NARESH KARLA (HUF),MUMBAI vs. JCIT CIR 24(3), MUMBAI

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ITA 7654/MUM/2016Status: DisposedITAT Mumbai12 September 2019AY 2012-134 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) took a pedantic and hyper-technical view in not condoning the 25-day delay. Citing Supreme Court judgments, the Tribunal stated that acceptance of explanations for delay should be the rule, not an exception, especially when stakes are high.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed solely on the grounds of a 25-day delay in filing. The assessee provided reasons for the delay, citing travel to London, and supported this with passport details. The CIT(A) also dismissed the penalty appeal as a consequence of the quantum appeal's dismissal.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal on grounds of limitation without liberally considering the assessee's explanation for the delay. Whether the penalty appeal survives if the quantum appeal is dismissed on limitation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI

Before: SHRI VIKAS AWASTHY & SHRI RAJESH KUMAR

For Appellant: Shri Vijay Mehta
For Respondent: Ms. Kavita P. Kaushik
Hearing: 12/09/2019Pronounced: 12/09/2019

ORDER PER VIKAS AWASTHY, JM:

These two appeals by the assessee are directed against order of CIT(A)-36, Mumbai dated 24/10/2016, common for the orders passed on quantum addition and penalty levied under section 271(1)(c) of the Income Tax Act 1961 (in short ‘the Act’).

2.

Shri Vijay Mehta, appearing behalf of the assessee submitted at the outset that the CIT(A) has dismissed quantum appeal of assessee on the ground of limitation alone. There was delay of 25 days in filing of the appeal, the assessee gave reasons for delay in filing of the appeal. However, CIT(A) rejected the same and dismissed the appeal being barred by limitation. The assessee had also filed an appeal assailing levy of penalty under section 271(1)(c) of the Act. Since the quantum appeal of the assessee was dismissed, the CIT(A) dismissed the penalty appeal as well, however, the same was decided on merits.

3.

On the other hand, Ms. Kavita P. Kaushik, representing the Department vehemently defended the order of CIT(A) dismissing both the appeals of assessee,.

4.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The CIT(A) has dismissed the quantum appeal of assessee being barred by limitation. Undisputedly, there was a delay of 25 days in filing of the appeal. The assessee had filed explanation seeking condonation of delay on the ground that the assessee was travelling to London during that period. The assessee in support of his contentions have filed a photocopy of the passport indicating the dates of departure and arrival of the assessee from/in India.

4.1 The Hon’ble Supreme Court of India in the case of Ram Nath Sao Alias Ram Nath Sahu & Ors. Vs. Gobardhan Sao & Ors.( (2002) 3 SCC 195) has held that acceptance of explanation furnished should be the rule and refusal, an exception. The relevant extract of the judgment is reproduced herein below:

"But one thing is clear that the courts should not proceed with the tendency of finding fault with the cause shown and reject the petition by a slipshod order in over-jubilation of disposal drive. Acceptance of explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bona fides can be imputed to the defaulting party. On the other hand, while considering the matter the courts should not lose sight of the fact that by not taking steps within the time prescribed a valuable right has accrued to the other party which should not be lightly defeated by condoning delay in a routine-like manner. However, by taking a pedantic and hypertechnical view of the matter the explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom the Us terminates, either by default or inaction and defeating valuable right of such a party to have the decision on merit. While considering the matter, courts have to strike a balance between resultant effect of the order it is going to pass upon the parties either way.” 4.2 The Hon’ble Apex Court in the case of Collector Land Acquisition, vs Mst. Katiji & Ors., 167 ITR 471(SC) held that the explanation furnished by the assessee for seeking condonation should be accepted. The expression “sufficient cause” should be interpreted liberally.

4.3 In view of the well settled law and explanation furnished by the assessee, we are of the view that the CIT(A) has erred in taking pedantic and hyper-technical view in not accepting the explanation furnished by the assessee for condonation of 25 days delay in filing of the appeal. The impugned order is set-aside and the appeal of the assessee is restored to the file of CIT(A) for denovo adjudication on merits. The CIT(A) is directed to grant reasonable opportunity of hearing to the assessee while adjudicating the appeal, in accordance with law.

4.4 Since we have quashed the order of CIT(A) in quantum appeal, the order of CIT(A) confirming levy of penalty under section 271(1)(c) of the Act will not survive. Accordingly, appeal of the assessee assailing levy of penalty under section 271(1)(c) of the Act is also restored back to the file of CIT(A) for fresh adjudication in accordance with law.

5.

In the result, both the appeals by assessee are allowed for statistical purposes.

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