The Income Tax Appellate Tribunal, Delhi, has reaffirmed that procedural delays in filing appeals may be condoned when the failure to act is not attributable to the assessee’s negligence, reinforcing the principle that substantial justice must prevail over rigid adherence to limitation periods.
Background & Facts
The Dispute
The appellant, The Apollo Cranes (P) Ltd., faced a reassessment for the assessment year 2016-17 under Section 147 read with Section 143(3) of the Income Tax Act, 1961. The Dispute arose when the National Faceless Appeal Centre (NFAC) passed an ex parte order dismissing the assessee’s appeal before the Commissioner of Income Tax (Appeals) for non-prosecution, without granting any hearing.
Procedural History
- 2018: Assessment order issued by DCIT, Circle 3(1), New Delhi
- 2023: CIT(A)/NFAC passed an ex parte order dismissing the appeal on 12.10.2023
- 2025: Assessee filed appeal before ITAT on 09.10.2025, after discovering the dismissal in September 2025
- Delay: 648 days beyond the statutory limitation period
- The delay was attributed to the failure of the assessee’s former Accounts Manager, Manoj Kumar, to communicate the order despite it being served on his registered email ID
Relief Sought
The appellant sought condonation of delay and remittal of the matter to the CIT(A) for fresh adjudication on merits, arguing that the ex parte dismissal violated principles of natural justice.
The Legal Issue
The central question was whether a delay of 648 days in filing an appeal before the ITAT can be condoned when the failure to receive the order was due to the negligence of an employee, and whether an ex parte dismissal without hearing violates the right to be heard under the Income Tax Act.
Arguments Presented
For the Appellant
The appellant’s counsel contended that the delay was not due to laches or deliberate neglect but arose from a bona fide oversight by an employee whose contact details were duly filed with the department. Reliance was placed on the principle that procedural fairness must not be sacrificed for technical non-compliance. The counsel emphasized that the assessee acted promptly upon discovering the order and that the ex parte dismissal by the CIT(A) was legally unsustainable.
For the Respondent
The Revenue argued that the order was duly served on the email ID provided by the assessee in Form 35, and that the failure to monitor official communications is attributable to the assessee. The respondent cited precedents holding that internal administrative lapses within an assessee’s organization cannot excuse non-compliance with statutory timelines.
The Court's Analysis
The Tribunal acknowledged the long delay but rejected a mechanical application of limitation rules. It held that substantial justice must override technicalities when the failure to act is not attributable to the assessee’s conscious disregard. The Court noted that the assessee had no actual knowledge of the order until over a year later, and that the employee’s failure to relay the communication was an internal oversight beyond the control of the company’s management.
"The mistake lies on the part of the accountant of the assessee which indirectly is attributable to the assessee." - This contention was accepted in part, but the Court found that the assessee’s subsequent action upon discovery demonstrated bona fides.
The Tribunal further held that the CIT(A)’s ex parte dismissal without affording a hearing was a violation of natural justice. The law requires that appellate authorities decide appeals on merits, and dismissal for non-prosecution without opportunity to be heard is impermissible. The Court distinguished this from cases where the appellant deliberately avoids service or ignores notices.
The Verdict
The appellant won. The ITAT condoned the delay subject to a cost of ₹50,000 and set aside the ex parte order of the CIT(A). The matter was remitted for fresh adjudication with a fair opportunity to be heard.
What This Means For Similar Cases
Condonation Requires Bona Fides, Not Perfection
- Practitioners must now argue that internal administrative lapses by employees do not automatically constitute negligence attributable to the assessee
- Courts will examine whether the assessee acted promptly upon discovery of the order
- Documentation showing lack of actual knowledge (e.g., email logs, employee exit records) is critical
Ex Parte Dismissals Are Legally Unsustainable
- CIT(A)s and NFAC must provide a hearing before dismissing appeals for non-prosecution
- Dismissals without adjudication on merits violate Section 250 of the Income Tax Act and Article 14 of the Constitution
- Appeals must be restored if dismissed ex parte, regardless of delay, unless there is clear mala fide
Cost as a Deterrent, Not a Penalty
- The imposition of ₹50,000 as a cost to the Legal Aid Authority signals that while delays may be condoned, they are not cost-free
- This creates a new benchmark: practitioners should advise clients to file condonation applications with evidence of due diligence, even if delay is substantial
