Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the Assessee against the order dated 08.02.2017 passed by the CIT(A)-9, Ahmedabad for the Assessment Year 2011-12.
The assessee has raised the following grounds of appeal :-
“1. The penalty order passed by Ld. A.O. and confirmed by Ld. CIT(A) is bad in law as while issuing notice u/s.271(1)(c) of the Act, A.O. was not sure whether to levy penalty on concealment of income or furnishing of inaccurate particulars of income. Hence the penalty order u/s. 271(1)(c) of the Act deserves to be considered as void ab initio. The same be held now.
The Ld. CIT(A) has erred both in confirming the penalty of Rs.37,07,727/- u/s. 271(1)(c) of the Income Tax Act, 1961. It is submitted that on the facts of the case and in view of the legal position there was absolutely no concealment of income or furnishing any inaccurate particulars of income and hence the penalty so confirmed deserves to be deleted. The same be deleted now.
Without prejudice to the above, the appellant could not furnish the submission during course of the appeal hearing because the concerned
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 2 of 10 authorized representative did not respond and complied the notices/opportunity of being heard received from office of Ld. CIT(A). This being the genuine and reasonable cause, the penalty so levied be deleted as same are not at all applicable based on the facts and legal position of the appellant.
The Ld. CIT(A) has further erred in not appreciating the fact that additions made during Assessment Proceedings which were either restricted or upheld by CIT(A) do not amount to furnishing of inaccurate particulars of income or ipso facto attract penal provisions as assessment and penalty proceedings are separate. It be so held now and the penalty be deleted.”
It was pointed out by the assessee/Ld. AR that the present appeal is filed beyond the usual statutory limit. The Ld. AR submitted that there is a delay of 1257 days in filing the present appeal. Ld. AR further submitted that the affidavit of Naresh Chadulal Zaveri, Director of the assessee company has filed the condonation of delay application thereby explaining that the assessee company could not file the appeal within the time because the CA, the then AR, who was handling the penalty proceedings as well as the appellate proceedings did not appear and furnish the submissions as well as not informed the assessee/did not advise the assessee about filing the appeal. The contents of the affidavit are reproduced herein below:-
“I, Naresh Chandulal Zaveri , aged about 64 years, residing at B-302,Kozve road, b/h Bejanwala Complex, adajan, Surat City, Surat, Gujarat-395009 hereby solemnly state and affirm as under:
That I am Director of Rosy Royal Minerals Ltd. (hereinafter referred as "Company" The Company is engaged in the business of mining, cutting and polishing of granite from the mines.
That Company is regularly filing Income Tax Return.
That Return of Income was filed for A.Y. 2011-12 on 25.09.2011 declaring Total Income of Rs. (-) 3,68,615. Subsequently the same was assessed by The Income Tax Officer, Ward 5(3), Ahmedabad and Assessment Order was passed u/s.143{3) of the Act dated 31.01.2014 by assessing Total Income at Rs 42,84,97,380/-.
That aggrieved against above Assessment order, appeal before Hon'ble CIT(A)-9, Ahmedabad was preferred by the Company. The appellate order was passed on 31.03.2015 whereby grounds of appeals were allowed partly. The order giving effect to the order of the CIT(A) was passed on 15.04.2015 determining Income to be Rs.1,11,61,970/-.
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 3 of 10 5. The proceedings before Assessing Officer as well as appellate proceedings were handled by Authorized Representative CA Aalok Mehta on behalf of the Company.
Subsequently Penalty order was passed by The income Tax Officer, Ward 3(1)(3), Ahmedabad dated 04/01/2016 where penalty amounting to Rs.37,07,727/- was levied u/s. 271(1)(c) of the Income Tax Act,1961.
That against such penalty order, appeal before Hon'ble CIT(A)-9, Ahmedabad was preferred by the Company. The appellate order was passed on 08.02.2017 received by the Company on 22.03.2017 whereby grounds of appeals were dismissed and penalty was confirmed.
That being a Director of the Company, I hereby confirm the bonafide reasons beyond control of the Company due to which it could not prefer an Appeal against the order passed by CIT(A) before Hon'ble ITAT on time for A.Y. 2011-12.
(a) The said Chartered Accountant Mr. Aalok S. Mehta, the then AR who was handling the penalty proceedings as well as appellate proceedings against the penalty order however, for the reasons and intentions best known to him did not appeared and furnished the submissions before Hon'ble CIT(A).
(b) The said Chartered Accountant was handling affairs of the Company earlier and, therefore, was continued & retained but then it was realized and came to be known that he has been involved in certain illegal and unethical practice; and Authorities of Goods and Services Tax have taken appropriate action and inquiry on him. Due to these reasons and for his such unethical practice the notices of hearing remained to be complied with and, therefore, Hon'ble CIT(A) passed an order in absence of any submissions and details on behalf of the appellant company's Representative and confirmed the penalty by dismissing the grounds of appeal filled by the appellant company.
