AFFLUENCE ENGINEERING AND ENTERPRISES LIMITED,HYDERABAD vs. DCIT., CIRCLE-1(1), HYDERABAD

At the outset, there is a delay of 468 days in filing the present appeal before the Tribunal. Shri Mukka Lakshman, Director of the assessee company filed an affidavit explaining the reasons for the delay. He submitted that the appellate order for the assessment year 2016-17 was passed on 29.11.2022 and was served on the assessee company on the same date. Accordingly, the due date for filing the appeal before the Tribunal expired on 28.01.2023. However, the appeal could not be filed within the prescribed time, as the accountant, who was dealing with the income-tax matters of the assessee-company, had resigned and the said fact was not brought to the notice of the management. He further submitted that immediately upon the management coming to know of the non-filing of the appeal, necessary steps were taken and the present appeal was filed on 10.05.2024, resulting in a delay of 468 days in filing the appeal.

The Director of the assessee company further submitted that the delay in filing the appeal was neither deliberate nor intentional, but occurred due to circumstances beyond the control of the assessee company. It was contended that the assessee company was prevented by reasonable cause from filing the 3 appeal within the period prescribed under Section 253(3) of the Act and, therefore, prayed that the delay of 468 days in filing the appeal may kindly be condoned in the interest of substantial justice.

The learned counsel for the assessee company, Shri P. Murali Mohan Rao, C.A., reiterating the contents of the petition and affidavit filed by the Director of the assessee-company, submitted that the delay occurred due to bona fide reasons and there was no malafide intention on the part of the assessee company in not filing the appeal within the prescribed time. Further, the appeal filed by the assessee against the assessment order passed by the A.O. u/s 147 r.w.s. 144 r.w.s 144B of the Act, has been set aside by the Ld. CIT(A) to the file of the A.O. to give one more opportunity of hearing to the assessee company and since the quantum proceedings itself has been restored to the file of the A.O., levying penalty u/s 271(1)(b) of the Act, for non-compliance of notices, is incorrect. Therefore, he submitted that since the assessee company has prima facie case on merit in respect of penalty, the delay may be condoned and the appeal may be admitted for adjudication.

The learned Senior A.R. for the Revenue, Shri K. Prasad, on the other hand, opposed the condonation petition and submitted that the assessee company has failed to explain the substantial delay with sufficient cause and, therefore, the delay should not be condoned.

We have heard both the parties and perused the petition and affidavit filed by Shri Mukka Lakshman, Director of the assessee- company, seeking condonation of delay of 468 days in filing the appeal before the Tribunal. We find that, the reasons explained by the assessee company appear to be bona fide and constitute reasonable cause for not filing the appeal within the prescribed period of limitation. We further find that, the Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. MST. Katiji reported in 167 ITR 471 (SC), has laid down that a liberal and pragmatic approach should be adopted while considering applications for condonation of delay so as to advance substantial justice and to avoid dismissal of meritorious matters on technical grounds. Therefore, we respectfully, following the principles laid down by the Hon'ble Supreme Court and considering the bona fide reasons explained by the assessee company, condone the delay of 5 468 days in filing the appeal and admit the appeal for adjudication.

The brief facts of the case are that the assessee company had not filed its return of income for the assessment year 2016-17. The assessment for the impugned assessment year was completed under section 144 r.w.s.147 r.w.s.144B of the Income Tax Act, 1961 on 29.03.2022 determining the total income at Rs.127,33,57,160/-. During the course of assessment proceedings, notices under section 142(1) of the Act, dated 09.12.2021, 23.12.2021 and 02.02.2022 were issued to the assessee company calling for certain details and information. Since there was no compliance from the assessee company to the aforesaid notices, the Assessing Officer initiated penalty proceedings under section 271(1)(b) of the Act and levied penalty of Rs.30,000/- being Rs.10,000/- for each default vide order dated 21.09.2022. 8. Aggrieved by the penalty order, the assessee company preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee company, inter alia, contended that there was reasonable cause for non-compliance to the notices issued by the 6 Assessing Officer and further submitted that due to Covid-19 situation and technical glitches in the Faceless Assessment Scheme, the assessee company could not furnish the requisite details before the Assessing Officer. The learned CIT(A), however, was not convinced with the explanation furnished by the assessee company and observed that the assessee company had failed to comply with any of the notices issued during the course of assessment as well as penalty proceedings and had failed to establish any reasonable cause for such non-compliance. Accordingly, the learned CIT(A) confirmed the penalty levied by the Assessing Officer under section 271(1)(b) of the Act and dismissed the appeal filed by the assessee company.

Aggrieved by the order of Ld. CIT(A), the assessee company is now in appeal before us.

The learned counsel for the assessee company, Shri P. Murali Mohan Rao, C.A., submitted that the authorities below erred in levying and sustaining penalty under section 271(1)(b) of the Income-tax Act, 1961 without appreciating the facts and circumstances of the case. The learned counsel submitted that the assessee company could not respond to the notices issued by the 7 Assessing Officer due to circumstances beyond its control and there was no deliberate intention on the part of the assessee company to disregard the notices issued by the Department. The learned counsel further submitted that the assessment proceedings themselves have been restored to the file of the Assessing Officer by the learned CIT(A) in the quantum proceedings by providing one more opportunity to the assessee company to substantiate its case and, therefore, in the facts and circumstances of the case, the issue of levy of penalty under section 271(1)(b) of the Act also requires reconsideration. Accordingly, he submitted that the penalty levied by the Assessing Officer and sustained by the learned CIT(A) is liable to be deleted.

The learned Senior A.R. for the Revenue, Shri K. Prasad, on the other hand, strongly supported the orders of the lower authorities and submitted that the assessee company had failed to comply with notices issued under section 142(1) of the Act on three occasions and also failed to respond to the show-cause notices issued during the course of penalty proceedings. The learned Senior A.R. further submitted that sufficient opportunities were provided by the Assessing Officer, but the assessee company

We have heard both parties and considered the relevant reasons given by the A.O. for levying penalty and confirmed by the learned CIT(A) towards penalty levied under section 271(1)(b) of the Act for non-compliance to the notices issued under section 142(1) of the Act. The learned counsel for the assessee company submitted that since the learned CIT(A) has set aside the assessment proceedings to the file of the A.O. to give one more opportunity to the assessee company to justify its case, the penalty levied by the A.O. for non-compliance to the notices cannot survive because, if the assessee company complies with the subsequent notices issued by the A.O., which ultimately result in no addition, then for mere non-response, penalty cannot be levied.

We find that, the learned CIT(A) has set aside the issue by noticing that the assessee company was not provided sufficient opportunity at the assessment stage and once the Ld. CIT(A) found that, the assessee company deserves one more opportunity before the A.O., and, for this reason, has provided one more opportunity, then the penalty levied under section 271(1)(b) of the Act, for non-compliance to certain notices cannot be upheld at this stage. Therefore, we are of the considered view that, the issue needs to be set aside to the file of the A.O. Thus, we have set aside the order of the learned CIT(A) and restored the issue back to the file of the A.O. and also direct the A.O. to reconsider the issue of levy of penalty under section 271(1)(b) of the Act, after completion of the assessment proceedings for the year under consideration.

In the result, the appeal of the assessee company is allowed for statistical purposes.

The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file