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Facts
The assessee filed seven appeals against the CIT(A)'s orders for AY 2009-10 to 2015-16, which had dismissed the appeals in-limine due to a significant delay (1039 days) in filing. The assessee contended the delay was due to non-service of penalty orders, lack of awareness until a demand notice, and the COVID-19 pandemic period. Crucially, subsequent to the CIT(A)'s original penalty orders, the CIT(A) had deleted the quantum additions for some years and remanded others, removing the basis for the penalty.
Held
The Tribunal noted a material change in circumstances where the basis for penalty (quantum additions) had been deleted or set aside by the CIT(A) himself in subsequent orders related to the quantum appeals. Therefore, considering the interest of justice, the Tribunal set aside the CIT(A)'s impugned orders and remitted all matters back to the CIT(A) for fresh reconsideration of the appeals, including the condonation of delay, allowing the assessee an opportunity of hearing.
Key Issues
Whether the CIT(A) erred in dismissing appeals on technical grounds of delay without considering subsequent developments in quantum proceedings where the basis for penalty was removed or under review, and if the delay should be condoned in light of these changes.
Sections Cited
271(1)(c), 250, 246
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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: Shri Vijay Pal Rao & Shri Madhusudan Sawdia
Per Bench: These seven appeals filed by the assessee are directed against the seven separate orders of the Commissioner of Income Tax (Appeals) [“Ld.CIT(A)”]-12, Hyderabad, all dated 04.12.2024 for the assessment year 2009-10 to 2015-16 respectively.
2. The assessee has raised common grounds in these appeals. The grounds raised for the assessment year 2009-10 are reproduced as under:
1. The Penalty order dated 18-03-2019 passed u/s 271(1)(c) of the Act has no legs to stand.
The Impugned Penalty order has no validity since the quantum appeal is still pending before the first appellate authority as on date.
The order of appeal passed by the Ld. CIT(A) u/s 250 of the Act dated 04.12.2024 is erroneous both on facts and in law to the extent the order is prejudicial to the interests of the appellant.
4. The Ld. CIT(A) erred in dismissing the appeal without condoning the delay of 1039 days in filing the appeal before him and without appreciating that the appellant has reasonable and sufficient cause for such delay in filing of the appeal.
5. The Ld. CIT(A) ought to have admitted and heard the appeal on the basis of merits. 6. The Ld. CIT(A) has erred in rejecting the appeal on technical reason of delay in filing which amounts to denial of justice to the appellant. 7. The Ld. CIT(A) ought to have appreciated the fact that there is no wilful attempt by the assessee to evade any tax and that there is no under reporting of any income. 8. Appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.
3. The Ld.AR of the assessee has submitted that the Ld.CIT(A) has dismissed the appeals of the assessee in-limine on the ground of limitation, after rejecting the prayer of the assessee to condone the delay of 1039 days. He has submitted that the dismissal of the appeals by the Ld.CIT(A) on technical grounds has resulted in gross injustice to the assessee, in view of the fact that in the quantum appeal, this Tribunal vide order dated 09.03.2021 remanded the matters to the record of the Ld.CIT(A) for fresh adjudication and consequently, the Ld.CIT(A) vide orders dated 30.03.2025 has deleted the additions made by the AO for the A.Y.2010-11 to 2014-15 and remanded the matters to the record of the AO for the A.Y.2009-10 and 2015- 16. Thus, the Ld.AR has submitted that once the addition made by the AO against which penalty was levied u/s 271(1)(c) of the Income Tax Act, 1961 (“the Act”) is no more in existence, then the confirmation of the penalty is unjustified and highly arbitrary. He has further submitted that before the Ld.CIT(A), the case was not properly represented on behalf of the assessee and therefore, the Ld.CIT(A) has declined to condone the delay in filing the appeal. He has filed a petition for condonation of delay, which is supported by the affidavit of the assessee for all the seven years, explaining the cause of delay of 1039 days in filing the appeals before the Ld.CIT(A). The main reason now explained by the assessee in the petition for condonation of delay as well as supporting affidavit is that the assessee was not aware about the penalty imposed by the department and only after receiving the demand notice on 10.01.2022, the assessee filed the appeals before the Ld.CIT(A) on 18.02.2022. He has further submitted that this period of 1039 days also comprised the Covid-19 pandemic period from 15.03.2020 to 18.02.2022, which is about two years and therefore, if the Covid-19 pandemic period is excluded, in view of the judgement of Hon’ble Supreme Court, then the delay in filing the appeals was only about 300 days. The Ld.AR has further pointed out that the assessee has requested the AO for supply of the penalty orders, which have been supplied to the assessee, only on 20.05.2025, which shows that the impugned orders of levy of penalty were not served upon the assessee, prior to supply of these orders by the AO on 20.05.2025. Thus, the Ld.AR has pleaded that the delay in filing the appeals before the Ld.CIT(A) may be condoned and consequently, penalty levied u/s 271(1)(c) in respect of the additions already deleted by the Ld.CIT(A) for the A.Y.2010-11 to 2014-15 and set aside to the record of the AO for the A.Y.2009- 10 and 2015-16 be deleted.
