SYEDALI EBRAHIM,NEYYATTINKARA vs. ACIT, CIRCLE 1(2), THIRUVANANTHAPURAM
Facts
The appellant, engaged in steel trading, was levied a penalty of Rs. 1,00,000 under Section 274 read with Section 271B for failing to submit an audit report as required by Section 44AB for AY 2010-11. An appeal was filed before the CIT(A) with a delay of 1463 days, which the appellant attributed to their previous Chartered Accountant's failure to inform them of the penalty orders. The CIT(A) dismissed the appeal on grounds of delay and negligence.
Held
The Tribunal found that the CIT(A) erred by dismissing the appeal based solely on the length of the delay. It clarified that the limitation period begins from the date the appellant gains knowledge of the order, not the date of service. Therefore, the case was remanded to the CIT(A) for a fresh decision after properly assessing the appellant's explanation for the delay.
Key Issues
Whether the CIT(A) was justified in dismissing an appeal in limine due to a significant delay, and the correct principle for determining the start of the limitation period for filing an appeal, specifically whether it's the date of service or the date of knowledge of the order.
Sections Cited
274, 271B, 44AB
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH
BEFORE SHRI INTURI RAMA RAO, AM ITA Nos. 759 to 763/Coch/2024 Assessment Years: 2010-11 to 2014-15 Syedali Ebrahim .......... Appellant 328, 239 Saad Manzil, Pathamkallu Neyyatinkara, Trivandrum 695009 [PAN: AAJPE7592E] vs. ACIT, Circle - 1(2) .......... Respondent Aayakar Bhavan, 1st Floor Kowdiar, Thiruvananthapuram 695003 Appellant by: Smt. Divya Ravindran, Advocate Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 17.01.2025 Date of Pronouncement: 23.01.2025
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.
2 ITA Nos. 759 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.
3 ITA Nos. 759 to 763/Coch/2024 Syedali Ebrahim 5. Being aggrieved, the appellant is in appeal before me in the present appeal.
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.
4 ITA Nos. 759 to 763/Coch/2024 Syedali Ebrahim 8. In the result, appeals filed by the appellant stand allowed for statistical purposes.
Order pronounced in the open court on 23rd January, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 23rd January, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin
