Loading judgment…
Facts
A survey was conducted in the assessee's business premises, during which the assessee agreed to offer additional income. This income was not reported in the subsequent income tax return. Consequently, the Assessing Officer (AO) passed an assessment order adding the income and initiated penalty proceedings, levying a penalty of Rs. 9,17,730/-. The assessee faced delays in filing appeals before the CIT(A) (270 days) and the ITAT (73 days), attributing it to staff oversight.
Held
The Tribunal noted that the assessee's staff received the penalty order and demand notice but did not bring it to the assessee's notice, leading to the delay. The CIT(A) had dismissed the appeal due to the delay without condonation. The Tribunal, considering the principles laid down by the Apex Court regarding condonation of delay, found that the delay was not deliberate or mala fide. The Tribunal condoned the delay of 270 days before the CIT(A) and 73 days before the Tribunal.
Key Issues
Whether the delay in filing the appeal before the CIT(A) and the Tribunal was justified, and if so, whether it should be condoned for substantial justice. Whether the penalty levied under Section 271(1)(c) was legally sustainable.
Sections Cited
271(1)(c), 250, 133A, 131, 148, 143(3), 147, 246A, 274, 253(5), 5 of The Limitation Act, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against order of CIT(A)-11, Bangalore dated 22.2.2024 for the AY 2012-13. The assessee has raised following grounds of appeal:
1. The appellate order passed by the learned Commissioner of Income- tax [Appeals] - 11, Bengaluru, under Section 250 of the Act dated 22/02/2024, in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case, may be quashed.
2. The learned Commissioner of Income-tax [Appeals] is not justified in not condoning the delay in filing the appeal preferred by the appellant without properly appreciating the fact that the reason for delay in filing the appeal is not intentional or negligence or deliberate but it is due to the reasons beyond the control of the appellant, on the facts and circumstances of the case.
3. The learned Commissioner of Income-tax [Appeals] ought to have condoned the delay in filing the appeal and thereby ought to have admitted the appeal and adjudicated on the grounds raised by the B.M. Manjunatha Gupta, Shivamogga Page 2 of 16 appellant in the interest of justice and equity, on the facts and circumstances of the case.
4. The appellant denies himself liable for penalty imposed by the learned assessing officer under section 274 r.w.s. 271 of the Act amounting to Rs. 9, 17,730/, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] failed to appreciate the fact that the notice for initiation of penalty issued under section 274 r.w.s. 271 (1)(c) is not in accordance with law and suffers from various irregularities, since the Notice of penalty is not clear under which limb of penalty the penalty proceeding shave been initiated whether for concealment of income Or furnishing of inaccurate particulars of income and consequently the learned Commissioner of Income tax [Appeals] ought to have cancelled the order of penalty, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] failed to appreciate that the penalty imposed under section 271 of the Act amounting to Rs. 9, 17,730/on an addition made of Rs. in the order of assessment, requires to be deleted since there is no concealment of income nor furnishing of inaccurate particulars of income, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] failed to appreciate the fact that there was no concealment nof furnishing of inaccurate particulars of income warranting levy of penalty under the provisions of section 271 of the Act, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] failed to appreciate the fact that the levy of penalty is not automatic and the learned assessing officer ought to have exercised his discretion before levying penalty, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] failed to appreciate that the penalty proceedings are independent with that of the assessment proceedings and ought to have verified the facts of the case independently, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] failed to appreciate the fact that the order passed by the learned assessing officer under section 271 [l][c] of the Income-tax Act, 1961 is without assumption of proper jurisdiction as the mandatory conditions for invoking the provisions of section 271 of the Act has not been complied with, on the facts and circumstances of the case.
Without prejudice to the above though not conceding for the sake of argument, the penalty levied is highly excessive and liable to be reduced substantially, on the facts and circumstances of the case.
The appellant craves leave to add, alter, amend, substitute or delete any or all of the grounds of appeal urged above.
B.M. Manjunatha Gupta, Shivamogga Page 3 of 16 13. For the above and other grounds to be urged during the course of hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.
1.1 There is a delay of 270 days in filing the appeal before the ld. CIT(A) and a delay of 73 days in filing the appeal before this Tribunal.
Facts of the case are that a survey u/s. 133A of the Income Tax Act, 1961 (in short “The Act”) was conducted in the case of M/s. Lakshmi Rice Mills, Gadikoppa Shimoga wherein the assessee is a partner. During the course of survey, the assessee agreed to offer additional income of Rs. 29,00,000/- in his hands. Nonetheless, this additional income was not reported in the income tax return subsequently filed. As a result; the AO passed the assessment order adding the said amount to the returned income and initiated penalty proceedings by issuing notice u/s. 271(1)(c) and passed penalty order on 13.06.2018 by levying the minimum penalty of Rs. 9,17,730/-. The reason quoted by the assessee for delay in filing the appeal before ld. CIT(A) is that his staff who received the penalty order and demand notice did not bring to his notice about such receipt and kept the same in file. The assessee came to know about such fact only in March, 2019 when the Income Tax Department officer called him to pay arrear of taxes. The ld. CIT(A) held that the Assessee cannot put the blame for the delay in filing of appeal in his case on the staff of the partnership firm. He further held that the assessee cannot claim that his staff was responsible for the delay since the details of such staff the name address and mobile no., their designation and responsibilities, was not at all mentioned in the reasons for condonation. It is therefore apparent that the reasons stated by the assessee are an afterthought and it is in the nature of self-serving statement. In managing these business ventures, the assessee also engages the services of Advocates and Chartered Accountants for its business operations and therefore the assessee has access to professionals to consult for his own tax matters.
B.M. Manjunatha Gupta, Shivamogga Page 4 of 16 Considering these facts, the ld. CIT(A) observed that it therefore cannot be said that the assessee is ignorant of the necessity of filing the appeal against the order passed by the AO for the relevant AYs, within the prescribed time limits and accordingly after quoting several judgements of Higher Courts, dismissed the appeal of the assessee without condoning the delay of 270 days in filing the appeal belatedly before him.
Aggrieved by the order of the ld. CIT(A), the assessee filed appeal before this Tribunal again belatedly by 96 days by filing an affidavit and a petition requesting for condonation of delay, which are reproduced as follows:
3.1 Hence, the ld. A.R for the assessee humbly prayed before this Tribunal that that if the delay in filing the appeal before the learned Commissioner of Income-tax (Appeals) of about 270 days as well as delay in filing appeal before this Tribunal by 96 days are not condoned the Assessee would be put to great hardship and irreparable injury and on the other hand no hardship or injury would be caused to the revenue if condonation of delay is allowed. Wherefore, he humbly prayed before us to condone the delay in filing the appeals before the learned Commissioner of Income-tax (Appeals) of about 270 days and direct the learned Commissioner of Income-tax [Appeals] to condone the delay and hear the same on merits of the matter for the advancement of substantial cause of justice. Further, he requested to condone the delay of 96 days in filing the appeals before this Tribunal as explained in his petition for condonation of delay as above.
The ld. D.R. submitted that the appeal may be dismissed in limine without adjudicating the same as the delay was substantial
5. We have heard the rival submissions and perused the materials available on record. The contention of the ld. A.R. that the assessee has no malafide intention in filing the appeal belatedly before ld. CIT(A). It is to be noted that u/s 253(5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeals within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on the part of the assessee in not filing these appeal within the prescribed time. 5.1 However, appeal of the assessee for this assessment year was dismissed, wherein he has not condoned the delay in filing theis appeal before him. The ld. A.R. pleaded before us that the Tribunal may also condone the delay in filing the appeal before ld. CIT(A) and remitted the matter to the file of ld. CIT(A) since the order passed by Ld. CIT(A) is dismissed without condoning the delay. 5.2 We have gone through the reasons explained by the assessee for filing the appeal belatedly before ld. CIT(A) and before us. The assessee has submitted that there is also a delay of 96 days in filing the appeal before this Tribunal. The application for condonation of delay is also filed praying to condone the delay in filing appeal about 96 days. On going through the affidavit the assessee has sworn stating that the order passed by the ld. CIT(A)-11, Bangalore was on dated 2.2.2024. While going through the application for condonation of delay, the assessee has stated that the order passed by the ld. CIT(A) was received on 2.2.2024 and therefore, the appeal before the Tribunal ought to have filed on or before 2.4.2024 resulting in delay in filing of the present appeal of about 96 days.
B.M. Manjunatha Gupta, Shivamogga Page 14 of 16 5.3 With regard to condonation of delay, we find that the ld. CIT(A) has actually passed an order on 22.2.2024 and not on 2.2.2024 as stated in the affidavit as well as application for condonation of delay. If we consider the same as the receipt of order also, then there will be a delay of 73 days in filing the appeal before this Tribunal and not 96 days as claimed by the assessee. 5.4 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. 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. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
5.5 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. Therefore, in our opinion, by preferring the substantial justice, the delay of 133 days has to be condoned. 5.6 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”. 5.7 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. 5.8 The Madras High Court in the case of Sreenivas Charitable Trust (280 ITR 357) (Mad.) held that no hard and fast rule can be laid B.M. Manjunatha Gupta, Shivamogga Page 16 of 16 down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal construction. 5.9 In view of the above, we are condoning the delay of 270 days in filing the appeals before ld. CIT(A) belatedly and also 73 days delay in filing the appeal before this Tribunal and we remit the entire issue in dispute in this appeal to the file of ld. CIT(A) to consider it on merit and to decide afresh in accordance with law after giving a fair opportunity of hearing to the assessee and decide accordingly.