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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
The appeal in CIT(A) Hubli for the assessment year 2015- 16 dated 28.9.2018 passed u/s 250 of the Income-tax Act,1961 ['the Act' for short] and the appeal in by the assessee is directed against order of Principal CIT Hubli passed u/s 263 of the Act dated 22.12.2017 for the assessment year 2015-16. The grounds raised in ITA No.128/Bang/2023 are as follows: & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 2 of 17
1. The impugned order of the Learned 1,52,199/- Appellate Commissioner, Hubbali is liable to set aside in so far as the same is incorrect, irregular, improper, unlawful and oppose to the law and facts of the case.
2 The Learned Appellate Commissioner, 1,52,199/- Hubbali erred in upholding the addition of Rs.5,94,276/- made by the Assessing Officer disregarding the facts of the case and as such the impugned order is liable to set aside.
3 The Learned Appellate Commissioner, 1,27,414/- Hubbali erred in upholding the impugned addition of Rs. 4,97,500/- being the Net Profit on alleged Cash Deposit of Rs.1,99,00,000/- estimated at 2.5% thereon disregarding the fact that the alleged deposits are relating to the business forming part of the Estate of the Appellant's father and the income relating to the said business is liable to tax in the hands of the Legal Representatives and as such the same is liable to set aside. 4 The Learned Appellate Commissioner, 24,785/- Hubbali erred in upholding the addition of Rs.96,776/- being the closing balance in the bank account of the Appellant used for the business of the Estate of his deceased father disregarding the facts of the case and the law related and as such the same is liable to set aside. & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 3 of 17 5 1,52,1997- The Learned Appellate Commissioner, Hubbali erred in not considering the fact that the impugned addition of Rs. 5, 94, 276/- belonged to the Estate of the deceased father of the Appellant and as such is not liable to tax in the hands of the Appellant u/s 4 or 5 of the Act and the Impugned order is liable to set aside.
1,52,199/- 6 The Learned Appellate Commissioner, Hubbali erred in disregarding the fact that the impugned income of Rs.5,94,276/-belonged to the Estate of the deceased father of the Appellant and as such the same ought to have been assessed to tax in the hands of the Legal Representatives of the deceased father of the Appellant as mandated u/s 159,161 and 162 of the Act and there the impugned order is liable to set aside 50,2267- 7 The Learned Appellate Commissioner erred in upholding the levy of interest u/s 234B even when the Appellant is not liable for the same. 2,02,4157- Total tax effect (see note below)
2. At the outset, it was observed that there was delay in filing the appeal in 1553 days. The assessee has explained this delay by way of an affidavit along with petition as follows:
ITA Nos.127 & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag ITA Nos.127 & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag ITA Nos.127 & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 7 of 17 3. Similarly, there was a delay of 1020 days in ITA No.127/Bang/2023 and the delay has been explained by the assessee by way of petition as below:
ITA Nos.127 & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag ITA Nos.127 & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 10 of 17 4. Since the issue in both are common with regard to delay, we consider this issue collectively. According to the ld. A.R., appeals in this case were not filed due to inadequate and improper advice given to the assessee and he opted to file the appeals when the department started pressing for the recovery of the outstanding demand of tax. Thus, there was delay of 1553 days in filing the appeal against the order of CIT(A) for the assessment year 2015-16 and 1020 days against the order of Principal CIT passed u/ 263 of the Act for the assessment year 2015-16. Accordingly, he prayed that these appeals may be adjudicated on merits.
5. The ld. D.R. strongly opposed the admission of these appeals.
6. We have heard the rival submissions and perused the materials available on record. The assessee in this case is required to file appeals before this Tribunal within 60 days against the impugned order of CIT(A)/Principal CIT. However, it was filed before this Tribunal with delay of 1553 days in the case of appeal filed against order of CIT(A) and 1020 days in the case of order passed by Principal CIT u/s 263 of the Act. The assessee has explained before us that the delay was due to not getting of proper advice from the consultants and as such these appeals are remains unchallenged from those days. It was submitted that only after department has taken the steps for recovery of the outstanding dues for the assessment year 2015-16, assessee consulted the consultants who has advised the assessee to file appeals against the impugned order of CIT(A) passed u/s 250 of the Act vis-à-vis order passed by the Principal CIT u/s 263 of the Act. It appears that originally assessee had no intention to file appeals against the order passed by ld. CIT(A) u/s 250 of the Act or appeal against the order passed by Principal CIT u/s 263 of the Act. We find that the plea of the assessee is that the assessee is not able to get proper advice from the consultants.
ITA Nos.127 & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 11 of 17 For getting the advice from the consultants, it is the duty of the assessee to contact the assessee’s consultants/advocates/Chartered Accountants who are specialized in these subjects. However, the assessee has not taken any steps to consult the advocate/CA to file appeal against these impugned orders. The assessee has been doing the business in these days. The assessee has not shut down its business after death of assessee’s father on 24.2.20214. The assessment order passed in this case was on 22.12.2017 and the assessee has filed appeal against this order before ld. CIT(A) on 22.12.2017. The ld. CIT(A) passed the order on 28.9.2018 confirming the assessment order. Since the assessee has filed the appeal before the ld. CIT(A), it means that assessee has taken advice from his CA/Advocate. Similarly, with regard to the order passed u/s 263 of the Act dated 11.3.2020, assessee has filed submissions before the ld. Principal CIT on 27.1.2020 and thereafter ld. Principal CIT has passed order on 11.3.2020 and the fact was that assessee has engaged his Advocate/CA to represent assessee’s case before the ld. Principal CIT. It cannot be said that assessee was not aware of the facts of passing the order by ld. CIT(A) as well as by the ld. Principal CIT as discussed above. In our opinion, in this case, assessee wants to take the benefit of his own wrong doing, which is evident from the above narrated facts in detail. The assessee has not explained proper reason for such inordinate delay in filing these appeals before this Tribunal and it cannot be said that the assessee was diligent in filing appeals before this Tribunal. It is the primary duty of the assessee to establish sufficient cause in not filing the appeals in time. The reason advanced by the assessee is very vague and it cannot be said that the assessee is actually interested in pursuing the issue before this Tribunal. Thus, in the present case, there is no sufficient cause for presenting the appeals belatedly before this Tribunal. In our opinion, the inordinate delay of 1553 days in the case of appeal & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 12 of 17 against ld. CIT(A)’s order and 1020 days delay in case of appeal against order passed u/s 263 of the Act by ld. Principal CIT, there is no reasonable cause in filing the appeal belatedly before this Tribunal. For this purpose, we place reliance on the order of Cochin bench of Tribunal in the case of Kosamattom Finance Ltd. Vs. ACIT in ITA No.600/Coch/2017 dated 5.9.2019, wherein held as under:
We have heard the rival submissions and perused the material on record. It is seen from the facts of the assessee’s case, the assessee received the order passed u/s 263 of the Act on 03.12.2016, the time for filing the appeal being 60 days from the date of service of the order, due the date of filing the appeal was on 01.02.2017. The appeal was actually filed on 16.11.2017. Thus, there was a delay of 288 days in filing the appeal before the Tribunal, but the assessee attributed the delay is on account of assessee’s ignorance to file an appeal before this Tribunal. It was submitted that only after receipt of giving effect order passed by the A.O. on 31.08.2017, the assessee has consulted his Advocate, who has advised the assessee to file appeal against the impugned order of the CIT passed u/s 263 of the Act. It was submitted that at that point only the assessee thought of filing this appeal before this Tribunal. It appears that originally the assessee had no intention to file an appeal against the order passed by the CIT u/s 263 of the Act. We find that giving effect order passed by the Assessing Officer on 31.03.2017 alone is the provocation of filing the appeal before this Tribunal with the delay of 288 days against the order passed by the CIT u/s 263 of the Act. We find that this does not constitute sufficient cause for the delay caused in filing the appeal before us. In our opinion, the assessee cannot indefinitely wait for the fate of the consequential order to be passed by the A.O. against the order passed by the CIT u/s 263 of the Act. The assessee herein wants to take the benefit of its wrong doing which is evident from the above narrated facts in detail. The assessee has not explained proper reason for such a delay of 288 days in filing the appeal before the Tribunal and it cannot be said that the assessee was diligent in filing appeal before the Tribunal. It is the primary duty of the assessee to establish sufficient cause in not filing the appeal in time. The reason advanced by the assessee is very vague and cannot be said that the assessee is actually interested in pursuing the issue before this Tribunal. Thus, in the present case, there is no sufficient cause for presenting the appeal belatedly before the Tribunal. Accordingly, we decline to condone the delay of 288 days.
Further in the case of M/s.Fathima Educational & Charitabe Trust v. Asst.Director of Income-tax in (order dated 25.07.2016), the assessee came in appeal before this Tribunal, wherein there was a delay of 1964 days in filing the appeal before the Tribunal against the order of the Commissioner of Income-tax, Trivandrum, dated 30.09.2010, passed u/s 12AA of the I.T.Act and pleaded before the Tribunal that due to ITA Nos.127 & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 13 of 17 circumstances emerged from the legal complexities in understanding the relevant procedure envisaged in the Act by the professional of the assessee. That assessee realized the importance of filing of appeal only on the rejection of the plea of registration of the Trust. However, the Tribunal has not condoned the delay by observing as under:-
“4. We have heard the rival contentions and perused the facts of the case. The undisputed fact is that the appeal has been filed late by 1964 days before the Tribunal. In the affidavit filed by the assessee- Trust, it was stated that the appeal has been filed late because of the professional advise given by the professionals and in understanding the legal complexities of the Income Tax Act. It was also stated that the assessee was under the bona fide belief that the entire income is exempt under the provisions of the Income Tax Act and the importance of filing of the appeal was realized only on the rejection of the plea for registration, even though the assessee was filing the return of income.
At the outset, the understanding of the legal complexities by the professionals itself is not a sufficient or reasonable cause for not filing the appeal late by a long period of 1964 days. Such an inordinate delay of 1964 days has to be satisfactorily explained which has not been done so in the present case. Moreover, there is no affidavit filed by the professionals which has been admitted by the Ld. Counsel of the assessee that the same is missing.
6. The grounds stated in the affidavit by the assessee-Trust cannot be termed as sufficient reasons for condonation of delay. The Ld. CIT(DR) has relied upon the decision of the ITAT, Cochin Bench dated 19/12/2008 in the case of Kerala Cricket Association (supra) and the relevant part of the decision is reproduced hereinbelow for the sake of convenience:
3. We have considered the rival submissions and perused the material available on record including the precedents. The delay of 445 days is, in our view, quite inordinate and there is no reason for such a long delay. The quantum of delay is not material, if it is supported with sufficient reason. The Court can take a pragmatic approach to the honest litigant and the Court cannot help a dormant person who slept over the order of the Commissioner who denied registration under section 12A(a) to the Kerala Cricket Association. If they are vigilant enough that the denial of the registration benefit has so much injurious & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 14 of 17 effect on their interest, then they should have approached the Tribunal within the reasonable time. The flimsy grounds stated in the petition are not sufficient reasons so as to condone the delay. As rightly contended by the learned Departmental Representative, without sufficient cause or sufficient reasons, delay cannot be condoned. There must be a reason convincing to the Tribunal to condone the delay. The Courts have already held that the delay has to be explained properly and there should be sufficient cause which prevented the assessee from filing the appeal. The reasonable and sufficient cause are absent, except flimsy grounds urged in the petition for condonation of delay which is not sufficient for condonation of delay. Under the above circumstances, we are unable to accept the prayer of the ld. Chartered Accountant for the assessee for condonation of delay of 445 in filing the appeal before the Tribunal. Hence, the appeal is not admitted and is rejected.
The said decision of the ITAT, Cochin Bench in the case of Kerala Cricket Association (supra) has been confirmed by the Hon’ble High Court of Kerala in the case of Kerala Cricket Association in I.T.A. 588/2009 dated 31/10/2014 and the relevant findings are reproduced hereinbelow for the sake of convenience:
4. Aggrieved by the order dated 17/10/2006, the appellant filed an appeal before the Tribunal with an application to condone the delay of 445 days. The Tribunal declined to condone the delay and accordingly, the appeal was also dismissed. It is aggrieved by the order of the Tribunal, which was passed on 19.12.2008, is filed
7. Condonation of delay is not a matter of right. Delay can be condoned by the Tribunal only if it is satisfied that the delay has been satisfactorily explained by the appellant. Reading of the order passed by the Tribunal shows that the appellant failed in providing any satisfactory explanation for the inordinate delay of 445 days. It was therefore that the Tribunal declined the prayer.
8. Having gone through the order passed by the Tribunal and the period of this appeal, we fully endorse the conclusions of the Tribunal regarding absence of reasonable cause for condonation of delay. Therefore, we see absolutely no reason to interfere with the order passed by the Tribunal declining to condone such inordinate delay.
& 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 15 of 17 7. Reliance has also been placed on the decision of the Hon’ble High Court of Bombay in the case of Raju Ramchandra Bhangde (supra) where the Hon’ble Court has held as under:
Held It is not as if that every mistake of counsel affords a sufficient cause for condonation of delay. All depends upon facts and circumstances of each case. It is obvious that application u/s. 35 for rectification was wholly misconceived under the circumstances. Having regard to the entire background of the case and the fact that the counsel happened to be natural father of the assessee, it is difficult to hold that any error of law has been committed by the Tribunal in refusing to condone the delay.
In the circumstances and facts of the case and the decisions relied upon hereinabove, we do not find any sufficient cause for condonation of such an inordinate delay of 1964 days and accordingly, the appeal of the assessee is not admitted and the same is rejected. Also, we do not think it fit to decide the issue on merit. Thus the appeal of the assessee is dismissed.
In the result, the appeal of the assessee in is dismissed.”
8. This view of the Tribunal was confirmed by the Hon’ble jurisdictional High Court in Writ Petition (C) No.31709 of 2016, dated 12th January, 2017, by observing as under:-
“The petitioner is aggrieved with the order at Ext.P7 of the Income Tax Appellate Tribunal, Cochin Bench, Cochin. The short facts to be noticed are that the petitioner filed an application under Section 12AA of the Income Tax Act, 1961 claiming registration as a charitable institution. The same was once dismissed by Ext.P1 dated 03.03.2009. A subsequent application was made which was also rejected as per Ext.P4 dated 30.09.2010. A 3 rd application is also said to have been made, which is said to be pending.
While so, the petitioner approached the Tribunal with a delay of 1964 days. The Tribunal by a detailed order refused to condone the delay. The only ground raised in the affidavit accompanying delay condonation application was the lack of understanding of the assessee with respect to the relevant procedure and the provisions of the Act. It is trite that ignorance of law is not an excuse and lack of understanding would also be akin to ignorance; which cannot validly & 128/Bang/2023 Mr. Lalasab Imamsab Araganji, Gadag Page 16 of 17 be taken up. The delay is also huge coming to 1964 days. This Court does not find any reason for condoning the delay and is unable to persuade itself to interfere with the order of the Tribunal.
The writ petition would stand dismissed leaving open the remedy of the petitioner to agitate the third application filed before the appropriate authority, which shall be applicable only to the future years, if at all.”
9. In view of the above, we are of the opinion that the assessee being a private limited company, which was assisted by group of Advocates and Chartered Accountants and in such circumstances it cannot be said that the assessee is not aware of the necessity of filing the appeal against the order passed by the CIT u/s 263 of the Act, and it cannot be said that the case of this appeal alone was slipped away from the assessee’s mind and he could not take remedial measure to file appeal before this Tribunal.
However, the learned AR pleaded before us that adjudication may be given on merits, even if the appeal is dismissed on condonation, to complete the legal proceedings. At this stage, we are refraining from going into the merits of the ground raised by the assessee on the addition proposed by the CIT. Accordingly, this plea of the learned AR is also rejected.
In the result, the appeal filed by the assessee is dismissed.”