NARSIMHA RAJU KURUR,MUMBAI vs. ITO, WARD 26(2)(3), MUMBAI

This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 12.03.2022 for AY. 2013-14 wherein the Ld. CIT(A) was confirmed the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter “the Act”).

None appeared for the assessee. The main grievance of the assessee is against the action of the Ld. CIT(A) in confirming penalty passed by the AO u/s 271(1)(c) of the Act for non-filing of condonation petition since there was delay of three (3) years before the filing of appeal before the First Appellate Authority.

Brief facts are that the AO has noted in the penalty order that scrutiny assessment u/s 143(3) of the Act was completed on 23.03.2016 assessing the total income at Rs.24,58,160/- as against the 2 A.Y. 2013-14 Narsimha Raju Kurur returned income of Rs.2,33,190/- making additions inter-alia on account of Cash Deposits, business income and part disallowance of Chapter VIA. According to the AO, he initiated the penalty proceedings and issued notice u/s 274 r.w.s. 271(1)(c) of the Act dated 23.03.2016. In the penalty order, the AO noted that the assessee had filed Income Tax Return ITR-4 hence was required to declare income of Rs.1,53,214/- which was the presumptive business income which ought to be 8% of the gross receipts of Rs.19,15,170/- i.e. Rs.1,53,214/-. However, the assessee had only returned/declared income of Rs.72,190/-. The AO noted that the assessee did not maintain any books of accounts, therefore, he estimated the income at Rs.1,91,517 being 10% of the gross receipts. Thereafter, the AO noted that as per the AIR/ITS details, the assessee during the year has deposited cash in his saving bank account to the tune of Rs.19,82,700/-. The AO asked the assessee to produce the source of the cash deposits. Pursuant to the same, the assessee stated that he got salary, brokerage etc in cash. According to the AO, no material was furnished by the assessee to substantiate the explanation given by him to justify the cash deposit. Since there was no supportive evidence to justify the cash deposited, it was treated as unexplained cash credit and added to the income of the assessee. Thereafter, the AO declined the deduction claimed u/s 80C of the Act as well as claim u/s 80D & 80GG of the Act citing lack of evidence and thus made total addition of Rs.22,24,970/- as against the returned of income of Rs.2,33,190/-. Thereafter, the AO noted that he has issued penalty notice on 24.08.2016 and since none appeared before him nor given any written 3 A.Y. 2013-14 Narsimha Raju Kurur reply he levied penalty @ 100% for concealing income of Rs.22,24,970/- at Rs.5,81,150/- by order dated 27.09.2016. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who noted that even though the penalty order was dated 27.09.2016, the assessee had filed the appeal only on 04.10.2019 (late by three (3) years). The Ld. CIT(A) acknowledges that at column no. 14 & 15 of Form no. 35 even though the assessee had submitted that letter for condonation of delay has been separately attached, he could not trace it out. According to the Ld. CIT(A), he issued notice on several occasions (on 17.03.2020, 21.01.2021 and 05.01.2022), and despite that none appeared on behalf of the assessee nor filed any submission or sought any adjournment. Thus, according to him, since there was long delay of three (3) years of filing of appeals and the assessee has not filed condonation application, he was pleased to dismiss the appeal of the assessee. Aggrieved, the assessee preferred this appeal before this Tribunal.

None appeared for the assessee. However, we note that the main reason for not admitting the appeal by Ld. CIT(A) was that the assessee has not filed the condonation petition for condonation of delay of three (3) years. In this regard, we note that an affidavit of the assessee has been filed. On perusal of the same, it reveals that the assessee has tried to explain the cause of delay. According to the assessee, during assessment proceedings, the case of the assessee was handed over to his CA Shri Vikki R; and he appeared for the hearing before the AO. According to the assessee, only when he received the demand notice in the year 2019, he realized that assessment order has 4 A.Y. 2013-14 Narsimha Raju Kurur been passed against him in the year 2016. And thereafter, immediately he approached a new advocate Shri Suresh N. Otwani, to represent him; and the new lawyer after having collected all the documents from the earlier AR filed the appeal on 04.10.2019 before the First Appellate Authority along with the condonation application which can be seen from perusal of Form no. 35 which fact has been rightly acknowledged by Ld. CIT(A) in the impugned order. Thus, we note that the assessee had filed return of income declaring total income of Rs.2,33,190/-. The case was selected for scrutiny under CASS. And the AO has made an addition of Rs.22,24,970/-. And due to miss- communication/non-communication of the CA/AR of the assessee Shri Vikki R, assessee realized it only when he received the demand notice in 2019. And thereafter he immediately contacted his AR Shri Vikki R and collected the documents from him and engaged another advocate Shri Suresh N. Otwani and filed the appeal before the Ld. CIT(A) along with application for condonation of delay which fact is supported by evidence and which fact has been acknowledged by the Ld. CIT(A). But according to Ld. CIT(A) the ibid application could not be traced out. So the impugned action of Ld. CIT(A) to not admit the appeal for non-filing of application for condonation of delay is not tenable and has to be set right. After having gone through the contends of the affidavit, we are of the opinion that the delay caused for filing appeal in time cannot be said to be deliberate/intentional. For whatever reason, the Ld. AR Vikki R who represented the assessee during the assessment proceedings have not informed the assessee about the outcome of the assessment proceedings as early as that of 23.03.2016. 5 A.Y. 2013-14 Narsimha Raju Kurur Therefore, the assessee cannot be penalized for the omission on the part of Ld. AR. Therefore, in the light of facts and circumstances discussed, we are of the opinion that delay caused in filing of appeal be condoned. And therefore the delay caused in filing of appeal before First Appellate Authority stands condoned. Consequently, the appeal against penalty is restored back to the file of the Ld. CIT(A) with a direction to decide the penalty appeal on its merits. 4. Having said so we also note from the impugned order that the assessee has submitted before the Ld. CIT(A) that the assessee had challenged the quantum assessment order dated 23.03.2016. If so, it would be prudent to first decide the quantum assessment and thereafter the appeal against the exparte penalty by imposed by the AO. Therefore, the appeal of assessee is allowed for statistical purposes. And the assessee is at liberty to file written submission/documents before the Ld. CIT(A) and the Ld. CIT(A) to direct the appeal against penalty in accordance to law.