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Facts
The assessee's appeal was dismissed by the CIT(A) for being filed with a delay of 187 days. The assessee attributed the delay to factors like the COVID-19 pandemic, the elderly age and health issues of the directors and their chartered accountant, and issues with email communication regarding assessment orders.
Held
The Tribunal held that the CIT(A) erred in not condoning the delay, as the assessee had provided reasonable explanations for the delay due to the prevailing circumstances like the pandemic and health issues. The assessment proceedings were conducted during the Covid-19 pandemic period, affecting the assessee's ability to represent themselves.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal due to delay, and whether the delay was sufficiently explained by the assessee considering the circumstances like the COVID-19 pandemic and health issues.
Sections Cited
147, 144, 144B, 250, 143(3), 148, 271(1)(b), 271(1)(c), 142(1), 5, 271(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K(SMC
order : 07.04.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 18/09/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘ the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 29/03/2022, passed under Section 147 read with Section 144 read with Section 144B of the Act for the Assessment Year 2013-2014.
2. The Assessee has raised following grounds of appeal :
“1. On the facts and in the circumstances of the case and in law, the Commissioner of Income tax Appeal was not justified in rejecting the petition for delay in filing the appeal and holding ITA No,5751/Mum/2024 Assessment Year 2013-2014 that the delay in filing the appeal was not condonable merely because the assessment order was served on the appellant's email address without appreciating the Affidavit of the Director that he being of old age had not seen the notices or the assessment order.
On the facts and in the circumstances of the case and in law, the Commissioner of Income tax Appeals erred in not considering that even the Supreme Court in Miscellaneous Application no 665 of 2021 and Misc. App. No. 21 of 2022. had held that any delay or causeway of action arising between the period from 15th March 2020 to 20th February 2022 should be considered leniently and the delay if any condoned.
On the facts and under circumstances of the case and in law the Commissioner of Income tax Appeals was not justified in holding that there was negligence on the part of the Director, merely basing his finding that the assessment order was served on the income tax portal of the company. On 29th March, 2022 and hence the delay in filing of the appeal was on account of sheer negligence and hence could not be condoned.”
3. The relevant facts in brief are that the assessment under Section 147 read with Section 144/144B of the Act was framed on the Assessee, vide Assessment Order dated 29/03/2022. The Assessee preferred the appeal against the said aforesaid Assessment order before the CIT(A) which was dismissed vide order dated 18/09/2024 on account of delay of 187 days in filing the appeal before the CIT(A). Now the Assessee has preferred the present appeal before the Tribunal challenging the aforesaid dismissal order passed by the CIT(A).
We have heard both the sides and perused the material on record.
We find that the Director of the Assessee Company had explained delay in filing appeal before CIT(A) by way of affidavit relevant extract of which reads as under: “3. That I am a director of Jagruti Computech Private Limited Company (JCPL) having Income Tax PAN AABCJ4436H carrying Assessment Year 2013-2014 on business of Rental income of Immoveable Property as well as of Furniture & Fixtures. 4. That Jagruti Computech Pvt Ltd was registered under Service Tax Law and Service Tax Registration Number was AABCJ4436H5T001. 5. That I was filing my above said Private Limited companies return of income through chartered accountant Shri xx xx having office address at Second Floor, Botawalla Building 71- 73, MS Marg Fort Mumbai - 400 023.
That I have filed companies return of income for the Asst Year 2013-2014 through Shri xx xx on 12/09/2013 having ITR Acknowledgement Number 772336881120913. 7. That in the said return the email id and mobile phone number mentioned as subash.karani@gmail.com and 9833913477. 8. That Notice Under Section 143(2) dt.04/09/2014 for the Asst Year 2013-2014 issued by the officer ward 1(2)(1) was duly attended by my chartered accountant and all details as required for the Assessment was dully submitted by him and an income tax order under section 143(3) passed on 30/11/2015 and return income was accepted as assessed income. 9. That on 30/03/2021 I have received Notice u/s 148 for IT Assessment year 2013-2014 in my email id subashvkarani@gmail.com and same I have forwarded to my chartered accountant Shri xx xx in his email id anujpkothari@yahoo.com on 31/03/2021. 10. That I was under an impression that Shri xx xx will attend the scrutiny case time to time as he has done in past. 11. That I received a Notice of Demand for levy of Penalty u/s 271(1) (b) and 271(1)(c) by mail on my mail id subashvkaranj@gmail.com on 30/09/2022, which I forwarded to Shri xx xx and enquired form him on this. 12. That I said to Shri xx xx that I am unable to understand what is this demand for as I have been forwarding the emails which I received from income tax department apart from this I have no idea about matter. 13. That at that time I have come to know that due to old age and Assessment Year 2013-2014 post corona Shri xx xx has stopped attending his office as well as department offices. He also remind me that when he had managed to file my companies last return that is income tax return for FY 2020-2021 and he also intimated me about this but I seriously due to my old age and my wife's illness forget to take any further action on this.
That I requested him to please look into my matter and attend the matter is for the same Asst. Year he has already attended the case in past.
That on my request Shri xx xx visited the Income Tax Officer Shri xx xx xx to enquire about the demand raised. On visiting the Income Tax Department he got to know that and order u/s 147 r.w.s. 144 r.w.s. 144B of the income tax Act was passed on 29/03/2022 by National Faceless Assessment Centre Delhi DIN ITBA/AST/S/147/2021-22/1041929482(1) for A.Y 2013- 2014. Raising a demand of Rs. 38,45,820/-, Shri xx xx collected the Assessment order copy along with Notice of Demand and Computation Sheet from the ITO on 04/10/2022.
That Shri xx xx has intimated me on 05/10/2022 about the above demand on verification I found that this order was not received by me on my mall hence I was also unaware of the same.
That he explained to me that due to his old age he is now not doing Income tax practice but for me he visited to income tax office and collected assessment order copy. He has also explained me that since I have not received order copy in my email; he has collected order copy from department and after that within a period of 30 days I have to file an Appeal before CIT. He also advice me appoint one more legal consultant for this matter as he is not very active in profession.
That as per the said assessment order I found that Companies returned income has been enhanced by Rs.28,81,799/- (returned Income 8,52,840/- Assessed Income 37,34,542/-) also credit for TDS of Rs. 17,42,306/- was not given and a consequential demand of Rs.38,45,820/- has been made against the company.
That by seeing the Income Tax Order I was shocked that Income tax assessment for the same assessment year has already been completed under section 143(3) and assessment order passed on 30/11/2015 and companies return income was Assessment Year 2013-2014 accepted as assessed income and in the absence of any new evidence how companies assessed income has been changed without any additional evidence and I am unable to understand on what basis the assessed income changed and demand worth Rs.38,45,542 is payable.
That I have not received any notice from Income Tax Department regarding Tax Demand for A.Y. 2013-2104 for order u/s 147 r.w.s. 144 r.w.s. 144B of the Income tax Act and it is from Shri xx xx I have come to know that order u/s 147 r.w.s. 144 r.w.s. 144B of the income tax Act has been passed and huge demand of Rs. 38,45,542/- is raised.
That immediately on 10/10/2022 with the help of my Shri xx xx. I contact a legal consultant and discussed the matter with him and requested him to look after this matter.
That I am advised by the legal consultant to file an appeal before the Hon'ble CIT Appeal for relief but the appeal has already become barred by time limitation and therefore accompanied by an application for condonation of delay as provided under section 5 of the LIMITATION ACT, 1963.
That in this way there is a delay of 6 mnts for which an application under Section 5 of the Limitation Act has been filed along with form 35 of appeal.
That delay in filing the appeal is because of a genuine belief on my legal consultant Shri xx xx who is due to corona and old age had stopped doing profession which I had forget due to my old age and due to my wife health issue.
That I had no intention to jeopardize the interest of the revenue by delaying In filing of the appeal. I have been regularly filing all the Tax return and Honestly paying all the taxes to the Income Tax Department in timely manner. As due to this pandemic and Non receipt of order on my mail this delay has been caused and I seek condonation of delay in filling the Appeal.”
6. The primary reason for delay in filing the appeal before the CIT(A) was that that the chartered accountant of the Assessee-Company, who was more than 70 years of age at the relevant time, had stopped attending his office in post Covid-19 pandemic period on account of his old age. Mr. Subhash Vithaldas Karani and his wife Assessment Year 2013-2014 Mrs. Manju Subash Karani were the only two directors of the Assessee-Company who were also senior citizens. Mr. Subash Karani was not actively participating in the business of Assessee-Company since he was taking care of his wife (ie. Mr. Subash Karani – the other director of the Assessee-company) who was not keeping good health. On the basis of aforesaid reasons the Assessee had sought contention of delay of 6 months in filing appeal before CIT(A). On perusal of order impugned, we find that CIT(A) rejected the request for seeking condonation of delay holding that the Assessee Company had made incorrect claim of belated service of Assessment Order as according to ITBA Portal the demand notice was served upon the Assessee on 23/03/2022. According to the CIT(A) the Assessee had failed to exercise due diligence and the delay was attributable to negligence on the part of the Assessee. In our view the CIT(A) failed to appreciate the explanation provided by the Assessee-Company for delay in filing the appeal. While dismissing the appeal the CIT(A) has referred to the demand notice, dated 29/03/2022, issued pursuant to the passing of Assessment Order under Section 144 read with Section 147 of the Act. We note that in paragraph 11 of the above affidavit, the Director of the Assessee-Company has stated that notice of demand for levy of penalty under Section 271(1)(b) and Section 271(1)(c) of the Act was received by the Director of the Assessee-Company on 30/09/2022. Since both the aforesaid orders were dated 23/09/2022, the same could not have been received prior to the aforesaid date. On getting the knowledge of the aforesaid demand notice, the Director of the Assessee-Company took steps to find out the status of the assessment proceedings which were previously handled by the concerned chartered accountant. The explanation offered on behalf of the Assessee- Company is that on account of discontinuation of active practice by the concerned chartered accountant, and on account of old age of the Directors as well as medical issues faced by them, the tax Assessment Year 2013-2014 matters pertaining to Assessment Year 2013-2014 could not be pursued diligently. The Learned Authorized Representative for the Assessee has also placed before this Tribunal a supporting affidavit sworn by the concerned chartered accountants which supports the aforesaid explanation offered by the Assessee-Company. In view of the aforesaid, we do not agree with the order passed by the CIT(A) and hold that the Assessee had provided reasonable explanation for delay of around 6 months in filing appeal before the CIT(A).
Further, on perusal of the Assessment Order, dated 29/03/2022, we find that the assessment proceedings were initiated under Section 147 of the Act by issuance of notice, dated 25/03/2021, issued under Section 148 of the Act and the same culminated into passing Assessment Order on 29/03/2022. During the aforesaid period notices issued by the Assessing Officer were not complied with. It is the case of the Assessee that the non-compliance with the aforesaid notices was not deliberate and was on account of the then prevailing Covid-19 Pandemic, and health issues faced by the Directors of the Assessee-Company. We find that the aforesaid contention of the Assessee was accepted by the CIT(A) by deleting penalty levied under Section 271(1)(b) of the Act vide order dated 19/07/2023. The Learned Authorized Representative for the Assessee has also placed on record a copy of the order, dated 19/07/2023, passed by the CIT(A) deleting the penalty levied upon the Assessee-Company under Section 271(1)(b) of the Act for levied for non-compliance of notice issued under Section 142(1) of the Act during the assessment proceedings for the Assessment Year 2013-2014 wherein it has been concluded as under:
“7. DECISION: 7.1. The appellant in this case filed his return of income for the assessment year under consideration on 12.09.2013 declaring a taxable income of Rs. 8,52,743/-. The case is reopened and Assessment Year 2013-2014 notice u/s. 148 was issued on 25.03.2021. In response to the notice, the appellant filed return of income on 08.08.2021. 7.2. Scrutiny assessment in this case was completed u/s.144 r.w.s.147 on 29.03.2022. During the assessment proceedings, the AO has issued the notices u/s.142(1) on the following dates. Nature of notice Date of Notice Response Notice u/s. 142(1) 28/06/2021 No response Notice u/s.142(1) 22/11/2021 No response Notice u/s.142(1) 21/02/2021 No response Since, the appellant has failed to respond to the above notices issued u/s.142(1). Accordingly, the AO initiated penalty proceedings u/s.274 r.w.s.271 and levied penalty u/s.271(1)(b) of Rs. 30,000/-on 23/09/2022 7.3. During the appellate proceedings, the appellant has stated that due to Covid pandemic and age my CA Shri-Padam J Kothari was not active in the Profession and due to this proper timely response to the notice could not be given and further stated that he is a Senior Citizen aged 72 years and his wife is facing serious health issue due to which he was also not able to follow up and provide timely response to the Income Tax Department. For the past 2 years was very difficult to the whole of humanity and I had also suffered a lot due to this pandemic and I would also like to state that Notice dated 22nd November 2021 was not received by me on my mail, and I had filed return in response to notice u/s. 148 on 8th August 2021 but due to genuine ignorance did not e verified the same, only this time due situations beyond his control and facing Pandemic and health issue this mistake has happen. As this is Genuine case of delay due to Pandemic and health requested to drop the penalty proceedings. 7.4. I have gone through the submissions of the appellant along with statement of facts. The appellant could not comply with the notices u/s.142(1) due to COVID 19 pandemic which was beyond the control of the appellant. 7.5. The non compliances to the statutory notices were unintended and because of genuine difficulties amid COVID 19 pandemic and the age and health of the appellant, the appellant could not be imposed penalty u/s.271(1)(b). Assessment Year 2013-2014
In view of the above, I am of the opinion that the AO is not justified in levying the penalty u/s.271(1)(b). Accordingly, the appeal of the appellant is allowed.” 8. We further, note that even the Penalty Order, dated 23/09/2022, pertaining to Assessment Year 2013-2014 levying penalty under Section 271(1)(c) of the Act has also been set aside by the Tribunal vide order, dated 24/02/2025, passed in observing that during the assessment proceeding the Assessee could not get proper opportunity to present its case on account of Covid- 19 Pandemic.