RAGHUNANDAN IMPEX PVT LTD,SURAT vs. INCOME TAX OFFICER, WD-2(1)(1), SURAT, SURAT

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH “SMC” SURAT

BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)

ITA No. 641/SRT/2025 Assessment Year: 2012-2013 Raghunandan Impex Pvt. Ltd., ITO Ward 2(1)(1), 6/2037, Office No. 205, 2nd floor, Room No. 222, Papadwala Building, Bhoja Bhai Vs. Aayakar Bhavan, Ni Sheri, Mahidharpura, Majura Gate, Surat-395003. Surat-395001. PAN NO. AAECR 5688 Q Appellant Respondent

Assessee by : Mr. Prakash Jhunjhunwala, CA Revenue by : Mr. J.K. Chandnani, Sr. DR

: 08/10/2025 Date of Hearing : 30/10/2025 Date of pronouncement

ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 27.11.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012-2013, raising following grounds:

1.0 On facts and circumstances of the case and in law, Ld. CIT(A), before deciding the quantum appeal, erred in passing the appeal order pertaining to levy of Penalty u/s.271(1)(c) of the Act; 2.0 On facts and circumstances of the case and in law, Ld CIT(A) erred in deciding the penalty appeal, without issuing any

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notice of hearing, thereby notice of hearing, thereby violated the principle of natural violated the principle of natural justice; 3.0 On facts and circumstances of the case and in Law, Ld 3.0 On facts and circumstances of the case and in Law, Ld 3.0 On facts and circumstances of the case and in Law, Ld CIT(A) erred in not condoning the delay in filing of the appeal of CIT(A) erred in not condoning the delay in filing of the appeal of CIT(A) erred in not condoning the delay in filing of the appeal of 335 days, though there exist bonafide reasons that had 335 days, though there exist bonafide reasons that had 335 days, though there exist bonafide reasons that had precluded the appellant to file t precluded the appellant to file the appeal in time: 4.0 On facts and circumstances of the case and in Law, Ld. 4.0 On facts and circumstances of the case and in Law, Ld. 4.0 On facts and circumstances of the case and in Law, Ld. CIT(A) ought to have deleted the levy of penalty u/s.271(1X(c) of CIT(A) ought to have deleted the levy of penalty u/s.271(1X(c) of CIT(A) ought to have deleted the levy of penalty u/s.271(1X(c) of Rs.7,72,500/ Rs.7,72,500/- in respect of addition made u/s.68 of alleged in respect of addition made u/s.68 of alleged non-genuine purchase of traded goods made from M/s. genuine purchase of traded goods made from M/s. genuine purchase of traded goods made from M/s. Gangotri Exim P Lid and M/s. Aditi Gems Pvt Ltd of Exim P Lid and M/s. Aditi Gems Pvt Ltd of Exim P Lid and M/s. Aditi Gems Pvt Ltd of Rs.25,00,000/ Rs.25,00,000/-; 5.0 The Ld. CIT(A) ought to have considered the bonafide 5.0 The Ld. CIT(A) ought to have considered the bonafide 5.0 The Ld. CIT(A) ought to have considered the bonafide explanation and existence of debatable issues and divergent explanation and existence of debatable issues and divergent explanation and existence of debatable issues and divergent views. under which circumstances the levy of penalty views. under which circumstances the levy of penalty views. under which circumstances the levy of penalty u/s.271(1)(c) is un u/s.271(1)(c) is unjustified. 2. At the very outset, the At the very outset, the Ld. Counsel for the assessee Ld. Counsel for the assessee invited our attention to the defective memo issued by the Registry our attention to the defective memo issued by the Registry our attention to the defective memo issued by the Registry pointing out a delay of pointing out a delay of 490 days in the filing of the present in the filing of the present appeal. The Ld. Counsel Ld. Counsel submitted that the delay was occasio submitted that the delay was occasioned by circumstances wholly beyond the control of the assessee and by circumstances wholly beyond the control of the assessee and by circumstances wholly beyond the control of the assessee and supported his plea by placing on record an affidavit duly sworn supported his plea by placing on record an affidavit duly sworn supported his plea by placing on record an affidavit duly sworn by Shri Kailash B. Tiwadi Shri Kailash B. Tiwadi, Managing Director of the assessee , Managing Director of the assessee company.

