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Facts
The assessee challenged an order under Section 263 of the Income Tax Act, 1961, which had set aside an earlier assessment order. The appeal was filed with a delay of 1481 days, which reduced to 1116 days after excluding the Covid-19 pandemic period.
Held
The Tribunal held that the assessee's explanation for the delay, attributing it to incorrect legal advice, was not bonafide and was an afterthought. The assessee had made an informed decision not to file an appeal earlier.
Key Issues
Whether the delay in filing the appeal is to be condoned based on the assessee's explanation of receiving incorrect legal advice.
Sections Cited
263, 143(3), 147
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
order : 23.12.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Assessee has challenged the order, dated 15/03/2021, passed by the Learned Principal Commissioner of Income Tax, Mumbai - 20 [hereinafter referred to as ‘the PCIT’] under Section 263 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Assessment Order, dated 27/12/2017, passed under Section 143(3) read with Section 147 of the Act was set aside as being erroneous in so far as prejudicial to the interest of Revenue.
2. The Assessee has raised following grounds of appeal :
1. 1. The Ld. Pr. Commissioner of Income-tax has erred in law and in facts in issuing notice and passing the revision Assessment Year 2011-2012 order u/s.263 of the Act which is invalid and bad in the eyes of law.
1. 2. The Ld. Pr. Commissioner of Income-tax has erred in law and in facts in passing the order without satisfying the conditions laid down u/s.263 of the Act.
3. The Ld. Principal Commissioner of Income-Tax has erred in law and in facts in passing the revision order in violation of principles of natural justice.
4. The Ld. Pr. Commissioner of Income-tax has erred in law and in facts in directing the assessing officer to assessee the genuineness of loan transaction of Rs.52,40,000/-.”
3. When the appeal was taken up for hearing, Learned Departmental Representative pointed out that the appeal preferred by the Assessee was delayed by 1481 days.
4. Explaining the reasons for delay in filing the present appeal, Learned Authorized Representative for the Assessee took us through the application seeking condonation of delay, the supporting affidavit of the Assessee and confirmation letter issued by the earlier chartered accountant engaged by the Assessee for handling tax matters for the Assessment Year 2011-2012. The Learned Authorized Representative for the Assessee submitted that the present appeal was preferred against the order of revision passed under Section 263 of the Act. It was submitted that the 263 proceedings were conducted during the Covid-19 pandemic period and therefore, the Assessee could not comply with the notice of hearing issued under Section 263(1) of the Act. The Assessee was affected by Covid-19 and was quarantined. During the said period the Assessee was not attending office. On account of financial constraints faced by the Assessee during the Covid-19 period the Assessee was compelled to discontinue the services of chartered accountants which also disrupted the tax compliances. The Assessee started going to office in March, 2022 and thereafter, on checking the emails came to know about the order, 2 Assessment Year 2011-2012 dated 15/03/2021, passed by the Learned PCIT under Section 263 of the Act and the consequent proceedings under Section 143(3) read with Section 263 of the Act. Thereafter, the Assessee approached the earlier chartered accountant, who advised the Assessee to participate in the assessment proceedings under Section 143(3) read with Section 263 of the Act since the same were already underway. It was submitted by the Learned Authorised Representative for the Assessee that as the limitation for filing appeal under Section 263 of the Act had expired, the Assessee was advised not to file appeal against the same. The Assessment proceedings under Section 143(3) read with Section 263 of the Act were completed vide Assessment Order, dated 30/03/2022 and the appeal preferred by the Assessee against the said Assessment Order was disposed off by the Learned CIT(A) vide Order, dated 06/02/2025, confirming the addition made by the Assessing Officer. The appeal preferred by the Assessee against the aforesaid Order, dated 06/02/2025, passed by the Learned CIT(A) [ITA No.4177/Mum/2025] is pending adjudication before this Tribunal. It was submitted that in June, 2025, the Assessee had engaged the present chartered accountant in relation to the aforesaid appeal who advised the Assessee to prefer appeal against the revision Order, dated 15/03/2021, passed by the Learned PCIT under Section 263 of the Act. Thereafter, the Assessee to the necessary steps and the present appeal got to be filed after delay of 1481 days. The Learned Authorized Representative for the Assessee submitted that in case Covid-19 Pandemic period is excluded the period of delay gets reduced to 1116 days. He submitted that the delay in filing of the present appeal was caused on account of bonafide belief formed by the Assessee on the basis of incorrect legal advice received by the Assessee from the earlier chartered accountant that no appeal was required to be filed against the Order, dated 15/03/2021, passed under Section 263 of the Act. The aforesaid, constituted sufficient cause for condoning delay in filing the present appeal. In support the 3 Assessment Year 2011-2012 Authorized Representative for the Assessee placed reliance on the confirmation letter/certificate issued by the earlier chartered accountant.
