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Facts
The assessee's appeal before the CIT(A) was dismissed due to a delay of 694 days, and the CIT(A) refused to condone the delay. The assessee had a bonafide belief that a separate return was not required due to TDS settling tax liability. Later, an assessment order was passed under Section 147, and a penalty order was also passed, which the assessee claims to have learned about much later.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal without condoning the delay. The Tribunal found that the assessee's reliance on their tax consultant and lack of technical knowledge contributed to the delay, and that substantial justice should prevail over technical considerations. The delay was condoned, and the case was restored to the CIT(A) for adjudication on merits.
Key Issues
Whether the CIT(A) was justified in refusing to condone the delay in filing the appeal before him, and whether the assessee's explanation for the delay was acceptable.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 147 of the Income Tax Act, 1961, Section 144 of the Income Tax Act, 1961, Section 148 of the Income Tax Act, 1961, Section 271(1)(c) of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
order : 09.12.2024 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 18/06/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 07/09/2021, passed under Section 147 read with Section 144 of the Act for the Assessment Year 2013- 2014.
2. The Assessee has raised following grounds of appeal :
“1. The Ld. CIT(A), NFAC, Delhi has erred in the dismissing the appeal of the Appellant on account of rejection of the petition for condonation of delay despite the fact the at the appeal was Assessment Year 2013-2014 already admitted by the Ld. CIT(A), NFAC, Delhi by issuing notice of hearing under Section.250 of the Act directing the Appellant to file ground-wise written submission.
2. The Ld. CIT(A), NFAC, Delhi has erred in retrospectively dismissing the appeal of the Appellant on account of rejection of the petition for condonation of delay without giving any opportunity o being heard to the Appellant.”
The relevant facts are in brief are that the assessment was completed vide the Assessment Order, dated 07/09/2021, passed under Section 147 read with Section 144 of the Act whereby the Assessing Officer assessed the income of the Assessee at INR.14,30,130/- as against return of income at INR.2,70,612/-.
Bering aggrieved, the Appellant preferred the appeal before the CIT(A) which was dismissed by the CIT(A) vide order, dated 18/06/2024, as being barred by limitation. The learned CIT(A) declined to condone the delay of 694 days in filing the appeal.
Being aggrieved the Appellant has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above.
We have heard the rival submission and perused the material on record. In the affidavit filed by the Appellant before us explaining the delay in filing the appeal before the CIT(A) it has been stated as under:
I am an individual Assessee regularly filing my income tax returns.
In F.Y 2012-13, I have earned a net salary income of Rs. 2,70,612/- from M/s Magma HDI General Insurance Company Ltd and have incurred a net loss of Rs.2,99,297/- from the share market (Derivative loss Speculative Gain-Rs.6,135/-) Rs.3,05,432/- and Speculative Gain – Rs.6,135/-). 3. Since TDS was already deducted on my salary income and 2 Assessment Year 2013-2014 deposited with Government as per provisions of the Income tax Act, 1961 hereinafter referred to ‘Act’), I was under the bonafide belief that I was not required to file a separate return of income, considering that the tax liability in my income had already been settled through TDS. This understanding was based on the premise that if the entire tax liability had been met through TDS, and no additional income or deductions were applicable, fling a return might not he obligatory. Copy of Form 16 in attached. 4. Thereafter, I received a notice under section 148 of the Act on 20 March 2020. 5. I do not possess a deep understanding of the technicalities of tax laws, financial jargons and provisions under the Act. I have limited knowledge of the complex terminologies and procedures involved in filing reply to notices, filing appeals, etc. 6. Accordingly, I took assistance of a professional tax consultant whose reference I got from a colleague to assist me in handling the assessment proceedings. 7. On 7 September 2021, the consultant informed me that the assessment order has been passed under section 147 of the Act and the Learned Assessing Officer, NFAC, Delhi has assessed my income at Rs. 14,30,130/- and raised a demand of Rs. 7,97,742. This demand left me in a state of shock and anxiety as my actual income is far lower and my financial situation is precarious. 8. Since I was of the belief that my case has not been handled appropriately which adversely impacted my matter, I intimated the consultant that post filing of the quantum appeal and other compliances till that date, I would not like to continue with his services. 9. The quantum appeal was filed on 15 February 2022 by the consultant. 10. Post filing of the quantum appeal, I was awaiting the hearing notice from the Ld. CIT(A), NFAC, Delhi. On receipt of the hearing notice in December 2023, 1 approached M/s ….. (Chartered Accountants) to assist me in filing written submission. 11. It was at this time that I was informed by M/s …… (Chartered 3 Assessment Year 2013-2014 Accountants) that the penalty order under section 271(1)(c) of the Act is also visible on the portal and has already been passed on 25 January 2022.