2.1 In the said affidavit, the deponent has deposed, In the said affidavit, the deponent has deposed, In the said affidavit, the deponent has deposed, inter-alia, that the impugned order of the that the impugned order of the Ld. Commissioner of Income Ld. Commissioner of Income-tax (Appeals) was transmitted to the e was transmitted to the e-mail address d0829@msco.in d0829@msco.in, belonging to the assessee’s erstwhile Chartered Accountant. The belonging to the assessee’s erstwhile Chartered Accountant. The belonging to the assessee’s erstwhile Chartered Accountant. The said said said Chartered Chartered Chartered Accountant Accountant Accountant had had had severed severed severed his his his professional professional professional association with the assessee without intimation; and that association with the assessee without intimation; and that association with the assessee without intimation; and that consequently, the assessee remained wholly unaware of the consequently, the assessee remained wholly unaware of the consequently, the assessee remained wholly unaware of the order’s passing. It was only upon receipt of a telephonic order’s passing. It was only upon receipt of a telephonic order’s passing. It was only upon receipt of a telephonic

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intimation from the Department in connection with recovery intimation from the Department in connection with recovery intimation from the Department in connection with recovery proceedings that the proceedings that the assessee became aware of the appellate assessee became aware of the appellate order. 2.2 Thereafter, the assessee immediately engaged new counsel Thereafter, the assessee immediately engaged new counsel Thereafter, the assessee immediately engaged new counsel and caused the present appeal to be filed. It was further and caused the present appeal to be filed. It was further and caused the present appeal to be filed. It was further explained that the assessee had been under a bona fide belief explained that the assessee had been under a bona fide belief explained that the assessee had been under a bona fide belief that the appeal relating to that the appeal relating to penalty could not be disposed of prior penalty could not be disposed of prior to the conclusion of the quantum appeal pending before the to the conclusion of the quantum appeal pending before the to the conclusion of the quantum appeal pending before the Ld. CIT(A), and that such misapprehension, coupled with personal , and that such misapprehension, coupled with personal , and that such misapprehension, coupled with personal and familial exigencies, contributed to the delay. and familial exigencies, contributed to the delay. 2.3 It was also brought to our notice that It was also brought to our notice that the mother of the the mother of the Managing Director passed away on Managing Director passed away on 01.02.2024 at his native at his native place in Bhilwara, Rajasthan Bhilwara, Rajasthan; that he remained there for a ; that he remained there for a considerable period attending to her illness and subsequent considerable period attending to her illness and subsequent considerable period attending to her illness and subsequent family disputes; and that he eventually relocated to family disputes; and that he eventually relocated to family disputes; and that he eventually relocated to Mumbai after the closure of business operations, thereby compounding his the closure of business operations, thereby compounding his the closure of business operations, thereby compounding his difficulty in ensuring timely compliance. The relevant portions of difficulty in ensuring timely compliance. The relevant portions of difficulty in ensuring timely compliance. The relevant portions of the affidavit, containing the sequence of events and the the affidavit, containing the sequence of events and the the affidavit, containing the sequence of events and the explanation for delay, are extracted in the record for ready explanation for delay, are extracted in the record for ready explanation for delay, are extracted in the record for ready reference.The relevant part of the affidavit is reproduced as The relevant part of the affidavit is reproduced as The relevant part of the affidavit is reproduced as under: 3. THAT, the delay in filing of the 2nd appeal before Hon'ble 3. THAT, the delay in filing of the 2nd appeal before Hon'ble 3. THAT, the delay in filing of the 2nd appeal before Hon'ble ITAT had occurred under the bonafide reasons and compelling ITAT had occurred under the bonafide reasons and compelling ITAT had occurred under the bonafide reasons and compelling circumstances beyond my control, stated as under : circumstances beyond my control, stated as under :- a) The CIT(A) order had not been served to me, since was sent a) The CIT(A) order had not been served to me, since was sent a) The CIT(A) order had not been served to me, since was sent at the email address viz. d0829@msco.in belonging to my at the email address viz. d0829@msco.in belonging to my at the email address viz. d0829@msco.in belonging to my earlier Chartered Accountant M/s Manoj Sandhya & Co. earlier Chartered Accountant M/s Manoj Sandhya & Co. earlier Chartered Accountant M/s Manoj Sandhya & Co. However, the said Chartered Accountant deserted me and did However, the said Chartered Accountant deserted me and did However, the said Chartered Accountant deserted me and did