5. Per contra, the Learned Departmental Representative submitted that the Assessee had preferred the present appeal only after the addition made by the Assessing Officer by way of Assessment Order, dated 30/03/2022, passed under Section 143(3) read with Section 263 of the Act were confirmed by the Learned CIT(A) vide Order dated 06/02/2025. It was submitted that the explanation now being offered by the Assessee for delay in filing the present appeal was nothing but an afterthought. It was submitted that the order under Section 263 was passed on 15/03/2021. Even if the Covid-19 period is excluded the present appeal preferred by the Assessee was delayed by more than 3 years. The Assessee has failed to provide sufficient cause for not filing the appeal during the period falling after the Covid-19 pandemic period (i.e. from 31/05/2022 till the date of institution of the present appeal). The only reason now sought to be given is that the Assessee had received incorrect legal advice which cannot constitute sufficient reason in the facts of the present case where the Assessee took no steps for almost 4 years to challenge the order of revisions and continued to pursue/participate in the consequent assessment proceedings. It was submitted that the explanation offered by the Assessee for seeking condonation of delay was neither bonafide nor reasonable. On the basis of abovesaid the Learned Departmental Representative submitted that the application seeking condonation of delay for more than 4 years be rejected and the present appeal be dismissed as barred by limitation.
6. We have given thoughtful consideration to rival submissions and have perused the material on record. It is admitted position that there is delay of 1481 days in filing the present appeal which gets reduced to 1116 days on excluding the Covid-19 pandemic period. The primary 4 Assessment Year 2011-2012 reason given on behalf of the Assessee for seeking condonation of delay is incorrect legal advice received by the Assessee. In this regard, reliance was placed on behalf of the Assessee on the confirmation letter issued by the earlier chartered accountant the relevant extract of which reads as under:
“1. This is to confirm that our firm was handling the Income Tax matters of Mr. Mayur Patel (PAN: AAGPP3288B). For the Assessment Year 2011-12, an order under section 263 of the Income-tax Act, 1961 was passed on 15.03.2021. However, I was not informed about the said order at that time. Subsequently, in March 2022, Mr. Mayur Patel forwarded to me a notice issued by the Assessing Officer in connection with the consequential proceedings under section 143(3) read with section 263 of the Act.
On receipt of the said notice, I advised Mr. Patel to file a reply to the notices issued in the assessment proceedings on a priority basis. Further, since the time limit for filing an appeal before the Hon'ble ITAT against the order passed under section 263 had already expired, and considering that Mr. Patel had informed me that he had a strong case on merits, I advised him to place all relevant details and submissions on record in the course of the assessment proceedings and to pursue the same diligently.
This clarification is being issued at the specific request of Mr. Mayur Patel.”
