SHRI PRAFUL M. PATEL,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAC, MUMBAI

Before proceeding further with the matter, it is necessary to observe that there is an inordinate delay of 1701 days in filing the present appeal. Seeking condonation of delay, the assessee has filed an application dated 13-08-2019 2 ITA 5299/Mum/2016 supported by an affidavit. The sum and substance of assessee’s explanation relating to the cause of delay is, the hearing of the penalty appeal before learned Commissioner (Appeals) took place on several occasions beginning from 06-02- 2019 till 16-07-2019. Whereas, on 29-07-2019, learned Commissioner (Appeals) intimated the authorized representative of the assessee that the penalty order has already been passed on 30-09-2014. On further verification, it came to the notice of the assessee that the order passed by learned Commissioner (Appeals) was served on his neighbor’s son, Master Urvesh Brijesh Bhavani on 16-10-2014, who was hardly ten years’ old at that time. It is further submitted, neither the assessee had received the notice of hearing of neither the penalty appeal nor the penalty order. It is submitted, had the assessee been aware of the order passed by learned Commissioner (Appeals), he would certainly have taken steps in time for filing of appeal before the Tribunal. It is further submitted on behalf of the assessee that the addition based on which the assessing officer imposed penalty under section 271(1)(c) of the Act, in the meanwhile, has been deleted by the Tribunal. Thus, it is submitted, unless delay is condoned and appeal is adjudicated on merit, it will cause great injustice to the assessee.

Learned departmental representative left it to the discretion of the Bench.

Having considered rival submissions and perused materials on record, we are satisfied that the inordinate delay in filing the present appeal was due to a reasonable cause. Further, it is an undisputed fact that the additions based on which penalty under section 271(1)(c) of the Act was imposed, in the meanwhile, have been deleted by the Tribunal. Therefore, there is no reason for the assessee in not contesting the imposition of penalty when he had strong case on the quantum. More so, considering the fact that imposition of penalty under section 3 ITA 5299/Mum/2016 271(1)(c) of the Act may lead to other consequences under the Act. It is fairly well settled, if technicalities come in the way of justice, the scale must always tilt towards justice rather than technicalities, unless, there are strong reasons for not doing so. In the aforesaid scenario, not condoning the delay in filing the appeal would cause great injustice to the assessee. In view of the aforesaid, we are inclined to condone the delay and admit the appeal for adjudication on merit.

Briefly the facts are, the assessee is an individual engaged in the business of builders, developers, civil and labour contractors. For the assessment year under dispute, assessee filed his return of income on 30-09-2008 declaring total income of Rs.28,47,071/-. While completing the assessment under section 143(3) of the Act, the assessing officer made various additions which enhanced the income to Rs.1,46,22,270/-. Contesting the additions made, the assessee preferred appeal before learned Commissioner (Appeals) and thereafter before the Tribunal. During the pendency of assessee’s appeal before the Tribunal, the assessing officer, based on the additions made in the assessment order, initiated proceeding for imposition of penalty under section 271(1)(c) of the Act and ultimately passed an order imposing penalty of Rs.37,90,410/- alleging concealment of income. As discussed earlier, assessee’s appeal filed before learned Commissioner (Appeals) challenging the imposition of penalty was dismissed by an ex parte order impugned in the present appeal.

The learned counsel for the assessee submitted, while deciding assessee’s quantum appeal, the Tribunal, while deleting all the additions made by the assessing officer, has restricted the addition to Rs.10.66 lakhs, being 10% of the gross receipts of M/s Raj Constructions and M/s Raj Enterprises. Thus, she submitted, there is no concealment of income by the assessee.

We have considered rival submissions and perused materials on record. Undisputedly, based on various additions made in the assessment order, the assessing officer had imposed penalty under section 271(1)(c) of the Act. However, all the additions made by the assessing officer, more or less, have been deleted by the Tribunal while deciding assessee’s appeal in dated 21-10-2015. What the Tribunal has ultimately done is estimated net profit @10% on the gross receipts. Thus, after accounting for the net profit already disclosed by the assessee, ultimately, net addition of Rs.10.66 lakh was sustained by the Tribunal. Thus, from the aforesaid facts it is very much clear that the additions giving rise to imposition of penalty no longer survive. Whatever addition sustained by the Tribunal is merely on estimate basis. Such estimated addition, in our considered opinion, cannot lead to either concealment of income or furnishing of inaccurate particulars of income. In view of the aforesaid, we are inclined to delete the penalty imposed under section 271(1)(c) of the Act.

In the result, appeal is allowed. Order pronounced on 22/10/2021. Sd/- sd/- (RAJESH KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dt : 22/10/2021 Pavanan 5 ITA 5299/Mum/2016 Copy to : 1. Appellant 2. Respondent 3. The CIT concerned 4. The CIT(A) 5. The DR, ITAT, Mumbai 6. Guard File /True copy/ By Order