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not inform me about the pa not inform me about the passing of the CIT(A) order. It is only ssing of the CIT(A) order. It is only upon receipt of a telephone call from the Income Tax upon receipt of a telephone call from the Income Tax upon receipt of a telephone call from the Income Tax department, I was made aware that the 1 ^ (st) appeal department, I was made aware that the 1 ^ (st) appeal department, I was made aware that the 1 ^ (st) appeal pertaining to levy of penalty has been passed. Accordingly, I pertaining to levy of penalty has been passed. Accordingly, I pertaining to levy of penalty has been passed. Accordingly, I immediately appointed M/s. Prakash Jhunjhunwala & immediately appointed M/s. Prakash Jhunjhunwala & immediately appointed M/s. Prakash Jhunjhunwala & Co. LLP, Chartered Accountant and filed the 2 ^ (nd) appeal with a LLP, Chartered Accountant and filed the 2 ^ (nd) appeal with a LLP, Chartered Accountant and filed the 2 ^ (nd) appeal with a prayer for condonation of delay; prayer for condonation of delay; b) I and my Chartered Accountant were under a bonafide b) I and my Chartered Accountant were under a bonafide b) I and my Chartered Accountant were under a bonafide belief that the penalty appeal cannot be decided before the belief that the penalty appeal cannot be decided before the belief that the penalty appeal cannot be decided before the decision on quantum appeal. I had alread decision on quantum appeal. I had already made part y made part submissions in the quantum appeal and was under a belief submissions in the quantum appeal and was under a belief submissions in the quantum appeal and was under a belief that on following the provision of Sec.274(2), the penalty that on following the provision of Sec.274(2), the penalty that on following the provision of Sec.274(2), the penalty u/s.271(1)(c) u/s.271(1)(c) u/s.271(1)(c) shall shall shall automatically automatically automatically stand stand stand modified modified modified upon upon upon deletion/ reduction of the quantum addition. Accordingly, till deletion/ reduction of the quantum addition. Accordingly, till deletion/ reduction of the quantum addition. Accordingly, till the decision of Ld. CIT(A) of quantum addition, the 2nd appeal n of Ld. CIT(A) of quantum addition, the 2nd appeal n of Ld. CIT(A) of quantum addition, the 2nd appeal pertaining to levy of penalty u/s.271(1)(c) could not be filed; pertaining to levy of penalty u/s.271(1)(c) could not be filed; pertaining to levy of penalty u/s.271(1)(c) could not be filed; c) I had gone to my hometown situated at Bhilwara, Rajasthan c) I had gone to my hometown situated at Bhilwara, Rajasthan c) I had gone to my hometown situated at Bhilwara, Rajasthan for substantial period of time to attend the serious medical for substantial period of time to attend the serious medical for substantial period of time to attend the serious medical illness of my moth illness of my mother and she ultimately died on 01/02/2024 er and she ultimately died on 01/02/2024 (copy of death certificate enclosed). Thereafter, due to (copy of death certificate enclosed). Thereafter, due to (copy of death certificate enclosed). Thereafter, due to bitterness and disputes with my elder brother on ancestral bitterness and disputes with my elder brother on ancestral bitterness and disputes with my elder brother on ancestral property matters, I was residing at Bijaynagar, Rajasthan and property matters, I was residing at Bijaynagar, Rajasthan and property matters, I was residing at Bijaynagar, Rajasthan and my non-presence at Surat had caused t presence at Surat had caused the delay in filing of the he delay in filing of the 2nd appeal before Hon'ble ITAT; 2nd appeal before Hon'ble ITAT; d) Due to complete closure of my business activities, I had d) Due to complete closure of my business activities, I had d) Due to complete closure of my business activities, I had permanently shifted my place of residence at Mumbai. Also, I permanently shifted my place of residence at Mumbai. Also, I permanently shifted my place of residence at Mumbai. Also, I am not conversant with the Income Tax Law and I did not am not conversant with the Income Tax Law and I did not am not conversant with the Income Tax Law and I did not have any staffs to as have any staffs to assist me to file the appeals and my sist me to file the appeals and my confusion in respect of the quantum and penalty appeals had confusion in respect of the quantum and penalty appeals had confusion in respect of the quantum and penalty appeals had resulted in delay in filing of the 2nd appeal before Hon'ble resulted in delay in filing of the 2nd appeal before Hon'ble resulted in delay in filing of the 2nd appeal before Hon'ble ITAT; There is no willful attempt nor gross negligence to delay the There is no willful attempt nor gross negligence to delay the There is no willful attempt nor gross negligence to delay the filing of the 2nd appeal, howeve filing of the 2nd appeal, however the delay had occurred r the delay had occurred unintentionally unintentionally unintentionally under under under the the the bonafide bonafide bonafide reasons reasons reasons stated stated stated hereinabove. I respectfully make a prayer before the Hon'ble hereinabove. I respectfully make a prayer before the Hon'ble hereinabove. I respectfully make a prayer before the Hon'ble Income Tax Appellate Tribunal to adopt a liberal approach and Income Tax Appellate Tribunal to adopt a liberal approach and Income Tax Appellate Tribunal to adopt a liberal approach and condone the delay in filing of the 2nd appeal and decide t condone the delay in filing of the 2nd appeal and decide t condone the delay in filing of the 2nd appeal and decide the appeal on merits; appeal on merits;” 3. We have carefully heard the rival submissions and have We have carefully heard the rival submissions and have We have carefully heard the rival submissions and have perused the entire record with circumspection. Although there is perused the entire record with circumspection. Although there is perused the entire record with circumspection. Although there is indeed a considerable delay in the institution of the appeal, the indeed a considerable delay in the institution of the appeal, the indeed a considerable delay in the institution of the appeal, the explanation tendered by the assessee is neith explanation tendered by the assessee is neither perfunctory nor er perfunctory nor evasive. The reasons adduced, duly supported by affidavit, reveal evasive. The reasons adduced, duly supported by affidavit, reveal evasive. The reasons adduced, duly supported by affidavit, reveal

