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Facts
The assessee company appealed an order of the Principal Commissioner of Income Tax (PCIT) passed under section 263 of the Income Tax Act, 1961. The PCIT had invoked revisional jurisdiction over the assessment order for AY 2018-19, identifying certain foreign expenditures as 'consultants outsourcing fees' and opining that TDS was deductible under section 195.
Held
The Tribunal noted that the appeal was filed with a significant delay of over 330 days and that the reasons provided for the delay, primarily the resignation of an officer, were not considered sufficient cause as other responsible personnel were available. The Tribunal found the explanation for the delay unsatisfactory and was not inclined to condone it.
Key Issues
The main issue was whether the delay in filing the appeal should be condoned. The secondary issue, which was not reached due to the dismissal on delay, concerned the validity of the PCIT's revisional order and the taxability of foreign payments.
Sections Cited
263, 9, 5, 195, 143(3), 144B
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee company against the order of the Learned Principal Commissioner of Income Tax, (hereinafter referred to as “the Ld.PCIT”), Chennai-1, dated 19.03.2024 for the Assessment Year (hereinafter referred to as "AY”) 2018-19 invoking his revisional jurisdiction u/s.263 of the Income Tax Act, 1961 (hereinafter
The brief facts of the case are that the assessee company filed its original return of income (RoI) for AY 2018-19 on 27.11.2018 declaring ₹3,89,57,320/- which return was selected for scrutiny and later assessment was completed u/s.143 r.w.s.143(3A) & 143(3B) of the Act on 07.04.2021 by the Faceless Assessment Unit assessing the total income at ₹4,12,41,620/-. The Ld.PCIT having gone through the assessment records found on a scrutiny of the annual accounts of the assessee company and especially from perusal of the Note 22 of the ‘Notes on Accounts’ that the assessee had shown total expenditure of ₹8.64 Crs. out of which ₹62.34 lakhs were towards ‘foreign travel’ and ₹8.02 Crs. towards ‘other expenditure’. Further, he noted from the Note 18 under the heading ‘other expenses’ that the assessee has incurred ₹11.80 Crs. towards ‘consultants outsourcing fees’. Also, he noted from perusal of the individual payment made towards ‘consultants outsourcing fees’ that many payments related to ‘overseas outsource manpower consultants services’. Thus, according to the Ld.PCIT ‘other expenditure’ represented ‘consultants outsourcing fees’. In this regard, the Ld.PCIT was of the view that overseas fees paid to overseas consultants was taxable u/s.9 r.w.s.5 of the Act and accordingly TDS was deductable u/s.195 of the Act. And in this regard, he noticed from Form 3CD that (AY 2018-19) M/s. Cholamandalam MS Risk Services Ltd. :: 3 ::
TDS u/s.195 of the Act was deducted for an amount of ₹39.81 lakhs only.
Hence, according to the Ld.PCIT, non-deduction of TDS on expenditure of ₹7.62 Crs. [₹8.02 Crs. minus ₹39.81 lakhs] u/s.195 of the Act has resulted in non-assessment of income with tax effect of ₹2,09,95,005/-.
Hence, he issued show cause notice to the assessee ‘as to why’ revisional jurisdiction u/s.263 of the Act shouldn’t be invoked against the assessee.
Pursuant to which, the assessee filed replies on 12.01.2024 and the Ld PCIT heard the version/objections of assessee on various dates including on 19.02.2024 & 22.02.2024 wherein Dy. Manager (Finance), Ms.
Tailambal & Shri V.P. Prabhu, AVP (Taxation) attended the proceedings, and represented the assessee company before the Ld.PCIT; and after hearing them and considering the written submissions [which are reproduced in the impugned order], the Ld.PCIT was pleased to partly set aside the assessment order with a direction to the AO to examine the details/documents submitted after verifying the relevant aspects as discussed in his order and passed fresh order after hearing the assessee.
At this juncture, it would be gainful to reproduce the relevant portion of the impugned order:
Aggrieved by the aforesaid action of the Ld.PCIT u/s.263 of the Act, the assessee is before us challenging the validity of exercise of revisional jurisdiction by the Ld PCIT.
At the outset, the Ld.DR for the Revenue objected to the maintainability of the appeal on the ground that the assessee belatedly filed the appeal before this Tribunal with a delay of ‘332’ (three hundred & thirty two) days. According to the Ld.DR, the AO has already given effect to the impugned order of the Ld.PCIT and has made certain additions, which has been appealed by the assessee before the First Appellate Authority. Therefore, the Ld.DR wants us not to condone the delay and resultantly dismiss the appeal of the assessee.
Per contra, the Ld.AR of the assessee addressed the issue of delay in filing of this appeal before this Tribunal and tried to justify the action by pointing out that assessee doesn’t gain any advantage by not filing the appeal and for showing that there was sufficient cause for the delay, drew our attention to the affidavit filed by the Managing Director of the assessee company and submitted that the Officer-In-charge of the litigation didn’t take timely advice for filing of appeal against the impugned action and later on she resigned on 12.07.2024. And then the Officer who came in her place promptly took advice from the legal professionals, but by that time, around ‘300’ days had passed away; and finally assessee filed the appeal on 28.04.2025. The Ld.AR, reiterated that assessee doesn’t gain any advantage by not filing the appeal within time, when it has statutory right to prefer an appeal before this Tribunal.
According to him, the omission on the part of the dealing Officer should not rob the right of the assessee filing the appeal before the Tribunal and cited several cases for condoning the delay viz. (i) decision of the Hon’ble Supreme Court in the case of State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749, (ii) decision of ITAT, Mumbai The Income Tax Officer Sterlite Industries (India) Ltd. v. Addl.CIT/Jt. CIT [2006] 6 SOT 497 (Mum.)], (iii) decision of ITAT Surat Bench in the case (AY 2018-19) M/s. Cholamandalam MS Risk Services Ltd. of Chirag P. Thummar v. PCIT in (SRT)/2022 dated 22.01.2025 & (iv) decision of the Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mist. Katiji [1987] 167 ITR 471, and prayed that the delay may be condoned since the delay was not occasioned due to any negligence and can’t be termed as deliberate. According to the Ld.AR, the assessee has a good case on merits and pointed out in this regard that the Ld.PCIT didn’t had the requisite jurisdiction to invoke revisional jurisdiction u/s.263 of the Act because the condition precedent for assumption of jurisdiction was absent in this case. According to him, it can be seen that enquiry was conducted by the AO on the issues raked up by the Ld.PCIT (supra). Hence, according to the Ld.AR, the Ld.PCIT ought not to have given an open remand to the AO for conducting enquiry, rather, he ought to have decided the issues flagged by him. In other words, since the AO had inquired about the issues, the Ld.PCIT should have passed an order allowing/disallowing the expenses rather than sending it back to the AO for fresh assessment, which is erroneous.
Therefore, he prayed that the delay may be condoned and matter may be decided on merits/legal issue.
Having heard both the parties and after perusal of the records on the limited purpose for condoning the delay, we note that the appeal has been preferred by the assessee with a delay of more than ‘330’ days. The impugned order of the Ld.PCIT is dated 19.03.2024 and the assessee has (AY 2018-19) M/s. Cholamandalam MS Risk Services Ltd. preferred the appeal before this Tribunal on 28.04.2025. The main plea of the assessee for condoning the delay is that the Officer handling the litigation [Ms. K.R.Thailambal] who appeared before the Ld.PCIT in February, 2024 had resigned on 12.07.2024. According to the assessee, the said Officer didn’t seek any advice from the legal consultants for filing of appeal and after she resigned, the Officer who came in her place got advice for filing the appeal in the month of March 2025, and immediately thereafter, an appeal was preferred on 28.04.2025, therefore, the delay should be condoned. However, it is noted that during revisional proceedings, Asst. Vice President (Taxation), Shri V.P. Prabhu, had also appeared before the Ld.PCIT and represented the assessee before the Ld.PCIT along with Ms. K.R.Thailambal. Therefore, it can’t be said that the vice president Taxation was not aware of the impugned action of the Ld.PCIT and therefore, the delay caused in filing of the appeal before this Tribunal can’t be put solely on the shoulder of the resigned official.
Hence, the foundation attributed for cause of delay can’t be accepted.
Moreover, it is noted that the AO has given effect to the impugned order of the Ld.PCIT and has made certain adjustments which action has already been challenged by the assessee before the First Appellate Authority. Thus, it is noted that the assessee has availed a statutory remedy available as per law against the action of AO passed pursuant to the impugned action of Ld PCIT. As noted the delay of more than ‘330’ (AY 2018-19) M/s. Cholamandalam MS Risk Services Ltd. days in filing of this appeal couldn’t be explained satisfactorily by the assessee. Instead, the reason adduced by the assessee for cause of delay as noted (supra) can’t be termed as sufficient cause. The expression ‘sufficient cause’ means a cause beyond control of the assessee. The cause stated by the assessee as noted supra can’t be said to be a cause beyond control of the assessee. The resignation of Dy. Manager (Finance) couldn’t have prevented the assessee from filing of the appeal in time when the Asst. Vice President (Taxation) who had represented/appeared before the Ld.PCIT was still serving in the assessee company. The reason cited by the assessee doesn’t in anyway demonstrate that the cause for delay was beyond the control of the assessee by virtue of which it was prevented from filing of the appeal in time before this Tribunal. The assessee was bound to explain each day of delay along with supporting material evidence. In the absence of the same and especially when the Dy. Manager (Finance) had resigned on 12.07.2024, still the assessee filed the appeal only after more than nine (9) months after her resignation speaks volume about the lackadaisical attitude of assessee, which inaction/omission couldn’t be satisfactorily explained by the assessee. Moreover, the assessee is noted to have participated before the AO during the set-aside proceedings pursuant to the impugned action of Ld PCIT. Hence the reason attributed for cause of delay in filing of appeal belatedly, doesn’t sound genuine. Therefore, the cause for delay stands (AY 2018-19) M/s. Cholamandalam MS Risk Services Ltd. unexplained and also considering the fact that the AO has already given effect to the order of the Ld.PCIT (after hearing the assessee) and had made certain adjustments, against which the assessee is noted to have preferred an appeal before the First Appellate Authority. Therefore, the assessee has availed statutory remedy against the adjustment made pursuant to the impugned order. Considering the overall facts discussed (supra), we are not inclined to condone the delay.
In the result, appeal filed by the assessee is dismissed.
Order pronounced on the 11th day of February, 2026, in Chennai.