On the other hand, the Ld.DR has submitted that it is case of inordinate delay of 1039 days and the assessee has failed to explain a sufficient cause for such inordinate delay in filing the appeals before the Ld.CIT(A). He has referred to the reasons explained by the assessee before the Ld.CIT(A) and submitted that the Ld.CIT(A) has duly considered the reasons and has given a finding that the assessee has failed to explain any reasonable cause of huge delay of 1039 days in filing the appeal. The Ld.DR has further contended that now the assessee has filed fresh petition for condonation of delay as well as affidavit, taking altogether a new stand before this Tribunal, which cannot be accepted. The change of stand by the assessee, explaining the cause of delay is nothing but an afterthought and taking an undue advantage of the process of law. Thus, he has vehemently objected to the condonation of delay and relied upon the impugned orders of the Ld.CIT(A).
We have considered the rival submissions as well as the material placed on record. Undisputedly, the assessee filed appeals before the Ld.CIT(A) against the penalty order belatedly and explained the cause of delay, which was not found by the Ld.CIT(A) as reasonable and acceptable/satisfactory, which is reproduced by the Ld.CIT(A) in para 6, page No.14 of the impugned order as under :
“……The appellant in the appeal papers submitted that the appeal was not filed in time and requested for condonation of delay with the reasons reproduced as under:
1. 1. That the order passed u/s 271(1)(c) on 10.01.2022 2. That the order passed u/s 271(1)(c) was served 10.01.2022 3. That the time for filing of the appeal expired on 09.02.2022 4. That there has been delay in filing of appeal by 9 days.
5. That the appeal could not be filed in time as the due date of filing has not been brought to the notice of management and due to the Covid-19 situation.
6. That the appeal could not be filed as the e-filing portal has been updated and due to technical issues.
7. The Hon'ble Supreme Court in the Miscellaneous Application No.21 of 2022 in MA No.665 of 2021 in SMW(C) No.3 of 2020 has voluntarily condoned the delay for any suit, appeal, application or proceeding till 28.02.2022.
8. That the delay may kindly be condoned and appeal be heard as the delay was caused to reasons beyond the appellant’s control.”
By considering the reasons explained by the assessee, the Ld.CIT(A) declined to condone the delay and then dismissed the appeals of the assessee in-limine, being barred by limitation. Now the assessee has filed a petition for condonation of delay and also filed an affidavit in support of the petition. The reasons explained by the assessee as stated in the affidavit are as under :
Thus, it is manifest from the record that before the Ld.CIT(A), the assessee has submitted that the order passed u/s 271(1)(c) was served on the assessee on 10.01.2022 and thereafter, the appeals were filed on 19.02.2022 with the delay of 9 days, whereas, in the affidavit filed before the Tribunal, the assessee has submitted that the impugned order was not served on the assessee and only when the demand notice was issued on 10.01.2022, the assessee came to know about the penalty order passed u/s 271(1)(c). The Ld.AR also taken a plea that the impugned order was served on the assessee only on 20.05.2025, however, this plea taken by the assessee is contrary to the record as the said order was already challenged by the assessee before the Ld.CIT(A) and also a copy of which has been filed by the assessee along with the memo of appeals filed before this Tribunal. Therefore, this plea of the assessee that the order was not served on the assessee and only on 20.05.2025, the AO has supplied the orders passed u/s 271(1)(c) is contrary to the record. Apart from this, there is a further development after the impugned orders passed by the Ld.CIT(A). The Ld.CIT(A) vide order dated 30.03.2025 has deleted the additions against which penalty u/s 271(1)(c) was levied for the A.Y.2010-11 to 2014-15 as well as remitted the matters to the record of the AO for the A.Y.2009-10 and 2015-16. It is pertinent to note that on 30.03.2025, these orders have been passed by the Ld.CIT(A) in pursuant to the orders of this Tribunal dated 09.03.2021, whereby all the matters in the quantum appeals were remanded to the record of the Ld.CIT(A) for fresh adjudication after giving an opportunity of hearing to the assessee. Thus, there is material change in the matter, when the Ld.CIT(A) himself has deleted the additions in some of the assessment years and set aside the additions in some of the assessment years to the record of the AO after passing the impugned orders and therefore, it would be appropriate and reasonable that this new development of deletion of additions as well as setting aside some of the additions be taken into consideration by the CIT(A). Therefore, in view of the above discussion, we are of the considered view that the matter of condonation of delay is required to be reconsidered by the Ld.CIT(A), in light of the subsequent developments in the shape of the orders dated 30.03.2025 passed by the Ld.CIT(A) in the quantum proceedings. Accordingly, in the facts and circumstances of the case and in the interest of justice, we set aside the impugned orders of the Ld.CIT(A) and remit all these matters to the record of the Ld.CIT(A) for reconsideration of the appeals of the assessee along with condonation of delay. Needless to say, the assessee be given an opportunity of hearing before passing the fresh order.
In the result appeals of the assessee are allowed for statistical purpose.
Order pronounced in the open court on 18th July, 2025.