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Facts
The appellant, an individual trading in steel rods, failed to submit a prescribed audit report for AY 2010-11 under Section 44AB, leading the AO to levy a penalty of Rs. 1,00,000 under Section 274 read with Section 271B. The appellant filed an appeal before the CIT(A) with a delay of 1463 days, explaining that the penalty orders were served on their erstwhile Chartered Accountant who failed to inform them, and they only became aware during the Covid-19 pandemic. However, the CIT(A) dismissed the appeal in limine due to the delay, finding the appellant negligent.
Held
The Tribunal held that the limitation period for filing an appeal begins from the date the appellant gains knowledge of the order, not the date of service, as per settled law. It found that the CIT(A) failed to give a finding on the bona fides of the explanation for the delay and erroneously focused on the length of the delay instead of the sufficiency of the cause. Consequently, the matter was remanded to the CIT(A) for a fresh disposal after affording the appellant an opportunity of being heard.
Key Issues
1. Whether the CIT(A) was justified in refusing to condone the delay in filing the appeal by dismissing it in limine. 2. Whether the limitation period for filing an appeal commences from the date of the order or the date the appellant acquires knowledge of the order.
Sections Cited
274, 271B, 44AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R These appeals filed by the assessee are directed against the orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 26.06.2024 for Assessment Years (AYs) 2010-11 to 2014-15.
Since identical issues are involved, these appeals are heard together and disposed of vide this common order. For the sake convenience and clarity, I shall adjudicate the appeal for AY 2010-11 as the lead case and the findings of this year will mutatis mutandis apply to the other assessment years. to 763/Coch/2024 Syedali Ebrahim 3. Brief facts of the are that the appellant is an individual carrying on the business of trading in steel rods in the name and style of M/s. Giant Steels. The appellant filed return of income for AY 2010-11 on 08.10.2010 declaring total income of Rs. 3,66,520/-. The ACIT, Circle 2(1), Thiruvananthapuram (hereinafter called "the AO") initiated penalty proceeding proceedings u/s. 274 r.w.s. 271B of the Income Tax Act, 1961 (the Act) on noticing that the appellant had failed to submit the prescribed audit report as envisaged under provisions of section 44AB of the Act. In respect of show cause notice the appellant could not file any explanation. In the circumstances the AO had proceeded with levy of penalty of Rs. 1,00,000/- for AY 2010-11 vide order dated 26.11.2019.
Being aggrieved, an appeal was filed before the CIT(A), with a delay of 1463 days. It was submitted that the delay had occurred as the show cause notice as well as the penalty orders were served on the erstwhile Chartered Accountant, who had failed to inform the appellant. Subsequently it is only during the Covid-19 pandemic period the appellant came to know about passing of penalty orders for AYs 2010-11 to 2014-15. Immediately he approached another Chartered Accountant who passed away on 22.09.2022. Finally the appeal came to be filed on 38.12.2023 through another Chartered Accountant. Thus, it was explained that the appellant was prevented by reasonable cause in filing the appeal before the CIT(A). However, the CIT(A) dismissed the appeal in limine on the ground of delay by holding that the appellant was guilty of negligence.
I heard the rival contentions of both the parties and perused the material available on record. The solitary issue that arises for my consideration is whether the CIT(A) was justified in refusing to condone the delay. At the outset I find that the date of the order levying penalty cannot be presumed to be the date of service of the order. It is now settled law as held by the Hon'ble Delhi High Court that the limitation period would being from the date the appellant had knowledge of the order, which has to be reckoned for the purpose of computing the limitation period, not the date of service. Further I find that the CIT(A) had failed to give a finding on the bona fides of the explanation given for the delay in filing the appeal before him. The tenor of the order of the CIT(A) would indicate that he simply got carried away by the length of the delay. It is settled position of law that for the purpose of condonation of delay the length of delay does not matter. What is to be considered is whether there is sufficient cause for the delay or not. In the circumstances I am of the considered opinion that in order to meet the ends of justice the matter requires remand to the file of the CIT(A) for de novo disposal of the appeal after affording opportunity of being heard to the appellant.
The above discussion sand find shall mutatis mutandis apply to the appeals for AYs 2011-12 to 2014-15.