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Facts
The AO imposed a penalty of Rs. 13,00,000/- under Section 271E for alleged violation of Section 269T. The assessee filed an appeal before the CIT(A) with a delay of 70 days, citing health issues and lack of familiarity with legal procedures.
Held
The Tribunal held that the expression "sufficient cause" in limitation provisions should be construed liberally to advance substantial justice. The delay was condoned in the interest of substantial justice, and the matter was restored to the CIT(A) for adjudication on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was bonafide and constituted "sufficient cause" for condonation, and whether the penalty under Section 271E was rightly imposed.
Sections Cited
271E, 269T, 249(2), 249(3), 250
AI-generated summary — verify with the full judgment below
Order PER LALIET KUMAR, J.M Both the above appeals have been filed by the Assessee against the separate orders of the Ld. CIT(A)/NFAC Delhi each dt. 26/09/2024 pertaining to A.Y 2012-13.
Since both the above appeals of the assessee are heard together therefore they are being disposed off by this consolidated order for the sake of convenience and brevity.
First, I will address the appeal in for the Assessment Year 2012–13, treating it as the lead case. In this appeal, the assessee has raised the following grounds:
1. That on the facts, circumstances and legal position of the case, Worthy CIT(A), NFAC in Appeal No. NFAC/2011-12/10139905 has erred in passing order dtd. 26.09.2024 in contravention of provisions of S. 250 of the Income· Tax Act, l 96 l (hereinafter referred to as "Act").
2. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in treating the appeal filed by the appellant as not-maintainable by invoking the provisions of s. 249(2) even when the appellant had bonafide and reasonable cause which led to delay in filing of appeal before the Worthy CIT(A). ANNEXURE-A 3. That on facts, circumstances and legal position of the case, Worthy CIT(A) haserred in confirming the action of Ld. AO of initiating and imposing the impugned penalty of Rs. 13,00,000/- u/s 271E of The Income Tax Act, 1961 (Hereinafter referred to as "Act").
4. That on the facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the penalty of Rs. 13,00,000/- imposed u/s 271E by the Ld. A. O even when the mandato.ry satisfaction to initiate penalty was not existing in this case.
5. That on facts, circumstances and legal position of the case, the impugned order passed by the Ld. AO and then by Worthy CIT(A) deserves to be quashed since the same have been passed without affording reasonable opportunity of being heard to the appellant.
That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
4. Briefly the facts of the case are that the Ld. AO imposed a penalty of Rs.13,00,000/- under section 271E on the assessee for alleged violation of section 269T, involving cash repayment of loan/deposit to one S. Kamal Singh. The penalty order was passed on 21.02.2022.
The assessee filed an appeal before the Ld. CIT(A) on 31.05.2022, which was delayed by 70 days beyond the statutory period prescribed under section 249(2). The explanation given for the delay was the assessee’s prolonged health issues and lack of knowledge of income tax laws, resulting in delay in consulting the legal advisor.
6. The Ld. CIT(A) dismissed the appeal solely on the ground of limitation, declining to condone the delay, holding that the reasons given were vague, general, unsupported by evidence, and did not constitute “sufficient cause” under section 249(3) of the Act. As a result, the appeal was dismissed as barred by limitation, without adjudicating the matter on merits. 7. Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal. 8. During the course of hearing the Ld. Counsel for the Assessee reiterated the grounds, emphasizing that the delay was due to genuine hardship, health issues, and ignorance, and therefore deserved condonation in the interest of substantial justice. 9. Per contra, the Ld. DR supported the order of the CIT(A) and submitted that the assessee had failed to show sufficient cause.
I have heard the rival contention and perused the material available on the record. In the present case, I find that it is a settled principle of law that the expression “sufficient cause” in the context of limitation provisions is to be construed liberally in order to advance substantial justice, provided the delay is not attributable to deliberate inaction, negligence, or lack of bona fides. Reference is drawn to the decisions of the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji (167 ITR 471) and N. Balakrishnan v. M. Krishnamurthy (AIR 1998 SC 3222). 10.1 In the present case, the delay of 70 days has been explained by the assessee as arising out of personal health issues and lack of familiarity with legal procedures. Though the explanation could have been better substantiated, it cannot be outrightly discarded as mala fide or indicative of deliberate negligence. The assessee should not be denied an opportunity to contest the penalty on merits merely on account of such a delay, which is not inordinate. 10.2 In view of the foregoing and in the interest of substantial justice, I am inclined to condone the delay in filing the appeal before the CIT(A). Accordingly, I set aside the impugned order of the CIT(A) and restore the matter to his file for adjudication on merits, after affording the assessee a reasonable opportunity of being heard 11. In the result, the appeal of the assessee is allowed for statistical purposes. 12. I will now deal with the assessee's appeal in pertaining to the Assessment Year 2012–13.
Since we have remanded back appeal in to the file of CIT(A), therefore the present appeal, being an offshoot of the same assessment proceeding is also remanded back to the file of Ld. CIT(A) with the direction to decide afresh after affording the opportunity of hearing to the parties. It is clarified that nothing contained in the foregoing paragraphs shall be construed as an expression of opinion on the merits of the case. The learned CIT(A) shall decide the matter independently, in accordance with law, and uninfluenced by any observation made hereinabove. The assessee is also advised to cooperate fully in the assessment proceedings and to refrain from seeking any unwarranted or repetitive adjournments before the Ld. CIT(A). Needless to say the assessee is entitled to raise any ground / s which are legal in nature.