I was again in a state of shock as my erstwhile consultant had failed to inform me about any such penalty order being reflected on my income tax portal despite the fact that he filed the quantum appeal on 15 February 2022, i.e. after the date of passing the penalty order.
I have also not received copies of any show cause notice or penalty order via speed post as claimed by the Learned Assessing Officer, NEAC, Delhi in the penalty order. My communication address is B-604, Sarvpdaya Swaroop, Old Dombivli, Telkos Wadi Dombivali -421202 and the address mentioned in the penalty notices and order is B/8, 2 Floor, Sunjyoti CHS, Old Dombivali Road, Near RBI Colony, Dombivli-421202 which is my old address. The date of service of penalty order has been mentioned as 25 January 2022 in Form 35 for the only reason as the same was visible on the portal since 25 January 2022 and nothing else. I am not well- versed with the technical aspects of the Income Tax portal and the process involved in logging in and navigating through the portal. Copy of the relevant pages of the penalty notices is attached.
I immediately requested M/s ………… (Chartered Accountants) to file an appeal in Form 35 against the penalty order alongwith the condonation petition explaining the above difficulties that were faced by me. The appeal against penalty order under section 271(1)(c) of the Act was passed on 19 January 2024. Copy of the appeal is attached.
Due to the above unforeseen and unavoidable circumstances, my appeal against the penalty order could not be filed within the prescribed time limit.
As soon as I became aware of the penalty order and delay in filing the appeal, I have taken immediate steps to seek professional advice and file the appeal.”
According to the CIT(A) the delay in filing the appeal before CIT(A) was not to be condoned since the Appellant was negligent in her conduct. However, on perusal of record we are not in agreement with the CIT(A). We note that the Appellant was relying upon the 4 Assessment Year 2013-2014 consultant for pursing assessment/appellate proceedings. On account of the assessment resulting in high assessed income, the Appellant had express desire to change the consultant post filing of the quantum appeal. It is a case of the Appellant that she was not informed about the penalty order having been passed on 25/01/2022 under Section 271(1)(c) of the Act by the aforesaid tax consultant. Further, the physical copy of the aforesaid penalty order was also not served upon the Appellant on account of change of address. At the relevant time the Appellant was residing B-604, Sarvpdaya Swaroop, Old Dombivli, Telkos Wadi, Dombivali – 421202. We find that the aforesaid submission are supported by the fact that both in the Form 35 filed before the CIT(A) and in the order dated 18/06/2024 passed by the CIT(A) (impugned by way of present appeal) the address specified by the Appellant has been stated whereas the penalty order dated 25/01/2022 bears the old address of the Appellant. In the sworn affidavit the Appellant has stated that she only got knowledge of the penalty order having been passed when the new tax consultant engaged by the Appellant accessed the online portal for the purpose of filing online submissions in the quantum appeal preferred by the Appellant. Soon thereafter the Appellants took steps to file the appeal before the CIT(A) against the penalty order. We note that in the affidavit the Appellant has stated that she was a salaried employee and was neither aware of technicalities of tax laws nor the procedure involved in filing appeal/submission before tax authorities and for the same she was dependent upon her tax consultant. Since the tax consultant did not inform her about the passing of the penalty order she only acquired knowledge subsequently. We have no reason to disbelieve the contents of the affidavit filed by the Appellant. In the case of Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 (SC) the Hon’ble Supreme Court has, while dealing with the issue of condonation of delay, emphasized that substantial 5 Assessment Year 2013-2014 justice should prevail over technical considerations. Every day’s delay must be explained does not mean that a pedantic approach should be taken and that the aforesaid doctrine must be applied in a rational common sense and pragmatic manner, more so in circumstances where a litigant does not stand to benefit by lodging the appeal late (as is the case in appeal before us). Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. We further note that the quantum appeal preferred by the Appellant is still pending adjudication before CIT(A). When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred. Considering overall facts and circumstance of the case, we are of the view that the delay in filing the appeal before the CIT(A) should have been condoned. Accordingly, the order, dated 18/06/2024, passed by the CIT(A) is set aside. Delay in filing appeal before the CIT(A) is condoned and the issue raised in appeal before CIT(A) are restored back to the file of CIT(A) for adjudication on merits. Thus, Grounds No. 2 raised by the Appellant are allowed while all the other Grounds raised by the Appellant are dismissed as infructuous.
In result, the present appeal preferred by the Assessee is treated as allowed for statistical purposes.