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that the delay was occasioned by a chain of bona fide and that the delay was occasioned by a chain of bona fide and that the delay was occasioned by a chain of bona fide and unavoidable circumstances unavoidable circumstances — including non-communication of communication of the appellate order due to the conduct of the erstwhil the appellate order due to the conduct of the erstwhil the appellate order due to the conduct of the erstwhile Chartered Accountant, Accountant, Accountant, subsequent subsequent subsequent discovery discovery discovery of of of the the the order order order upon upon upon departmental intimation, personal bereavement, and a genuine departmental intimation, personal bereavement, and a genuine departmental intimation, personal bereavement, and a genuine misconception regarding the interlinkage between quantum and misconception regarding the interlinkage between quantum and misconception regarding the interlinkage between quantum and penalty proceedings.

3.1 We find substance in the plea that the assesse We find substance in the plea that the assesse We find substance in the plea that the assessee was prevented by sufficient cause sufficient cause within the meaning of Section 5 of within the meaning of Section 5 of the Limitation Act, 1963, from filing the appeal within the the Limitation Act, 1963, from filing the appeal within the the Limitation Act, 1963, from filing the appeal within the prescribed time.

3.2 It is a well-enshrined principle of law, as laid down by the enshrined principle of law, as laid down by the enshrined principle of law, as laid down by the Hon’ble Supreme Court Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji quisition v. Mst. Katiji & Others [(1987) 167 ITR 471 (SC)], that the expression [(1987) 167 ITR 471 (SC)], that the expression [(1987) 167 ITR 471 (SC)], that the expression “sufficient cause” should receive a liberal and justice “sufficient cause” should receive a liberal and justice “sufficient cause” should receive a liberal and justice-oriented construction so as to advance the cause of substantial justice. construction so as to advance the cause of substantial justice. construction so as to advance the cause of substantial justice. The Court therein observed that technicalities The Court therein observed that technicalities should not be should not be permitted to defeat the ends of justice and that a litigant should permitted to defeat the ends of justice and that a litigant should permitted to defeat the ends of justice and that a litigant should not suffer for the inadvertence or default of his representative, not suffer for the inadvertence or default of his representative, not suffer for the inadvertence or default of his representative, particularly when the explanation is bona fide and devoid of particularly when the explanation is bona fide and devoid of particularly when the explanation is bona fide and devoid of malafides.

