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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI RAMIT KOCHAR
आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being ITA No. 832/Mum/2016, is directed against the appellate order dated 04th November 2015 passed by the
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learned Commissioner of Income Tax (Appeals)- 4, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2001-02, the appellate proceedings before the learned CIT(A) arising from the penalty order dated 17th March, 2016 passed by the learned Assessing Officer (Hereinafter called “ the AO” ) u/s 271(1)(c) of the Income-tax Act,1961 (Hereinafter called “the Act”).
The controversy in this appeal is in very narrow compass. The assessee’s assessment was framed by the Revenue u/s 143(3) for the impugned assessment year 2001-02 , wherein disallowances to the tune of Rs. 85,34,638/- of various expenditure were made by the AO which stood added to the income of the assessee , thereby income was assessed at Rs. 31,26,573/- as against returned loss of Rs. 54,83,065/- which culminated finally into an assessment order dated 26-12-2003 passed by the u/s 143(3). The AO also initiated penalty proceedings u/s 271(1)(c) for furnishing of inaccurate particulars of income , which finally culminated into an penalty order dated 17-03-2006 passed by the AO u/s 271(1)(c) for furnishing of inaccurate particulars of income wherein penalty of Rs.33,75,449/- was levied against the assessee. The assessee did not file appeal with learned CIT(A) against the afore-stated penalty order dated 17-03-2006 passed by the AO u/s 271(1)(c) within the time prescribed u/s 249(2), which appeal with learned CIT(A) was finally filed by the assessee on 13-10-2014 after a gap of 7 years. The learned CIT(A) dismissed the said appeal filed by the assessee against penalty order dated 17-03-2006 u/s 271(1)(c) by not condoning the delay in filing appeal late by 7 years by holding that no convincing reasons were given for the said delay in filing the appeal after a gap of seven years as in his opinion , the assessee has not demonstrated ‘sufficient cause’ or ‘reasonable cause’ with demonstrable evidences for such delay, vide appellate order dated 04-11-2015 passed by learned CIT(A). The assessee had admitted before learned CIT(A) that the penalty order dated 17-03-2006 was served on the assessee on 23-03-2006 which is emanating from the appellate order of
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learned CIT(A) at page 6/para 2.3. This fact is also admitted by the assessee in form no 35 filed with the learned CIT(A) which is placed in paper book.
The assessee has now filed an appeal before the tribunal as the assessee was aggrieved by decision of learned CIT(A) in not condoning such delay and dismissing the appeal of the assessee vide appellate order dated 04-11-2015.
At the outset learned counsel submitted that there was a delay of 3111 days which is more than 8 years delay in filing the appeal and not seven years as was mentioned by learned CIT(A) in his appellate orders. It was submitted that compilation of 29 pages has been filed to which our attention was drawn, which we will advert to in detail in our decision in subsequent para’s. It was submitted that department did not recover the outstanding amount for a long time which mainly lead to delay in filing appeal before learned CIT(A) as the assessee forget to file appeal because of such delay on the part of Revenue. It was submitted that substantial justice is to be done vis-à-vis technicalities and it was submitted that no prejudice will be caused to the Revenue if the delay in filing appeal before the learned CIT(A) be condoned . It was submitted that an interest has already been deposited, thus there is no prejudice to Revenue in condoning the delay by tribunal for delay in filing an appeal before learned CIT(A) It was prayed that directions be issued to learned CIT(A) for admitting appeal and then learned CIT(A) can decide the issues on merits for which directions may be issued by tribunal. It was submitted that in alternative reasonable costs be imposed but the appeal be admitted. The learned counsel for the assesseee relied upon several case laws where the substantial delays were condoned by Courts/tribunal.
The learned DR on the other hand strongly objected to condonation of delay in filing appeal by the assessee before learned CIT(A) which was delayed by more than 8 years as delay was for 3111 days beyond time stipulated u/s
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249(2). It was submitted by learned DR that the department has provided copies of record which was asked for by the assessee which is now filed by the assessee as paper book containing 29 pages. The learned DR submitted that it is claimed that delay by department in recovering the demand is one of the ground taken by the assessee during arguments before the Bench for delay in filing appeal before learned CIT(A) which has no relevance to the filing of appeal by the tax-payers late beyond time stipulated u/s 249(2) as both are independent matter having no nexus with each other. The tax-payer protects its right by filing an appeal within time prescribed by statute and it has no connection with recovery proceedings by Revenue which is totally independent. Thus, to place fault on department for non recovery for a long period of time is not correct. It was submitted that the assessee was fully aware of the penalty proceedings u/s 271(1)(c) against the assessee and there is no evidence that the penalty order was lost as claimed by the assessee. It was submitted that the appeal of the assessee deserved to be dismissed and there is no reasonable costs to be imposed in lieu of direction for admission of appeal by learned CIT(A) as the appeal lacks merit.
