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Facts
The assessee filed his return for AY 2015-16 declaring total income of Rs. 7,05,740/- and a long-term capital loss. The AO, however, estimated a higher fair market value for the property, leading to a significant addition and initiation of penalty proceedings under Section 271(1)(c). The CIT(A) dismissed the assessee's appeal for want of prosecution.
Held
The Tribunal condoned the significant delay in filing the appeal due to bona fide reasons and procedural misunderstandings. The Tribunal set aside the CIT(A)'s order, restoring the matter to the CIT(A) for fresh adjudication on merits. A cost of Rs. 5,000/- was imposed on the assessee.
Key Issues
Whether the appeal filed after a significant delay should be admitted. Whether the CIT(A) erred in dismissing the appeal without adjudicating on merits.
Sections Cited
271(1)(c), 143(3), 147, 154, 133(6)
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: MS.SUCHITRA R. KAMBLE & SHRI MAKARAND V.MAHADEOKARShri Bhaveshkumar Ganshyam Patel
This appeal filed by the assessee is directed against the order dated 28.02.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "CIT(A)"] arising out of penalty order passed u/s 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as "the Act"] dated 04.02.2022 for the A.Y. 2015-16.
Brief Facts of the Case
The assessee, an individual, filed his return of income for A.Y. 2015-16 originally on 26.03.2016 declaring total income of Rs.
2 7,05,740/-. In the said return, the assessee did not offer any capital gain on transfer of land but instead disclosed a long-term capital loss by claiming indexed cost of acquisition and improvement. The Assessing Officer (AO) gathered information that the assessee had transferred immovable property admeasuring 6750 sq.mtrs at Gotri, Vadodara for a consideration of Rs.11,63,23,857/-, wherein assessee's 1/3rd share worked out to Rs.3,87,74,619/-. Upon issuing notice u/s 133(6) on 07.02.2020, the assessee furnished a revised computation based on a new valuation report, offering long-term capital gains of Rs.89,36,585/-. The AO, not satisfied with both valuation reports submitted by the assessee (by Mr. B.H. Patel and Mr. Ketan N. Patel), independently estimated the fair market value (FMV) as on 01.04.1981 at Rs.40 per sq.mtr., taking reference from departmental valuation for property in Motera, Gandhinagar. Accordingly, cost of acquisition for assessee's share was determined at Rs.90,000/-, resulting in computation of long-term capital gain of Rs.2,49,38,019/-. After adjustment for amount already offered, the AO made an addition of Rs.1,60,01,434/-. The assessment order u/s 143(3) r.w.s 147 was framed on 24.09.2021. Penalty proceedings u/s 271(1)(c) were also initiated for furnishing inaccurate particulars of income. Thereafter, on receipt of DVO report dated 28.10.2021, the AO passed rectification order u/s 154 on 12.01.2022 wherein the FMV was determined at Rs.12,87,400/- (assessee’s 1/3rd share), and consequential long-term capital gain was recomputed at Rs.1,26,76,643/-, resulting in net additional income of Rs.37,40,058/-. However, penalty was levied by the AO on the originally assessed addition of Rs. 1,60,01,434/-, determining tax sought to be evaded at Rs.55,57,481/- and levying penalty at 100% thereof under section 271(1)(c) vide order dated 04.02.2022.
3 The assessee filed appeal before the CIT(A), NFAC. Multiple notices were issued by the CIT(A) on 17.01.2024, 09.02.2024, and 19.02.2024. However, the assessee failed to respond to any of these notices or to file any written submission. The CIT(A), relying on some judicial precedents including the judgement of Hon’ble Supreme Court in CIT vs. B.N. Bhattacharjee [1970] 10 CTR 354 (SC) dismissed the appeal in limine for want of prosecution, without adjudicating on merits.
Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal:
All the grounds of appeal
in this appeal are mutually exclusive and without prejudice to each other:
1. The penalty order passed by the learned Income Tax Officer, National Faceless Assessment Centre, Delhi ("AO") u/s 271(1)(c) of the Act is bad in law and hence liable to be quashed.
2. he learned CIT(A) erred in law and in fact in confirming the penalty u/s 271(1)(c) of the Act amounting to Rs.55,57,481/- on revision regarding estimation of Fair Value as on 01.04.1981.
3. The learned CIT(A) erred in law and in fact in confirming penalty u/s 271(1)(c) of the Act despite of the fact that AO has not specified the “Charge” of penalty either in body of the Assessment order or the Notice or the impugned penalty order.
4. The learned CIT(A)/AO erred in law and in fact in levying penalty u/s 271(1)(c) of the Act without appreciating the facts of the case and provision of law in proper perspective.
5. The learned CIT(A)/AO erred in law and in fact in not appreciating that the Appellant has neither furnished any inaccurate particulars of income nor concealed any particulars of income and therefore penalty is not leviable.
4 6. Your Appellant craves the right to add to or to alter, amend, substitute, delete or modify all or any of the above grounds of appeal.
Condonation of Delay
At the outset, it may be noted that there was a delay of 364 days in filing the present appeal before us, as recorded by the Registry. The assessee filed a detailed petition along with affidavit explaining the reasons for delay. During the course of hearing, the learned Authorised Representative submitted that the delay in filing the present appeal was neither deliberate nor intentional but was attributable to bona fide reasons and procedural misunderstanding. It was explained that the registered email address of the assessee on the income-tax portal had become inoperative over a period of time, as a result of which the assessee could not receive any electronic communications from the department, including notices or the order passed by the CIT(A). The assessee remained under a bona fide impression that upon passing of the rectification order under section 154 of the Act, wherein the quantum addition was significantly reduced, the Assessing Officer would suo motu revise or rectify the penalty order accordingly, and therefore, no further independent action was required on his part. Since no physical copy of the CIT(A)'s order was served upon him, the assessee remained unaware of the appellate order. The learned Authorised Representative further explained that the assessee first came to know about the CIT(A)'s order only when he accessed his account on the income-tax portal during the course of verification undertaken in connection with the Vivad Se Vishwas Scheme, 2024. Upon becoming aware of the pendency of the penalty demand, the assessee immediately sought professional advice and, without any further delay, filed the present
5 appeal before us. In support of the prayer for condonation of delay, the learned Authorised Representative placed reliance upon various judicial precedents to contend that in absence of mala fides or deliberate inaction, a liberal view should be taken for condoning the delay in the interest of substantial justice.
The learned Departmental Representative, after hearing the factual submissions, fairly submitted that he has no serious objection if the delay is condoned and the matter is restored back to the file of the CIT(A) for fresh adjudication on merits.
We have carefully considered the submissions advanced by the learned Authorised Representative and examined the reasons assigned by the assessee for delayed filing of the present appeal. On a close analysis of the facts and circumstances placed before us, it is evident that the delay in filing the appeal arose due to bona fide and inadvertent circumstances, which were beyond the control of the assessee. The delay primarily resulted from the fact that the email address registered by the assessee on the income-tax portal had become inoperative over a period of time, thereby preventing effective communication of departmental notices and orders. Furthermore, no physical copy of the order passed by the CIT(A) was ever served upon the assessee, which further compounded the difficulty. In addition, the assessee was under a genuine and mistaken belief that since the quantum addition was substantially reduced pursuant to the rectification order passed u/s 154 of the Act, the consequential penalty proceedings would automatically stand revised or nullified without the need for any further action on his part. It was only when the assessee accessed the income-tax portal in connection with verification under the Vivad Se Vishwas Scheme, 2024, that he
6 became aware of the pendency of the penalty demand. Upon discovering this inadvertent omission, the assessee immediately approached tax professionals, obtained appropriate legal advice, and promptly filed the present appeal without any further lapse of time.
The Hon'ble Supreme Court and the Hon’ble Gujarat High Court both have emphasised that appellate authorities must adopt a liberal and pragmatic approach while deciding applications for condonation of delay, particularly where no gross negligence, deliberate inaction, or absence of bona fides is imputable to the assessee. The Co-ordinate Bench in Shree Asandas B Murjani Education Trust v. CIT [2023] 157 taxmann.com 577 (ITAT Ahmedabad) has also condoned substantial delay in analogous circumstances where similar procedural lapses had occurred without any element of mala fide conduct. In view of the consistent legal position emerging from these decisions and keeping in view the overarching principles of natural justice, we are satisfied that the delay in filing the present appeal deserves to be condoned. Accordingly, we condone the delay and admit the appeal for adjudication on merits.
On merits, we find that the CIT(A) has dismissed the appeal without adjudication on merits solely for want of prosecution. The assessee was unable to effectively participate before the CIT(A) due to the procedural lapses already narrated above. Since the matter has not been examined on merits either by the CIT(A) or before us, and both the parties also fairly agreed for restoration, we deem it just and proper to set aside the impugned order and restore the matter back to the file of the CIT(A) for fresh adjudication. The assessee is directed to cooperate in the proceedings before CIT(A) and furnish necessary submissions and documentary evidence as may be required.
However, having regard to the facts that there was lack of diligence on part of the assessee resulting into avoidable litigation and wastage of judicial time, we deem it appropriate to impose a cost of Rs.5,000/- on the assessee. The said cost shall be deposited to the credit of the Income Tax Department and compliance thereof shall be furnished before the CIT(A) during the course of proceedings.
In the result, the appeal is allowed for statistical purposes.
Order pronounced in the Court on 16th June, 2025 at Ahmedabad.