120 days in filing the appeals before itself, as well as the delays of five and eight days in filing appeals before the Ld.CIT(A). The Court underscored that "justice should not only be done, but it must be seem to be done," highlighting the necessity to avoid mechanical dismissal without inquiry.

The competing arguments were that the Revenue opposed any further opportunity, asserting that the orders were validly passed against the deceased assessee and that the legal heirs should pursue the appeals. The appellant argued for admission of appeals and opportunity to be heard on merits. The Tribunal sided with the appellant, stressing the need to decide appeals on merits rather than technicalities.

Validity of Orders Passed in the Name of the Deceased Assessee and Rights of Legal Heirs

The Ld.DR contended that the assessment and penalty orders were passed while the assessee was alive, thus no infirmity arose from the orders being in the name of the deceased. The appellant's representative argued that the orders were passed against a deceased person and hence were bad in law.

The Tribunal examined the timeline and found that the assessment and penalty orders were indeed passed before the demise of the assessee. The death occurred only one month prior to the first appellate order. Therefore, the orders were validly passed in the name of the assessee.

However, the Tribunal observed that the legal heirs are entitled to pursue the appeals on behalf of the deceased in accordance with law. The appellant's counsel undertook to bring the legal heirs on board and pursue the appeals diligently.

The Court left open all substantive legal issues for determination by the Ld.CIT(A) after admitting the appeals and hearing the parties, thus ensuring procedural propriety and adherence to legal norms governing succession and representation in tax proceedings.

Violation of Natural Justice

The Tribunal found that the Ld.CIT(A) dismissed the appeals ex parte without admitting them or providing an opportunity to explain the alleged delay. This was held to be a per se violation of the principles of natural justice, which require that a party be given a fair hearing before adverse orders are passed.

The Tribunal emphasized that the Ld.CIT(A) ought to have asked the appellant to explain the delay before dismissing the appeals. The failure to do so warranted interference with the impugned orders.

3. SIGNIFICANT HOLDINGS

"Justice should not only be done, but it must be seem to be done."

The Tribunal held that the Ld.CIT(A) erred in dismissing the appeals for delay without affording an opportunity to explain the delay, thereby violating natural justice.

The Tribunal condoned the delay of 120 days before itself and the delays of five and eight days before the Ld.CIT(A), directing admission of the appeals and remand for decision on merits as mandated by sub-section (6) of section 250 of the Income Tax Act.

The orders passed in the name of the deceased assessee were held valid as they were passed prior to the assessee's death; however, the legal heirs are entitled and required to pursue the appeals going forward.

All substantive legal and factual issues raised in the appeals were left open for adjudication by the Ld.CIT(A) after hearing the parties, ensuring procedural fairness and adherence to statutory mandates.

In result, the appeals were allowed for statistical purposes, with directions to the Ld.CIT(A) to admit and decide the appeals on merits.