(c) We solemnly affirm and further state that not only the aforesaid Chartered Accountant did not comply with the notices of hearing before CIT{A) but on receipt of the penalty order on 22.03.2017 did not advise us to file any appeal within 60 days of the receipt of the order as required under the Income Tax Act.
(d) It was only when the demand recovery notices were received, we came to know about such appellate order being passed and penalty u/s. 271(1)(c) of the Act amounting to Rs.37,07,727/- has been confirmed by Hon'ble CIT(A).
(e) Immediately thereafter, we have approached another leading firm of Chartered Accountant M/s. Talati & Talati LLP Chartered
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 4 of 10 Accountants and under their advice and guidance necessary appeals with condonation application are now filed.
That our Company has now appointed have appointed Shri Sunil Talati, Chartered Accountant from M/s. Talati & Talati, Chartered Accountants as Authorized Representative hereafter to handle appellate proceedings before Hon'ble ITAT.
That there was delay in filing appeal before Hon'ble ITAT totally due to reasons beyond control of the Company and there is consequential delay of 1257 days in filing Form 36 and related sets of documents before Hon’ble ITAT.
That Company had no malafide intention to conceal or to non-furnish any information or documents pertaining to assessment as well as appellate proceedings under Income Tax Act in case of the Company.”
The Ld. AR also filed submissions related to condonation of delay dated nil which is reproduced as under :-
“Most Respected Hon. Member, ITAT Bench 'C', Ahmedabad.
As directed by the Hon. Bench Appellant hereby most respectfully submit the following for kind consideration to condone the delay in filing of appeal.
The assessee company has filed an affidavit duly sworn & notarized mentioning clearly the facts as to; only because of the fault on the part of its C.A.; not handling, not appearing & not informing the Appellant to file the appeal in ITAT against the order of CIT.(A) Confirming the penalty such long delay of 1257 days.
There is no fault of the Assessee for such delay. It is most 'Sufficient cause' as mentioned in Affidavit that the C.A. was caught by Service Tax Department for Unethical practice and due to this, he absconded & never responded to the Appellant orally: by phone, by mail or by any other mode.
It is not that Affidavit is merely self serving evidence. The fact that said C.A. was not available & did not give papers & instructions for filing second Appeal is clear from the fact that he was removed as an Auditor of the company and also for filing this appeal and other Tax matter and a new C.A. firm was engaged.
Only because of non availability of documents, papers & advise; that appeal is to be filed within 60 days, the appellant company could not file in time & realized its seriousness only when it came to know that the
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 5 of 10 entire amount of penalty & also interest u/s 220(2) thereon has been adjusted against the refund of A.Y. 2019-20 in 2020.
The above is 'Sufficient cause' for the delay & in such an event 'A' should not suffer & should not be denied its right of justice as held in following cases.
I. When as appellant has a good case on merit defeat of his claim on technical ground of limitation would ultimately lead to injustice. State should not stand by a technical plea of limitation if the citizen's case was otherwise meritorious (Surya General Traders V. CTO, (2003) 133 STC 388, 389 (AP) Page 1 & 2.
II. In the facts of J.M. Ramachandra and sons V. Customs, Excise & Gold (Control) Appellate Tribunal [(2002) 166 Taxation 377, 390 (Del)], it has been held that as there was no findings recorded by the Tribunal that there was any deliberate attempt in delaying the matter or that there was culpable negligence or there was lack of bonafides, the application for condonation of delay deserves to be accepted. Page 3 to 6.
III. Where an application for condonation of delay is filed before the Tribunal, it is the duty of the Tribunal to consider the grounds put forth for the delay in filing the Appeal. It Is not proper for the Tribunal to dismiss the Appeal as barred by limitation. It is necessary at that stage to call upon the appellant either to produce affidavit or if need be to prove allegations of delay and to adjudicate thereupon (see, Sthaneshwar Handmade Papers PCIS Ltd V. State of Haryana (1994) 94 STC 165, 167 (Punj) Equivalent citation - (1994) 107 PLR 22. Page 7 to 8.
IV. Delay of more than Three years caused in bonafide prosecuting remedy through a writ petition, which did not lie was allowed. (J.M. Bhansali V. State of Madras, (1968) 21 STC 41 1. Page 9.
V. Besides the above decisions by Hon. S.C. and Hon. H.C. ITAT Jaipur bench in case of Rakesh Garg V, ITO in Appeal No. 316 to 318 /JP/2020 almost identical facts condoned the delay relying on various other decision as on quoted page 4 to 9 of the order and has reproduced principles laid down by Hon. S.C. while condoning the delay on page 9. The same may please be considered and delay may please be condoned. Page 10 to 17.
VI. Lastly the Appellant also relies on the decision of ITAT Mumbai in case of Phonix Mills Ltd. V. ACIT in Appeal No.6240/M/2007 again in almost similar facts of assessee condoned the delay of Four years. Page 18 to 22.
In view of above various decisions it may please be seen that Tribunal & Courts have taken cognizance of 'Sufficient cause' have condoned the long delay. The Appellant's fact of 'Sufficient cause' may please be appreciated and your honour may please condone the delay & oblige.”
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 6 of 10 5. The Ld. DR vehemently opposed the condonation of delay thereby stating that the assessee has not given/explained the delay from 22.03.2017 till March 2020. Ld. DR further submit that the affidavit filed by the Director of the assessee company has not explained why the assessee has not taken action against the said Chartered Accountant or the assessee company has not taken second opinion related to filing of further appeal before the Tribunal. Ld. DR also filed written submission which is as under :- “No.Addl.DIT(Inv.)/Ahd/ITAT/RRML/2022-23 dated: 21.1.1.2022 To, The Hon'ble members, ITAT, 'C’ Bench, Ahmedabad.
Sir,
Sub.: Appellate proceedings before the Hon'ble ITAT, Ahmedabad in the case of Rosy Royal Minerals Limited, PAN: AAECR3950P, A.Y. 2011-12 - Reg. ********** Kindly refer to the above.
In the case of the captioned assessee, the assessee has filed appeal before Hon'ble ITAT, Ahmedabad on 29.10.2020 with condonation of delay by 1257 days, against the order passed by the CIT(A>9, Ahmedabad vide order No. CIT(A)-9/365/ITO, Wd-3(l)[3]/15-16 dated 08.02.2017.
In this regard during hearing on 03.11.2022, the undersigned was directed by the Hon'ble ITAT to file written submission regarding the issue of condonation of delay filed by the assessee. The undersigned submits the following objections against the condonation application filed by the assessee.
In the case of the assessee company, the director of the company, shri Naresh Chandulal Zaveri has filed affidavit before Hon'ble ITAT, wherein he has affirmed that the CIT(A] had dismissed the appeal because the AR of the company had not comply with the notices and submit the details before CIT(A). It is further affirmed that their AR, CA Aalok S Mehta, has not given advise in respect of filing of appeal before the CIT(A) after receiving of CIT(A) order dated 08.02.2017, therefore same could not be filed within specified time.
Further, vide para 8.d of the affidavit the director has stated that he only came to know that such appellate order has been passed and penalty u/s 271(l)(c) has been confirmed, after receiving the demand recovery notice. Thereafter, they approached to another CA firm and under their guidance appeal before Hon'ble ITAT has been filed on 29.10.2020.
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 7 of 10 6. Here, the assessee has making to contradictory statements in the affidavit, one way he stated that their AR M/s CA Aalok S Mehta, has not given advise in respect of filing of appeal before the CIT(A) after receiving of CIT[A) order dated 08.02.2017 and other way he stated that he only came to know that such appellate order has been passed and penalty u/s 271{l)[c) has been confirmed, after receiving the demand recovery notice. Hence, the assessee was well aware about the decision of CIT(A), however, he choose to not file further appeal,
In this case the demand recovery notice was issued by the AO on 07.01.2020 (as accepted by the assessee also in his affidavit) which was served to the assessee through e-mail. However, the assessee company has not responded and has not filed any reply before the AO in response to this recovery notice (copy enclosed].
Further, it is ascertained from the assessee's case records available with the AO, that the assessee vides its application dated 25.05.2021 has requested the AO, Ward-3(1)(1)), Ahmedabad to cancel the demand appearing on its e-filling portal and to issue refund, which was adjusted against the demand. Along its application the assessee has also attached a copy of letter dated 28.08.2017 issued by the AO, ward- 3(1)(3), Ahmedabad showing the details of interest of Rs.10,73,847/- u/s 220(2] of the Act payable on account of penalty demand of Rs.37,07,727/- (copy enclosed). It is also may be noted that this letter dated 28.08.2017 is available with the assessee in its own records and in response to this letter the assessee had started to make payment towards the penalty demand from 17.03.2016 with a initial payment of Rs.6,50,000/- and then made further payment of Rs.6,50,000/- on 12.04.2016. Further, after passing the order dated 08.02.2017 by the CIT(A), the assessee has made remaining full payment of this penalty demand on 04.08.2017. Hence, it is clear that the assessee was aware about the appellate proceedings and if they wanted they might file further appeal before the Hon'ble ITAT. There is delay of almost 3 years and 3 months in filing appeal before Hon'ble ITAT from the date of last payment of penalty demand.
Without prejudice to the above, as the assessee had received recovery notice they have approached the new CA and the assessee company has 77 days to file further appeal before lockdown (i.e. 24.03.2020), if they wanted. But, they failed to do so well with in time and now filed the appeal on 29.10.2020. Further, the assessee has also not explained the sufficient cause or reason by giving necessary details as to how the delay from the date 07.01.2020 to the date of filing of appeal has been occurred,
The assessee has received the order of CIT(A) on 08.02.2017, in which their appeal against penalty order has been dismissed . They are aware that the appeal has been dismissed and penalty has been confirmed. In this scenario if they wanted they might have approached to a new CA to consult the consequences of the order of CIT(A). But they choose to sit
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 8 of 10 idle remain completely ignorant. Now the assessee is trying to establish that the delay in filing of appeal is attributable to the earlier AR. However, there has been manifest negligence or lapse on the part of the assessee. As the assessee had received each and every communications made by the AO as well as CIT(A), hence, it is a fact that the assessee is totally aware about the proceedings and consequences of the notices/orders of the AO as well as CIT(A).
Further, in its application the assessee has stated that they have closed down their mining business during the year 2017-18 and have submitted copy of audited P&L Ac for the year ended 31.03.2018 showing no operational income. However, on verification of 1TR filed for A.Y. 2019- 20 the assessee company has shown profit and gains of Rs.1,14,91,737/- from business or profession. Though, in his affidavit, the director of the company, shri Naresh Chandulal Zaveri has affirmed that the AR of the company, Mr. Aalok S Mehta had not comply with the notices and submit the details before CIT(A), however. It is observed that the accounts of the assessee company for the A.Y. 2019-20 was audited by the CA firm, Aalok S Mehta and associates. This implies that the CA, shri Aalok S Mehta was still handling the affairs of the company.
In this case, the decision of not filing appeal is the decision of the assessee and not the decision of the AR, shri Aalok S Mehta. The reason has to be sufficient and proper, mere filing of affidavit of the director does not constitute sufficient reasons. Therefore the reasons stated by the assessee company in its condonation application and in the affidavit cannot be a case of genuine hardship and the assessee only cooking stories that the old CA did not advice them to file further appeal and they are unaware of the consequences of ex-parte order of CIT[A). In this regard reliance may be placed on following judgments:
JCIT Vs. Tractors & Farm Equipments Ltd., [2007] 104 ITD 149 (Chennai)(TM). 2. Madhu Dadha Vs. ACJT, [2009] 317 ITR 458 (Mad.)
Considering the facts mentioned above the undersigned requests that the condonation application may not be entertained and should be rejected.”
We have heard both the parties and perused all the relevant material available on record. During the course of hearing, the Ld. AR was asked to file the date-wise details as to why the delay has been occurred since 22.03.2017 till March 2020 as subsequently in March 2020 due to Pandemic the delay in filing the appeal was condoned by the Apex Court. Ld. AR filed submissions dated nil before us and explained that the CA of the assessee has advised at that time orally for non-filing of the appeal before the Tribunal. From the perusal of the documents given by the DR’s
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 9 of 10 submissions, it is found that the assessee company was very much in operation till 2019 and in fact, demand notice dated 28.08.2017 was also taken into account by the assessee and payment was accordingly made. But the Ld. AR submitted that the CA was absconding and never responded to the assessee thereafter. The Ld. DR submitted that since the assessee paid the demand and claimed the refund under the Income Tax in subsequent years, the assessee should have taken cognizance of the challenge of the order dated 08.02.2017 passed by the CIT(A). But the conduct of the assessee by making the payment of the demand made by the Department which was honoured shows that the assessee company was under bonafide belief that the penalty will not be levied if the taxed are paid relating to quantum appeal as per the advise of the earlier CA. During the hearing, the Ld. AR submitted that the company is not functional as in 2018 the operation of mining was closed. Therefore, in the peculiar circumstances of the present appeal, the explanation offered by the Ld. AR and the details filed by the assessee are self explanatory and delay is condoned. This should not be taken as precedent in any other cases.
Now coming to the merits of the case, it is found that the CIT(A) has decided the case without giving proper hearing to the assessee relating to penalty under Section 271(1)(c) of the Act. Therefore, it will be appropriate to remand back the issue related to penalty to the file of the CIT(A) for proper adjudication of the case after giving opportunity of hearing to the assessee by following principles of natural justice. The appeal of the assessee is partly allowed for statistical purpose.
In the result, appeal filed by the assessee is partly allowed for statistical purpose.
Order pronounced in the open Court on this 16th day of December, 2022.
Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 16th day of December, 2022 PBN/*
ITA No.535/Ahd/2020 Assessment Year: 2011-12
Page 10 of 10
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File
By order UE COPY
Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad