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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI AMARJIT SINGH
Present for: Assessee by : Shri. Hitesh Shah, A.R. Revenue by : Shri. Ajay Singh, Sr.AR Date of Hearing : 09 . 10 . 2023 Date of Pronouncement : 26 . 10 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: Aforesaid appeals filed by the appellant M/s. Kunal J. Luthra (hereinafter referred to as the assessee) pertaining to A.Y. 2011-12 one being quantum appeal and another against the penalty order passed under section 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’) are being disposed of with composite order for the sake of brevity. & 2122/M/2023 2 Shri Kunal J. Luthara
At the very outset the Ld. A.R. for the assessee brought to the notice of the Bench that aforesaid quantum and penalty appeals filed by the assessee are time barred having been filed with the delay of 527 days and 317 days in & ITA No.2122/M/2023 respectively and sought to condone the same by moving an application for condonation of delay supported with an affidavit on the grounds inter-alia that the assessee being an individual salaried class tax payer got married on 12.12.2012 and since very beginning his married life was disturbed and he was dragged into matrimonial litigation; that ultimately the assessee filed for divorce on 16.10.2014 and his marriage was dissolved by a decree of divorce on 17.06.2015 on payment of alimony of Rs.10,00,000/- in three installments; that due to mental pressure and trauma caused by the litigation the assessee could not contact his chartered accountant (CA) namely Mr. Navnit Patel who appeared before Assessing Officer (AO) and the assessee was of the bonafide belief that his CA will look after the matter by filing the appeal before the Ld. CIT(A); that the assessee being not technically qualified was dependent upon the consultant to file the appeal, making prayer for condonation and submissions before the Ld. CIT(A); that his consultant has not filed the submissions/application for condonation of delay properly; that thereafter the assessee engaged some other consultant but he got held up in attending the health issues of his own brother who was detected with 4th stage lung cancer who unfortunately died on 03.05.2023 and he could not prepare the appeal and application for condonation of delay to be filed before the Tribunal. & 2122/M/2023 3 Shri Kunal J. Luthara
However, on the other hand, the Ld. D.R. for the Revenue opposed the application for condonation of delay on the ground that the late filing of appeals in this case is apparently malafide due to callous attitude of the assessee and prayed for dismissal of the application.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Keeping in view the facts pleaded by the assessee in his application for condonation of delay supported with an affidavit which prove that due to fierce matrimonial litigation of the assessee who is an individual salaried class tax payer, in the form of criminal cases and divorce proceedings, as is evident from copy of FIR and decree of divorce, certificate of registration of marriage and averments made in the divorce petition, available at pages 1 to 12 of the paper book it is proved, the delay in filing the appeal was due to unavoidable circumstances of multiple matrimonial litigations and due to the fact that new tax consultant engaged by the assessee got stuck with the treatment of his own brother who was fighting with 4th stage cancer and unfortunately died on 03.05.2023, and as such is a sufficient cause to condone the delay.
When a salaried employee is into matrimonial litigation and his tax consultant due to negligence or due to inadvertence has not pleaded the facts properly before the Ld. CIT(A) to get the delay condoned and thereafter the assessee could not file the appeal & 2122/M/2023 4 Shri Kunal J. Luthara before the Tribunal even in time due to hardships faced by them as discussed in the preceding paras, the assessee could not be made to suffer. The Ld. CIT(A) has merely dismissed the application for condonation of delay moved by the assessee on the ground that there is no coherence in the reasons stated by the assessee in his application for condonation of delay and he has pleaded different reasons at different times in order to explain the substantial delay in filing the appeal before him [Ld. CIT(A)]. When preparing the application and affidavit for condonation of delay is job of an expert, the tax consultant engaged by the assessee, the assessee cannot be made to suffer if he was negligent or due to mistake he has not pleaded the fact properly.
In view of the decision rendered by the Hon’ble Supreme High Court in case of Land Acquisition Collector vs. MST Katiji & Others 167 ITR 471 (SC) wherein it is held that “it is on contention of delay that when substantial justice and technical considerations are pitted against each other, the case of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non deliberate delay.”, we are of the considered view that there are sufficient grounds to condone the delay in filing the appeal by the assessee before the Ld. CIT(A) as well as before the Tribunal. Hence, the delay of 705 days in filing the quantum appeal and delay of 523 days in challenging the penalty order before the Ld. CIT(A) as well as delay of 527 days & 317 days in & ITA No.2122 respectively before the Tribunal is hereby condoned. The appeals are ordered to be registered and are being disposed of by hearing the argument today itself. & 2122/M/2023 5 Shri Kunal J. Luthara
The assessee by filing the present appeals, sought to set aside the impugned orders dated 29.10.2021 & 20.05.2022 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] both pertaining to assessment year 2016-17 on the grounds inter-alia that:- “ITA No.2121/M/2023 i)The Ld. AO ought to have appreciated the fact that the appellant could not submit the required details due to circumstances beyond his control. ii)The Hon. CIT(A) was not justified in dismissing the appeal without deciding it on merits. iii)The Ld. A.O. erred in adding the cash deposits of Rs.27,13,710/- without appreciating the facts and circumstances of the case.”
“ITA No.2122/M/2023 “i)The Ld. AO ought to have appreciated the fact that the appellant could not represent his case due to circumstances beyond his control. ii)The Hon. CIT(A) was not justified in dismissing the appeal without deciding it on merits. iii)The Ld. A.O. erred in levying penalty U/S.271(1)(c) of Rs.8,38,536/- without appreciating the facts and circumstances of the case.”
Briefly stated facts necessary for consideration and adjudication of the issues at hand are : assessee being a salaried tax payer filed his return of income declaring total income of Rs.10,43,430/- which was subjected to scrutiny. The Assessing Officer (AO) noticed that the assessee has made cash deposit of Rs.15,63,200/- and Rs.11,50,510/- (total Rs.27,13,710/-) in ICICI Bank and Standard Chartered Bank respectively during the year under consideration and on failure of the assessee to explain the source of income in the form of cash, proceeded to make the & 2122/M/2023 6 Shri Kunal J. Luthara addition of Rs.27,13,710/- to the total income of the assessee and thereby framed the assessment under section 143(3) of the Act.
The AO on the basis of assessment framed under section 143(3) of the Act initiated the penalty proceedings by way of issuance of notice under section 274 read with section 271(1)(c) of the Act. On failure of the assessee to appear before the AO, the AO levied the penalty of Rs.8,38,536/- i.e. 100% of the tax sought to be evaded under section 271(1)(c) of the Act.
The assessee carried the matter before the Ld. CIT(A) by way of filing appeals who has dismissed both the appeals being time barred without going into the merits of the case by not condoning the delay as pleaded by the assessee. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeals.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
At the very outset it is noticed from the impugned orders dated 29.10.2021 & 20.05.2022 passed by the Ld. CIT(A) one in quantum appeal and another in appeal challenging the penalty under section 271(1)(c) of the Act, that both the appeals have been dismissed being time barred after dismissing the application moved by the assessee for condontion of delay. The Ld. CIT(A) has not decided the appeal on merits. Keeping in view the findings & 2122/M/2023 7 Shri Kunal J. Luthara returned in the preceding paras condoning the delay in filing the appeals by the assessee before the Ld. CIT(A) and before the Tribunal, we are of the considered view that both he appeals are required to be decided afresh by the Ld. CIT(A) on merits.
However, it is brought to our notice that the assessee has not filed complete evidence to prove the source of cash deposit before the AO as recorded in para 4.2 of the assessment order and the evidence sought to be led by the assessee in the form of bank statements, statements showing the deposits by the assessee with Bajaj Alliance Life Insurance Company Ltd., with whom the assessee is working, statement of bank account, confirmation made by one Mr. Suchet S. Rastogi whose cash deposit was made by the assessee in his bank account and subsequently deposited as his premium with Bajaj Alliance Life Insurance Company available at page 40 to 110 of the paper book. All these documents are required to be examined and verified by the AO. So to decide the issue once for all the case is required to be remitted back to the AO to do the complete justice.
Accordingly the impugned orders passed by the Ld. CIT(A) against the assessment order dated 04.03.2014 for A.Y. 2011-12 is hereby set aside and remitted back to the AO to decide afresh after examining the evidence brought on record by the assessee and after providing opportunity of being heard to the assessee.
Likewise impugned order passed by the Ld. CIT(A) confirming the penalty levied by the AO under section 271(1)(c) of the Act is also set aside being consequential in nature, hence set & 2122/M/2023 8 Shri Kunal J. Luthara aside. The AO is to take the call as per law after framing the assessment afresh as directed in the preceding paras.
Resultantly, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 26.10.2023.