3.3 Adopting the same benevolent and Adopting the same benevolent and equitable approach, we equitable approach, we are satisfied that the delay in the instant case is neither are satisfied that the delay in the instant case is neither are satisfied that the delay in the instant case is neither deliberate nor motivated by negligence but arose under deliberate nor motivated by negligence but arose under deliberate nor motivated by negligence but arose under circumstances beyond the reasonable control of the assessee. We circumstances beyond the reasonable control of the assessee. We circumstances beyond the reasonable control of the assessee. We

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therefore, in the exercise of our judicial discretion therefore, in the exercise of our judicial discretion, , condone the delay of 490 days in the filing of the appeal. of 490 days in the filing of the appeal.

4.1 The Ld. Departmental Representative (DR) Ld. Departmental Representative (DR), though not in , though not in complete agreement, did not seriously controvert the fa complete agreement, did not seriously controvert the fa complete agreement, did not seriously controvert the factual matrix or the legal implications advanced by the matrix or the legal implications advanced by the Ld. Counsel Ld. Counsel.

4.2 We have considered to the submissions of both sides. In We have considered to the submissions of both sides. In We have considered to the submissions of both sides. In principle, there is no statutory bar precluding the principle, there is no statutory bar precluding the Ld. CIT(A) Ld. CIT(A) from adjudicating a penalty appeal even while the quantum appeal adjudicating a penalty appeal even while the quantum appeal adjudicating a penalty appeal even while the quantum appeal remains pending. Nevertheless, in the judicial balance between remains pending. Nevertheless, in the judicial balance between remains pending. Nevertheless, in the judicial balance between technical authority and procedural fairness, it is always desirable technical authority and procedural fairness, it is always desirable technical authority and procedural fairness, it is always desirable that the determination of penalty that the determination of penalty—being consequential in being consequential in nature—should await the final outcome of the quantum should await the final outcome of the quantum should await the final outcome of the quantum proceedings.

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4.3 The rationale is self The rationale is self-evident: the foundation of the penalty evident: the foundation of the penalty lies in the quantum addition; if that foundation is unsettled, the lies in the quantum addition; if that foundation is unsettled, the lies in the quantum addition; if that foundation is unsettled, the superstructure of penalty cannot stand independently. Should superstructure of penalty cannot stand independently. Should superstructure of penalty cannot stand independently. Should the quantum addition be deleted or modified, the penalty would the quantum addition be deleted or modified, the penalty would the quantum addition be deleted or modified, the penalty would automatically require proportionate reconsideration. Thus, in the matically require proportionate reconsideration. Thus, in the matically require proportionate reconsideration. Thus, in the larger interest of larger interest of larger interest of justice, avoidance of multiplicity, and justice, avoidance of multiplicity, and justice, avoidance of multiplicity, and consistency of adjudication, we deem it just, proper, and in consistency of adjudication, we deem it just, proper, and in consistency of adjudication, we deem it just, proper, and in consonance with judicial prudence that the penalty appeal be consonance with judicial prudence that the penalty appeal be consonance with judicial prudence that the penalty appeal be restored for decision after the disposal of the quantum appeal by decision after the disposal of the quantum appeal by decision after the disposal of the quantum appeal by the Ld. CIT(A).

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Order pronounced by way display o Order pronounced by way display of result on notice f result on notice board on 30/10/2025 under Rule 34(4) of ITAT Rules, 1963. /10/2025 under Rule 34(4) of ITAT Rules, 1963. /10/2025 under Rule 34(4) of ITAT Rules, 1963.

Sd/- Sd/ Sd/- (SANDEEP GOSAIN (SANDEEP GOSAIN) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Surat; Dated: 30/10/2025 Rahul Sharma, Sr. P.S. (on Tour) Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Surat 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Surat ITAT, Surat