We have considered rival contentions and perused the material on record including case laws. The controversy in this appeal is in very short compass and concerns itself whether delay of 3111 days which translates to of more than 8 years in filing an appeal late with learned CIT(A) beyond time stipulated u/s 249(2) is to be condoned or not. We are fully aware that when technicalities are pitted against substantial justice, courts will always lean towards cause of substantial justice and condone the delay because in that situation at best what will happen is that the issues will be ultimately decided on merits. At the same time we are also fully aware that appeal under the 1961 Act is a statutory right which is a creature of statute and there is no vested right in appeal unless expressly provided under the 1961 Act. Non- filing of an appeal by a litigant within time stipulated by statute creates
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vested rights in favour of the opposite party as it has also an expectation of getting an end to litigation to avoid uncertainties and enjoy the fruits of success of litigation which cannot be unsettled lightly unless a sufficient and bonafide cause is shown by an opposite party seeking condonation of delay in filing an appeal. Law of limitation is enshrined on principles of public policy with an object to end to uncertainties and to avoid anarchy wherein litigations are expected to exercise their right of appeal within statutory time limit prescribed under the statute unless sufficient cause is shown. On the touchstone of these threshold’s , we now proceed to adjudicate this appeal and see whether delay of 3111 days in filing an appeal by assessee before learned CIT(A) which was more than 8 years beyond the time stipulated u/s 249(2) can be condoned. Chapter XX-A of the 1961 Act vide Section 246A provides for filing an appeal by the assessee’s before learned CIT(A) , if the assessee is aggrieved by such orders of the AO as are specified in the said section. Penalty orders passed by the AO u/s 271(1)(c) are mentioned , inter- alia, in Section 246A as one of the orders against which an appeal shall lie with learned CITA(A) vide Section 246A(1)(j)(B).Such an appeal before learned CIT(A) is to be filed in prescribed form and shall be verified in the prescribed manner as stipulated u/s 249(1). Section 249(2) prescribes that such an appeal shall be filed before learned CIT(A) within 30 days from the date of service of notice of demand relating to the penalty. Section 249(3) empowers learned CIT(A) to admit an appeal after expiry of the said period stipulated u/s 249(2) and condone delay if he is satisfied that the appellant has ‘sufficient cause’ for not presenting an appeal within time stipulated u/s 249(2). This is the scheme of the Act so far as powers of learned CIT(A) in condoning the delay in filing an appeal against penalty orders u/s 271(1)(c) is concerned , the learned CIT(A) can condone the delay in filing an appeal beyond time stipulated u/s 249(2) for filing an appeal, if sufficient cause is shown by the appellant to him. Now, we have to see whether the assessee had shown an sufficient cause before learned CIT(A) in filing an appeal late
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beyond period stipulated u/s 249(2) by more than 8 years. The assessee has submitted that delay in recovery of demand by Revenue has contributed to this delay in filing an appeal . It is also made out that the assessee forgot to file an appeal as the penalty order was lost and the assessee in the interim period was not aware of this demand. We , now at this juncture need to advert to sequence of events as are emerging from records before us to see whether there was sufficient cause as is made out to be by learned counsel for the assessee which justify condoning the delay of more than 8 years in filing appeal before learned CIT(A) late beyond time stipulated u/s 249(2):
The AO passed penalty order dated 17-03-2006 u/s 271(1)(c) which along with notice of demand dated 17-03-2006 u/s 156 is admittedly served on assessee on 23-03-2006 . 2. The assessee filed an appeal against said penalty order with learned CIT(A) on 13-10-2014 , which is filed late by 3111 days beyond the time stipulated u/s 249(2) i.e. late by more than 8 years. 3. Paper book containing 29 pages has been filed by the assessee which consist of set of documents obtained from the learned DR on inspection of assessment records(pb/page 1-28) in pursuance of direction of the tribunal. 4. During the course of hearing before the Bench, the content of this paper book which contains vital documents were gone into in the open court . Careful Perusal of the said paper book filed by the assessee reveals as under:-
a) The acknowledgement of receipt of penalty order dated 17-03- 2006 u/s 271(1)(c) along with notice of demand dated 17-03- 2006 u/s 156 , on 23-03-2006 by the assessee is placed at paper book/page 19. It is pertinent to mention while receiving said penalty order and notice of demand while acknowledging
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receipt, rubber stamp of the assessee company was also affixed in the said acknowledgement of receipt. b) Letter dated 01-09-2006 addressed by the AO to The Principal Officer, Dytek India Limited, Bangalore is placed in paper book/page 18 which states that the assessee has agreed to pay the balance amount by way of instalments and hence attachment u/s 226(3) is lifted.Thus, in the interim period between after issuance of notice of demand u/s 156 on 17-03- 2006 till 01st September , 2006 , the AO issued garnishee notices to Dytek India Limited for recovering demand outstanding against the assessee and the assessee agreed to pay the arrears of demand by way of scheme of instalments which led Revenue to lift attachment u/s 226(3) against Dytek India Limited. This clearly reveals that the issue of outstanding demand against the assessee was very much alive and the assessee was fully aware that demand arisen on account of penalty levied u/s 271(1)(c) has been actively persued by Revenue for recovery. c) Perusal of page 13-14/paper book reveals letter dated 24-08- 2006 written by M/s B K Khare and Co., Chartered Accountants addressed to The Assistant Commissioner of Income Tax i.e. AO which is an application requesting for stay of 50% demand and for payment of balance arrears of demand latest by 30-09-2006 for the impugned assessment year. In this letter, there is a mention of receipt of notice dated 24-08- 2006 issued by the AO asking assessee to pay arrears of demand for various assessment year including impugned assessment year under consideration before the Bench. d) Perusal of page 11 of paper book will reveal that it is a letter dated 20-08-2007 (received by Revenue vide diary no 675 on
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20-08-2007) written by M/s B K Khare and Co., Chartered Accountants addressed to The Assistant Commissioner of Income Tax i.e. AO wherein there is a mention of receipt of notice dated 13-08-2007 issued by the AO . It is clearly mentioned in the said letter dated 20-08-2007 that there is , inter-alia, demand of Rs. 33,75,449/- outstanding to be payable vide DCR no 81/64/Pg-14/07-08 for AY 2001-02 towards penalty u/s 271(1)(c), wherein there is a mention of earlier letter dated 24-08-2006 wherein request was made for stay of 50% demand. The assessee in this letter dated 20-08- 2007 has contended that as against total demand of Rs. 2,45,18,775/- outstanding against the assessee for AY 2001- 02 and 2003-04 , the assessee has paid much more than 50% and it was also stated that the learned CITA() has heard the appeal on 10-08-2007 and order is expected in the month of August 2017 itself and hence prayer was made to keep the demand stayed. e) Perusal of page 10 /paper book will reveal that the AO has issued notice to the assessee on 02-02-2012 asking assessee to pay , inter-alia, outstanding demand of Rs. 33,75,449/- for AY 2001-02. Thus, once again the assessee was notified by Revenue about payment of this outstanding demand. f) Perusal of the page 8-9/paper book reveals that letter dated 08-08-2014 ( received by Revenue vide diary no 1271 on 08- 08-2014 ) was written by M/s B K Khare and Co., Chartered Accountants addressed to The Assistant Commissioner of Income Tax i.e. AO stating that penalty order dated 17-03- 2006 u/s 271(1)(c) and notice of demand dated 17-03-2006 u/s 156 raising demand of Rs. 33,75,449/- were not received by the assessee. It is stated in the said letter dated 08-08-
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2014 that penalty order and notice of demand was received on 22-07-2014 which is not a correct statement in the midst of acknowledgment of receipt on 23-03-2006(see sub-clause (a) above) and several correspondence thereafter in the year 2006/2007 itself w.r.t. demand raised towards penalty levied by the AO u/s 271(1)(c).