On perusal of above, we find that earlier chartered accountant has stated that the Assessee had forwarded notice issued by the Assessing Officer in relation to the assessment proceedings under Section 143(3) read with Section 263 of the Act to the earlier chartered accountant in March, 2022. The earlier chartered accountant had advised the Assessee to file reply to the said notice on priority basis. Considering the fact that the Assessee had informed earlier chartered accountant that the Assessee had a good case on merits, the earlier chartered accountant had advised to place all documents/details/submissions before the Assessing Officer in the pending assessment proceedings 5 Assessment Year 2011-2012 and pursue the same diligently. As regards the Order dated 15/03/2021 passed under Section 263 is concerned, the earlier chartered accountant has stated that at the time of passing the same, he was not informed about the same. In March 2022, a copy of notice issued by the Assessing Officer in the assessment proceeding under Section 143(3) read with Section 263 of the Act was placed before him by the Assessee. The confirmation letter does not state that the Assessee was advised that order passed under Section 263 of the Act was not appealable order. To the contrary the confirmation letter states that copy of order passed under Section 263 of the Act was not provided to the earlier chartered accountant and a copy of notice issued in the consequential assessment proceedings was provided to the earlier chartered accountant. The confirmation letter goes on to states that since the time limit for filing an appeal before the Tribunal against the order passed under Section 263 had already expired and considering that that the Assessee had informed that the Assessee had a strong case on merits, the earlier chartered accountant had advised the Assessee to place all relevant details and submissions on record in the course of the consequent assessment proceedings and to pursue the same diligently. Thus, the Assessee took an informed decision of not filing appeal against the Order, dated 15/03/2021, under Section 263 of the Act. We are of the considered view that it the facts and circumstances of the present case it cannot be said that the delay in filing the present appeal was on account of incorrect legal advice received by the Assessee.
Further, we note that the present appeal was filed only after the Order, dated 06/02/2025, was passed by the Learned CIT(A) disposing off the appeal preferred by the Assessee against the consequent Assessment Order, dated 30/03/2022, passed under Section 143(3) read with Section 263 of the Act. The aforesaid fact supports the contention of the Revenue that the explanation now 6 Assessment Year 2011-2012 being offered by the Assessee is an afterthought.
During the course of hearing, the Assessee had placed on record judicial precedents. We are of the view that the said judicial precedents do not have application in the facts of the present case. In the case of Vijay Vishin Meghani Vs. Deputy Commissioner of Income- Tax, Circle – 23(2), Mumbai [2017] 86 taxmann.com 98 (Bombay) the Assessee was stated to be completely dependent upon the chartered accountant for attending his tax matters who advised the Assessee not the file appeal before the Tribunal. On perusal of Paragraph 15 of the aforesaid judgment we find that the Hon’ble Bombay High Court had overturned the decision of the Tribunal not to condone the delay in that case after taking into consideration the facts peculiar to that case and observing that the Tribunal, being the final fact finding authority, had adopted incorrect approach by not returning finding on fact. In the case of M/s. Garg Brothers Pvt. Ltd. Vs. Deputy Commissioner of Income Tax, Central Circle 3(2), Kolkata [ITA No.2519/Kol/2017, common order dated 14/04/2018], and Chirag P. Thummar Vs. Principal Commissioner of Income-tax, [ITA No.44/Srt/2022. dated 22/01/2024 reported in 159 taxmann.com1628 (Surat-Trib)] the Assessee was advised not to file appeal by the tax practitioner who was under bonafide belief that the order passed under Section 263 of the Act was not an appealable order. As noted hereinabove, in the present case there was neither misrepresentation of any facts nor rendition of incorrect legal advice to the Assessee. We are of the view that Assessee took an informed decision to raise all the rights and contentions in the assessment proceedings under Section 143(3) read with Section 263 of the Act before the Assessing Officer and not to prefer appeal challenging the order passed under Section 263 of the Act since almost one year had expired since the passing of the order under Section 263 of the Act. In view of the aforesaid, we decline to condone the delay of 1481 days on the filing the present 7 Assessment Year 2011-2012 appeal. Accordingly, the present appeal preferred by the Assessee is dismissed as being barred by limitation.
In terms of above, the present appeal is dismissed.