ORDER
K.P.T. Thangal, J.M.
1. This appeal by the assessee is for the asst. yr. 1992-93. Though the assessee has urged the Tribunal to decide the issue on merit, the first objection of the assessee is directed against the order of the CIT(A) in not condoning the delay and subsequently proceeding to decide the issue on merit, without first condoning the delay.
2. The assessee filed the return of income on 31st Aug., 1992 for the assessment year under consideration claiming loss of Rs. 1,67,080. This figure was arrived at by the assessee after setting off of brought forward loss of Rs. 27,67,339 which related to the asst. yrs. 1984-85, 1985-86, 1989-90, 1990-91 and 1991-92. The return was processed under Section 143(1)(a) of the Act on 10th Nov., 1993 after set off of the brought forward losses as claimed by the assessee. Subsequently, the AO noticed that the claim of brought forward losses allowed earlier was excessive. Hence, he issued a notice under Section 148 and reopened the assessment on 31st March, 1995. The assessee filed the same return in response to the above notice on 15th March, 1995. The assessee’s representative made a written submission that he has no objection to set off of correct amount of brought forward loss. Accordingly, the AO allowed the loss relating to the asst. yr. 1990-91 and disallowed the claim of the assessee for the remaining years. Aggrieved, the assessee approached the first appellate authority.
3. There was a delay in filing the appeal before the first appellate authority for about two years which according to the assessee occurred due to the fact that the assessee approached the CIT under Section 264, assessee shifted from Quilon to Chennai and the assessee was facing stringent financial difficulties. However, the CIT(A) was of the view that there was no reasonable cause for the delay in filing the appeal for two years and thus he held that the appeal is not maintainable. Accordingly, he dismissed the appeal in limine. However, he disposed of the appeal on merit also.
4. Aggrieved, the assessee is in second appeal before the Tribunal. It is the submission of the Authorised Representative of the assessee that first of all the CIT(A) had no right to decide the issue on merit, once he rejected the assessee’s petition for condonation, Once the appeal is not entertained, there is no appeal before the first appellate authority to decide the issue on merits. Secondly, the assessee’s Authorised Representative submitted that the assessee was facing stringent financial crunch. This fact is very clear from the reading of the order of the CIT(A), para 7. He submitted that the assessee and his father were partners in two firms of cashew export business. Father expired on 23rd April, 1989. The business was not going well. The loan taken from State Bank of Travancore could not be repaid in time. Subsequently, there was a settlement, even according to the CIT(A) with regard to the loan and interest thereof. All these aspects clearly establishes the fact that the assessee was having financial difficulty, as even accepted by the first appellate authority. Thus, the learned Authorised Representative of the assessee submitted that the Tribunal should remand the matter back to the file of the CIT(A) with a direction to condone the delay and then decide the issues on merits, afresh, as the delay had occurred due to the reasonable causes.
5. The learned Departmental Representative supported the order of the first appellate authority (sic) not to interfere with the findings of the CIT(A), at this stage.
6. Hearing rival submissions and on going through the orders of the Revenue authorities, we are of the view that the order of the first appellate authority is liable to be set aside. He had not condoned the delay. Therefore, there was no reason to decide the issue on merits. In all fairness there cannot be a further proceeding. However, in the interest of justice, we remand the matter back to the CIT(A) with a direction to condone the delay and decide issues on merits. The assessee shall file all the details available with the assessee so as to claim the benefit of set off of brought forward losses of earlier years.
7. In the result, the appeal is treated as allowed for statistical purposes only.
