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Facts
The assessee filed an appeal against the CIT(A)'s order for AY 2004-05. The appeal was filed with a delay, for which the assessee cited non-service of the order and uploading on the portal without specific information. The Tribunal considered the delay condonation applications and the history of litigation.
Held
The Tribunal held that the expression "sufficient cause" for condoning delay should be interpreted liberally. Given the checkered history of litigation and the settlement under the Vivad Se Vishwas Scheme, the penalty imposed was deleted.
Key Issues
Whether the delay in filing the appeal can be condoned, and if the penalty imposed is sustainable in light of the settlement under the Vivad Se Vishwas Scheme.
Sections Cited
253, 249, 5, 132, 132A, 271(1)(c)
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Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ �नधा�रण वष� / Assessment Year: 2004-05 Valco Industries Ltd., Vs The DCIT, SCO 37, Sector 26, Central Circle-1, Chandigarh. Chandigarh. �थायी लेखा सं./PAN NO: AAACV5195J अपीलाथ�/Appellant ��यथ�/Respondent Revenue by : Shri Yogesh Monga, CA Assessee by : Shri Anil Kumar Sharma, Sr.DR Date of Hearing : 28.08.2025 Date of Pronouncement : 02.09.2025 PHYSICAL HEARING O R D E R PER RAJPAL YADAV, VP
The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 27.03.2018 passed for assessment year 2004-05.
The present appeal has been filed by the assessee in the Tribunal on 27.05.2021. In column No. 3 of Form 36 (Appeal Form before the Tribunal), assessee has mentioned that impugned order was checked by it on online Portal on A.Y.2004-05 2 11.02.2021. It was not served upon the assessee. Considering a substantial period between 2018 to 2021, Registry has written letters to ld. CIT (Appeals)’s office requesting as to when this order was served upon the assessee. But, inspite of two communications, nothing has been supplied to the Tribunal. The assessee has filed an application for condonation of delay also. In this application, it has pleaded that the impugned order of the CIT (Appeals) was never served upon the assessee. It was only uploaded on the Portal without any specific information to the assessee. The assessee has applied for a certified copy of the order vide letter dated 11.02.2021 which was supplied to it on 15.02.2021 and assessee has filed the appeal immediately.
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 expression sufficient cause employed in the section has also been used A.Y.2004-05 3 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:
Ordinarily a litigant does not stand to benefit by lodging an appeal late.
2. 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.
3. "Every day’s delay must be explained" does not mean A.Y.2004-05 4 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.
4. 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.
5. 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.
6. 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.
Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (1998) 7 SCC 123 dated 03.09.1998. 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 A.Y.2004-05 5 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 finislitium (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 A.Y.2004-05 6 party for his loss”.
In the light of above, if we examine the record, then it would reveal that there is a checkered history of litigation in this case, namely; assessee has filed its return of income on 02.12.2004 declaring total income at Rs.80,87,602/-. An assessment order was passed on 21.12.2006 whereby income of the assessee was determined at Rs.2,27,87,600/-.
Dissatisfied with the additions, assessee carried the matter in appeal before the ld. CIT (Appeals) who has deleted all the additions vide his order dated 18.04.2008.
The Department challenged the order of the ld. CIT (Appeals) before the ITAT vide ITA No.663/CHD/2008. This appeal was decided alongwith the appeals of other group concerns on 30.04.2014. According to the assessee, ITAT deleted the addition of Rs.22 lacs, confirmed the addition of Rs.75 lacs and restored the issue with regard to the addition of Rs.50 lacs. The AO has passed the fresh assessment order on 30.03.2016 confirming the addition of Rs.50 lacs. Thereafter, he has levied a penalty u/s 271(1)(c) of the Act of Rs.44,84,375/- and the CIT (Appeals) has confirmed the A.Y.2004-05 7 penalty by way of the impugned order. Thus, there are various litigations by the assessee in this assessment year. In 2021, Covid was also prevalent and from March, 2020 upto the date of filing of the appeal, the period was covered by the Covid period which has been condoned by the Hon'ble Supreme Court by exercising its inherent powers. Therefore, in the absence of any communication from the office of CIT (Appeals) exhibiting the service of order upon the assessee, if we appreciate the explanation of the assessee, then it is to be construed as a bonafide communication gap and accordingly, delay is condoned.
A perusal of the record would reveal that penalty has been computed on three amounts, namely; (i) Rs. 50,00,000/- on account of unexplained unsecured loans. (ii) Rs. 75,00,000/- on account of unexplained source of payment for purchase of property namely Plot NO. 70, Industrial Area-1, Chandigarh on protective basis. (iii) Rs. 22,00,000/- u/s 69B on account of unexplained source of Rs. 22,00,000/- for purchase of land in Village Katha.
8.1 It has been brought to our notice that when issue travelled to the ITAT in the first round of litigation, i.e. alongwith CO No.30/CHD/2008, ITAT A.Y.2004-05 8 has deleted the addition of Rs.22 lacs, confirmed the addition of Rs.75 lacs and set aside the issue of Rs.50 lacs, meaning thereby, there is no foundation to compute the penalty qua Rs.22 lacs. According to the assessee, in the second round of litigation, this addition of Rs.50 lacs has been deleted by the CIT (Appeals) vide his order dated 28.02.2023 in appeal No.11241/2016-17. Copy of this order is placed at page No.170 of the Paper Book. Thus, no penalty could be computed qua this Rs.50 lacs also.
8.2 The only amount which remains on which assessee could be visited with a penalty is Rs.75 lacs whose addition was confirmed by the Tribunal in its first round of order dated 30.04.2014 (ITA No.663/CHD/2008 read with CO No. 30/CHD/2008).
The assessee carried this matter in appeal before Hon'ble High Court and it has settled the dispute under ‘'Vivad Se Vishwas Scheme’ and only aggregate of taxes plus 25% could be charged from the assessee on settlement of the dispute under 'Vivad Se Vishwas Scheme 2020’.
ITA No.125/CHD/2021 A.Y.2004-05 9
The ld. DR, on the other hand, is unable to controvert, rather he brought to our notice the clarification issued regarding 'Vivad Se Vishwas Scheme 2020’ on 04.03.2020 by Government of India, Ministry of Finance vide Circular No. 7/2020. He read over question No.34 and its answer.
We have duly considered the rival contentions and gone through the record carefully. There is no dispute with regard to the fact that two additions already stand deleted by ITAT as well as CIT (Appeals) in the second round. These additions are of Rs.22 lacs and Rs.50 lacs. The addition confirmed by the ITAT was of Rs.75 lacs whose appeal travelled to the Hon'ble High Court and according to the assessee, it has settled the dispute under 'Vivad Se Vishwas Scheme 2020’.
Before us, copy of the Scheme has been placed on record, namely, Direct Taxes 'Vivad Se Vishwas Act No.2020’. Section 3 of this Act provides the computation of taxes required to be made for charging qua declaration. For the facility of reference, we take note of the relevant part of this Section:
A.Y.2004-05 10 (b) where the tax the aggregate of the amount the aggregate of the arrear includes the of disputed tax and twenty- amount of disputed tax tax, interest or five per cent, of the and twenty-five per penalty determined disputed tax: cent, of the disputed in any assessment tax: on the basis of search under section 132 or section 132A of provided that where the provided that where the Income-tax twenty-five per cent, of the thirty- five per Act. disputed tax exceeds the cent, of disputed tax aggregate amount of exceeds the aggregate interest chargeable or amount of interest charged on such disputed chargeable or charged tax and penalty leviable or on such disputed tax levied on such disputed tax, and penalty leviable or the excess shall be ignored levied on such disputed for the purpose of tax, the computation of amount excess shall be payable under this Act. ignored for the purpose of computation of amount payable.
12.1 We also take note of Circular No. 7 of 2020 vide which certain questions were framed and their explanation was given by the Ministry of Finance. We refer Question No. 34 and its answer, which reads as under : Question 34. Appeals against assessment order and against penalty order are filed separately on same issue. Hence, there are separate appeals for both. In such a case how disputed tax to be calculated?
Answer : Please see question no. 8. Further, it is clarified that if the appellant has both appeal against assessment order and appeal against penalty relating to same assessment pending for the same assessment year, and he wishes to settle the appeal against assessment order (with penalty appeal automatically covered), he is required to give details of both appeals in one declaration form for that year. However, in the annexure he is required to fill only the schedule relating to disputed tax.
ITA No.125/CHD/2021 A.Y.2004-05 11
A conjoint reading of Section 3 of 'Vivad Se Vishwas Act’ alongwith Question No.34, we are of the view that if dispute regarding determination of income is being resolved under 'Vivad Se Vishwas Act’ then penalty on such determined income would not be imposable upon the assessee. Accordingly, the penalty confirmed by the ld. CIT (Appeals) is deleted. This appeal of the assessee is allowed and penalty of Rs.44,84,375/- is deleted.
In the result appeal of the assessee is allowed.
Order pronounced on 02.09.2025.