Careful perusal of the entire spectrum of facts as culled out above leaves no iota of doubt in our mind that the assessee was duly served with notice of demand dated 17-03-2006 u/s 156 and also penalty order dated 17-03-2006 u/s 271(1)(c) by AO on 23-03-2006.The assessee was also fully aware of the demands raised against him pursuant to the penalty order dated 17-03-2006 way back in 2006/2007 itself and also that Revenue was vigorously pursuing the demand for effecting recovery from the assessee way back in 2006/2007 itself and the assessee was fully aware as well participated in the said proceedings. The claim of the assessee that the order of penalty and notice of demand both dated 17-03-2006 were received in the year 2014 is wrong. The claim of the assessee that the Revenue did not recover these demands for more than eight years and suddenly started recovery proceedings is also wrong. The claim of the assessee that it forgot to file appeal and the penalty order was lost is also not correct as if the assessee has lost the penalty order , it could have easily taken a copy of the same from revenue in 2006/2007 when Revenue was vigorously chasing its demand for effecting recovery. No such attempt was made by the assessee which clearly shows that a conscious decision was taken by the assessee not to file an appeal against the penalty order. It is pertinent to mention here that the assessee has filed chronology of events and it clearly reveals that against quantum assessment ,the assessee filed an appeal with learned CIT(A) wherein as against the additions of Rs.85,34,638/- as made by the AO, the learned CIT(A) granted relief only to the tune of Rs. 13,63,176/- vide orders dated 23-07-2004 while rest of the
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additions were upheld by learned CIT(A) and the appeal of the assessee on those issues stood dismissed. The assessee did not file an appeal with tribunal against appellate order dated 23-07-2004 passed by learned CIT(A),while the Revenue went in appeal before the tribunal against the learned CIT(A) appellate order . The AO levied penalty u/s 271(1)(c) on 17-03- 2006 which is almost two years after appellate order passed by learned CIT(A) on 23-07-2004. Thus, in our considered view keeping in view factual matrix of the case, the assessee has not shown any ‘sufficient cause’ for filing appeal late by more than 8 years i.e. late by 3111 days beyond time stipulated u/s 249(2) before learned CIT(A). We donot find any infirmity with the decision of learned CIT(A) in dismissing the appeal of the assessee by not condoning the delay in filing appeal beyond time stipulated u/s 249(2).We have observed that the assessee is making a desperate attempt to somehow gets its appeal admitted while there was a delay of more than 8 years in filing appeal late beyond time stipulated u/s 249(2) before learned CIT(A) which was not satisfactorily explained by the assessee and in absence of ‘sufficient cause’ shown by the assessee in late filing of appeal, rights which have accrued and got vested in favour of Revenue cannot be disturbed lightly as the Revenue equally has right to enjoy the fruits of success of litigation . It is also not correct to say that no prejudice will be caused to Revenue if the delay is condoned, we are afraid this contention of the assessee cannot be accepted as serious prejudice will be caused to Revenue if the delay is condoned in this case because rights which have accrued and got vested in favour of Revenue will get disturbed which cannot be disturbed lightly. The onus was on assessee to show that there existed sufficient cause which prevented assessee to file appeal within time limit prescribed u/s 249(2). Law of limitation is placed on statute to put an end to uncertainty as to the litigation and to avoid anarchy. If the litigants are allowed to come to courts beyond time prescribed by statute without any just, bonafide and reasonable cause explaining delay in filing an appeal , there will be no end to litigation and it will lead to an
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anarchy. Law of limitation is based on principles of public policy. It is well settled principle that courts will always lean towards the cause of substantial justice vis-a-vis technicalities but the assessee has to demonstrate its bonafide as to why courts should condone delay in filing appeal beyond prescribed time limits. The assessee relied upon case laws which are placed in case law paper book wherein delay in filing appeal was condoned by the courts/tribunal but the assessee only showed us the number of days delay which were condoned but the assessee did not refer to the fact that in those cases, the tax-payer had satisfied the Hon’ble Courts/tribunal about the ‘sufficient cause’ which prevented said tax-payers in filing appeal in time and those cases were decided on their own factual matrix which was before Hon’ble Courts/tribunal. We in the instant appeal before us refused to condone the aforesaid delay in filing appeal late by more than 8 years i.e. late by 3111 days with learned CIT(A) . Thus, the assessee fails in this appeal. We order accordingly.
In the result, appeal filed by the assessee in ITA No. 832/Mum/2016 for assessment year 2001-02 is dismissed.
Order pronounced in the open court on 29th September, 2017. आदेश क� घोषणा खुले �यायालय म� �दनांकः 29.09.2017 को क� गई ।
Sd/- sd/- (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER मुंबई Mumbai; �दनांक Dated 29.09.2017
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आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT(A)- concerned, Mumbai 4. आयकर आयु�त / CIT- Concerned, Mumbai �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai H” Bench 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai