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Income Tax Appellate Tribunal, BENCH ‘B’
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL BENCH ‘B’ BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
Stay Petition No.39 and 40/Ahd/2018 With ITA No.1040 and 1041/Ahd/2018 �नधा�रण वष�/Asstt. Year: 2007-08
Suchit Arvindbhai Patel Vs. ITO, Ward-4 B-14, Madhav Vihar Bungalows Gandhinagar. Tapovan Circle S.P. Ring Road Gandhinagar 382 424.
PAN : ATHPP 6723 H
अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)
Assessee by : Shri S.N. Soparkar with Shri Parin Shah Revenue by : Shri Saurabh Singh, Sr.DR
सुनवाई क� तार�ख/Date of Hearing : 11/05/2018 घोषणा क� तार�ख /Date of Pronouncement: 11/05/2018 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:
Present two stay applications are directed at the instance of the assessee for grant of ad-interim stay of outstanding demand amounting to Rs.9,73,142/- and Rs.5,92,697/- in the assessment year 2007-08.
The ld.AO has passed assessment order under section 144 r.w.s. 148 of the Income tax Act, 1961 and determined total tax demand of Rs.22,72,460/- which included interest of Rs.7,75,871/-. Similarly, he
SP No.39 and 40/Ahd/2018 with ITA 2 imposed penalty under section 271(1)(c) vide order dated 26.6.2015 and raised a demand of Rs.7,40,871/-. Out of the quantum addition the assessee has made a payment of Rs.12,99,318/- and out of penalty he has paid Rs.1,48,174/-. In this way, the assessee has prayed for stay of outstanding demand of Rs.9,73,142/- out of quantum addition and Rs.5,92,697/- out of penalty amount imposed under section 271(1)(c) of the Act.
The ld.counsel for the assessee at the very outset, while taking us through record, contended that the assessment was framed under section 144 r.w.s. 148 of the Income Tax Act i.e. on the basis of best judgment of the AO. In other words, it is an ex parte assessment order. Similarly, penalty order has also been passed ex parte. The assessee has challenged the assessment order before the ld.CIT(A) but his appeal was time barred by 1099 days. The penalty appeal was filed before the ld.CIT(A) after expiry of 906 days of limitation. He pointed out that both the appeals have been dismissed by the ld.CIT(A) on account of bar of limitation.
With the above background, the ld.counsel for the assessee prayed that in order to render substantial justice, appeals may kindly be taken up for hearing on this limited issue. The ld.DR has no objection with the prayer of the assessee, if the appeals are being adjudicated. Therefore, after looking into the facts and circumstances of the case, we deem it appropriate to hear the appeals itself instead of stay applications.
As alleged above, there is no dispute that the appeals filed before the CIT(A) were time barred by 1099 days and 906 days. In order to explain the delay the assessee has filed his affidavit. The affidavit filed by the assessee reads as under: “I, Suchit Arvindbhai Patel -aged 35 years residing at B-14, MadhavViharBunglows, Tapovan Circle, S.P. Ring Road,
SP No.39 and 40/Ahd/2018 with ITA 3 Chandkheda, Ahmedabad do hereby solemnly affirm and state as under: ' . • That Assessment order u/s 144 r.w.s. 147 was passed on 29/l2/2014 and served to my father Shri Arvindbhai S Patel on 31stMarch, 2015 (tentative date as father lost his memory from 2011 due to brain stroke). • My father ShriArvindbhai S Patel was suffered from brain stroke and was hospitalized on 23/02/2011 in Apollo Hospitals International Ltd. He underwent Craniotomy and clipping of aneurysm on 16/03/2011 and kept under observation and discharged from hospital on 28/03/2011 i.e. after almost 33 days (48 hours with ventilated support). Subsequently, he was observed by doctors from time to time. My father also lost his memory as he was operated SAH with ACOM aneurysm. Necessary papers to prove the bonafide of the appellant is attached herewith as per Annexure 1. • Again in 21/08/2013, angiography was done at Apollo Hospital for heart related problems. Necessary papers to prove the bonafide of the appellant is attached herewith as per Annexure-2. • Then again on 03/04/2015 to 07/04/2015, my father was admitted in Sterling Hospital for brain stroke and complete left side paralysis. Due to repetitive brain stroke and paralysis he lost, his memory and took very long time to recover from unstable mental condition, Necessary papers to prove the bonafide is attached herewith as per Annexure 3. • Due to deteriorating health condition, my father loose his memory and also not able to inform me about receipt of assessment order on my behalf. At present also my father suffers from memory loss. • In month of June 2015, Income Tax Department contacting me through phone call regarding outstanding demand in my case but I informed him that copy of assessment order was not served to me. • There was no recovery action from income tax department in year 2016 and till last month On December, 2017 and suddenly income tax department attached my property i.e. car and residential house belonging, to me and also attached residential house of
SP No.39 and 40/Ahd/2018 with ITA 4 my mother. Due to departmental action of attachment of properties and recovery action I came to know about assessment order and penalty orders were passed in my case. • Against the action of attachment and subsequent action of auction by way of notice in newspaper, I along with my mother filed Special Civil Application before Hon'ble Gujarat High Court. Hon'ble High Court lifted the attachment of properties and bank accounts and ordered to considered the delay in filing an appeal before your honour. Copies of judgment of Hon'ble High Court of Gujarat is attached herewith as per Annexure 4. • Due to above facts, there is a delay of 1047 days (approx.as correct date of receipt of order is not known to assessee) in filing .appeal for which I pray your honour to condone the same and decide the appeals on merits.
I do hereby solemnly confirm that whatever is stated above is true to the best of my knowledge and belief.
The ld.CIT(A) was not satisfied with the explanation of the assessee. According to the ld.CIT(A), assessee had appeared before the AO along with his tax consultant and took adjournments. However, thereafter he failed to appear. With regard to the contention of the assessee that the assessment order as well as penalty was served on his father, the ld.CIT(A) observed that this assertion is patently false. These orders were served upon the assessee and not on his father. On account of these two reasons, the ld.CIT(A) recorded a finding that the assessee failed to give plausible explanation for filing the appeal beyond period of limitation.
We have duly considered rival contentions and gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This
SP No.39 and 40/Ahd/2018 with ITA 5 expression “sufficient cause” employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld.Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: “1. 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. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
"Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”
SP No.39 and 40/Ahd/2018 with ITA 6 8. Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: “Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss.”
SP No.39 and 40/Ahd/2018 with ITA 7 We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon’ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach.
In the light of the above, let us examine the facts. The first reason assigned by the ld.CIT(A) for not entertaining explanation of the assessee is that according to the finding recorded by the AO he had appeared before the AO on 14.11.2014, and thereafter did not appear. Therefore, it suggests that the assessee has knowledge of assessment proceedings and he deliberately did not participate in the assessment proceedings. In the second reason, the ld.CIT(A) has observed that demand notice and assessment order were served upon the assessee on 5.1.2015 and not on his father on 31.3.2015. She further observed that Shri A.M. Shah has made a request to the AO for stay of recovery proceedings and this letter was written on 13.9.2016. Thus, there is no plausible reason for not filing the appeal upto 7.2.2018. A perusal of the above circumstances would suggest that no doubt there is some negligence at the end of the assessee for conducting his income tax proceedings. There is no material before us to ascertain whether the assessee has appeared before the AO on 14.11.2014. Similarly, there is nothing to doubt that the assessment order might have not been served upon father of the assessee. Original acknowledge receipt has not been placed on the record. However, considering the case of an individual upon whom tax liability of Rs.22,72,460/- has been fastened by virtue of an ex parte order which has been further compounded by imposition of penalty of Rs.7,40,871/- we are of the view that punishment in the shape of tax liability is far disproportionate with the alleged negligence. The possibility of illness of his father could not be ruled out. His house was attached and he has to approach Hon’ble High
SP No.39 and 40/Ahd/2018 with ITA 8 Court by way of writ petition bearing SCA No.1403 of 2018. Copy of which is available at page no.67 of the paper book. It is pertinent to observe that by making appeals time barred the assessee would not achieve anything. The tax liability would be confirmed and it could be recovered. Therefore, it cannot be alleged that the assessee has adopted this modus operandi as a strategy. It might be a bona fide negligence.
In view of the above discussion, we condone the delay in filing the appeal before the ld.CIT(A) and remit the issues to the file of the ld.CIT(A) for fresh adjudication. Considering the alleged negligence in conducting the proceedings before the ld.Revenue authorities below, we impose a cost of Rs.2,500/- upon the assessee on each appeal. The assessee shall deposit the cost within one month from the receipt of order. The ld.CIT(A) shall decide both the appeals on merit after providing reasonable opportunity to the assessee. The assessee shall cooperate with the proceedings before ld.CIT(A) and shall not seek unnecessary adjournment unless situation so warrants.
So far as stay petitions are concerned, they become redundant and hence dismissed.
In the result, both the appeals of the assessee are allowed for statistical purpose, and both stay petitions are dismissed as being redundant.
Order pronounced in the Court on 11th May, 2018 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 11/05/2018