ITAT Chennai Condones Appeal Delay Caused by Pending High Court Writ Petition, Directs Fresh Adjudication

Introduction and Background of the Dispute

In a significant judicial pronouncement, the Income Tax Appellate Tribunal (ITAT), Chennai, has reaffirmed the principle that the pursuit of an alternative legal remedy, such as a writ petition before a High Court, constitutes a valid ground for the condonation of delay in filing a statutory appeal. The ruling was delivered in the case of AA281 Urachikottai Primary Agricultural Cooperative Credit Society Ltd. Vs DCIT, pertaining to the Assessment Year 2012-13.

The core controversy revolved around the rejection of the first appeal by the Commissioner of Income Tax (Appeals) [CIT(A)] at the National Faceless Appeal Centre (NFAC), Delhi. The appellate authority had dismissed the appeal at the very threshold (in limine) citing a delay in submission, completely disregarding the assessee's explanation that the time lapse occurred because a writ petition was actively pending before the Hon'ble Madras High Court. The Tribunal's intervention underscores the necessity for appellate authorities to adopt a pragmatic and justice-oriented approach rather than a hyper-technical one when dealing with procedural delays.

The Assessing Officer's Action under Section 144 and Section 147

The factual matrix of the case reveals that the assessee, functioning as a primary agricultural co-operative credit society, had not furnished its return of income for the relevant assessment year. During the scrutiny of financial data, the Assessing Officer (AO) discovered that the assessee had deposited cash amounting to ₹24,24,457 into its bank accounts.

Consequently, the AO invoked the provisions of Section 147 of the Income-tax Act, 1961, to reopen the assessment, forming a reason to believe that income chargeable to tax had escaped assessment. Due to the non-compliance or failure of the assessee to respond adequately during the assessment proceedings, the AO proceeded to frame an ex-parte assessment. By invoking Section 144 of the Income-tax Act, 1961 (Best Judgment Assessment), the AO concluded the proceedings and made a substantive addition of ₹24,24,457 to the total income of the assessee, categorizing the cash deposits as unexplained money under Section 69A of the Act.