MIDAS TOUCH EXPORT PRIVATE LIMITED,MUMBAI vs. DCIT 7(1)(1), MUMBAI

On the facts and circumstances of the case and in law, The Ld. CIT(A) erred in confirming the penalty of Rs.3,98,99,590/- under section 271(1)(C) of the Act for allegedly furnishing inaccurate particulars of income.

At the outset, it was noticed that the instant appeal is delayed by 551 days.In this regard,the assessee has filed an application for condonation of delay alongwith an affidavit of Sri Ashok Rajani,Director stating that the assessee company was facing severe financial difficulties as it turned NPA in April 2017 by which the bank finally sold off its factory on 20.06.2018 where all the relevant papers,documents etc. were lying which was not possible to retrieve due to bank authorities. Moreover, the Finance and Accounts Manager Sri Ramavatar Garg, also suddenly left the company in June 2018 who was looking after all tax matters and the email communication were also received on his e-mail id and also mail ids of the company were exclusively assigned to him. In this regard, an affidavit of Sri Ramavtar Garg was also filed affirming the above contentions of the Director. It is submitted that all such factors led to the delay which was not intentional and malafide. The delay may be condoned.

On careful consideration of the submissions of the assessee, we are of the view that the delay was not intentional but due to unavoidable and sufficient cause. In this connection, reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late……..Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated….Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period…. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.” We therefore, condone the delay.

Briefly stated facts of the case are that the assessee company filed its return of income declaring total of Rs. 24,97,54,382/-. Subsequently, the assessment was completed under section 143(3) of the Act making an addition of Rs. 2,32,38,909/- as the assessee did not submit any reply before the AO to the queries and notices issued. The assessment was completed based on the materials available on record

Before us the ld.AR has contended that the quantum appeal is still pending in this case before the ld.CIT(A).It is therefore, requested to set aside the penalty order or in the alternative, send it back to the AO for fresh consideration in the light of the decision as passed by the appellate authority in the quantum appeal. The ld.DR did not object to the proposal for remitting the matter to the AO.

On careful consideration of the above stated facts, we agree with the proposition for remanding the penalty back to the file of the AO after setting aside the appellate order. We order accordingly with a direction to decide the imposition of penalty afresh in the light of the decision of the ld.CIT(A) in the pending quantum appeal. The ground of appeal is therefore, allowed for statistical purposes.

In the result, the appeal is allowed for statistical purposes.