SMT. SHASHI JAIN,LUDHIANA vs. ITO, W-VII(2), LUDHIANA

आदेश/Order PER ANNAPURNA GUPTA, A.M. : Both the captioned appeals relate to the same assessee and are against separate orders passed by the Commissioner of Income Tax (Appeals)-4, Ludhiana (in short CIT(A), dated 31.8.2016 & 15.12.2017 respectively .While the appeal in ITA No.362/Chd/2017 is against the order passed by the CIT(A) upholding the assessment framed u/s 144 r.w.s. 147 of the Income Tax Act, 1961 (in short ‘Act’), the appeal in ITA No.326/Chd/2018 is against the confirmation of penalty levied u/s 271(1)(c) of the Act on the addition so upheld. Since the issues involved in both the appeals were interrelated ,they were heard together and are being disposed off by a consolidated order.

Also since the outcome of the quantum appeal may have a

bearing on the adjudication of the penalty appeal, we shall first

be taking up the appeal filed in quantum proceedings in ITA

No.362/Chd/2017 .

(in short referred to as “AO”) reopened the case of the assessee

u/s 147 of the Act, on information that the assessee had received

gift of Rs.9,00,000/- from one Shri Subhash Duggal, who was

neither related to the assessee, nor was there any occasion for

gift. Notice u/s 148 of the Act was issued to the assessee, but

neither any return was filed in response to the same, nor were the

re-assessment proceedings attended by the assessee. Therefore,

ex-parte order u/s 144 of the Act was passed, making the

addition of the gift as income from undisclosed sources.

refused to admit the appeal since the appeal filed was delayed by

136 days and neither any application was filed by the assessee for

condoning the delay, nor any explanation given for the delay. The

CIT(A) further upheld the order of the A.O. on merits holding that

the addition made was justified since the assessee was unable to

prove the genuineness of the gift received. The CIT(A) also upheld

the validity of the order passed u/s 147 of the Act, stating that

there were justifiable reasons for the same since the assessee had

not responded to the enquiry letter issued vis-à-vis the impugned

issue, before reopening of the case and, therefore, the

Ld.CIT(Appeals) held, the A.O. was justified in believing that the

gift was not genuine.

appeal before us, raising the following grounds:

“1. That on the facts and the circumstances of the case, the Order of Learned CIT(A) is bad in law. 2. That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer in confirming the addition of Rs. 9,00,000/- made by him on arbitrary and estimated basis. 3. That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the addition made by the Assessing Officer on the basis of the fact that the appeal has been filed late with the Commissioner of Income Tax (Appeals) even when no opportunity has been given to the Appellant during the course of Appellate Proceedings to show the reasonable cause. 4. That, the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the addition made by the Assessing Officer even when there was non-application of mind by the Assessing Officer before opening the case of the Assessee under Section 147 of the Act. 5. That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the addition of the Assessing Officer even when the Assessee has furnished the documents relating to the identity and creditworthiness of the Donor of the Gift and the genuineness of the transaction during the course of Appellate Proceedings. 6. That the Appellant has not been given sufficient opportunity to present the reasonable cause for the delay in filing an appeal with the Worthy Commissioner of Income Tax (Appeals). 7. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.” 5. The appeal was initially heard on 24.7.2017 and dismissed

for non prosecution vide order dated 3.8.2017. Thereafter

Miscellaneous Application was filed by the assessee for recalling

the order which was allowed vide order passed in MA

No.11/Chd/2017 dated 1.3.2018. Thereafter the case was fixed

for hearing afresh.

present appeal was also delayed in filing by 106 days. The Ld.

counsel for assessee pointed out that an application requesting

condonation of delay had been filed alongwith the appeal referring

to the same. The Ld. counsel for assessee stated that the delay

was attributed to his part since by mistake and due to heavy work

with the counsel of the assessee the set of documents delivered by

the assessee to him for filing the appeal to the ITAT, i.e. i) Form

No.36 duly verified, ii) Fee for filing appeal before the I.T.A.T.

and, iii) Power of Attorney, were misplaced and were forgotten to

be filed to the Registry and it was only later on the Ld. counsel

for assessee detected his mistake and filed the appeal

immediately thereafter. The Ld. counsel for assessee contended

that the appeal set containing aforesaid documents had all been

prepared well before the due date for filing of the appeal. It was

pointed out that while the CIT(A)’s order passed on 31.8.2016 was

received in the first week of September and the appeal to the

I.T.A.T. was required to be filed within 60 days thereafter i.e. by

the end of October, 2016, the appeal set had been prepared by the

assessee by 26th October itself with the form No.36 duly verified

on 21.10.2016 by the assessee, the filing fee deposited on

25.10.2016 and the Power of Attorney duly attested from the

Notary on 26.10.2016 and it was only on account of the mistake

of the Ld. counsel for assessee that the delay occurred. Our

attention was drawn to the contents of the application for

condonation of delay as under:

“Sub: Condonation of Delay in filing an Appeal before the Hon'ble Bench Respected Sir/Madam, With due respect to the Hon'ble Members, it is humbly submitted that the Order of the Commissioner of Income Tax (Appeals) in the Case of the above said Assessee was passed on 31.08.2016 and the Order was received in the first week of September, 2016.

The Appeal against the above said Order was to be filed within 60 days from the Date of Receipt of the Order of CIT(A). Actually the Set of Documents for filing an Appeal, as per the prescribed norms, were prepared up till 26.10.2016. This can be verified from the following facts: 1. Form No. 36 was verified on 21.10.2016 by the Appellant; 2. The Fee for filing an Appeal before the Hon'ble ITAT was filed on 25.10.2016; and 3. The Power of Attorney was attested from the Notary Public on 26.10.2016. This Set of Documents was delivered by the Assessee to his Counsel on 26.10.2016, but this Set of Documents was not filed before the Hon'ble Bench in time due to the mistake of the Counsel of the Assessee. The Counsel of the Assessee has started his firm in the name of "Sharma Gaurav & Associates" in the year 2016 and is majorly in the Income Tax Practice. The Counsel was handling good number of Cases, at Assessment Level and Ld. CIT (Appeal) Level and Hon'ble ITAT Level, during the year 2016. The Counsel was working alone during the year 2016, without any helper. Due to the burden of work and documentation in various Cases, the Counsel misplaced the above said Set of Documents and forgot to file an Appeal in the case of above said Assessee. Now at the time of Proper Record Maintenance, the Counsel found the above said Set of Documents and is now filing the same before the Hon'ble Bench. It is humbly submitted to your Honour to condone the delay caused in filing the above said Appeal, as there is no mistake on the part of the above said Assessee but the mistake has been on the part of the Counsel of the Assessee.” 7. Further an affidavit of the Ld. counsel for assessee admitting

to his mistake on oath was also filed before us.

Bar to first justify the delay before the CIT(A) and why the act of

the CIT(A) in not admitting the appeal was not justified.

8.1 To this, the Ld. counsel for assessee contended that the

delay occurred for no fault of the assessee since all the facts

relating to the assessment and even the assessment order were

sent to the wrong address of the assessee which were, therefore,

never received by him and it was only when the penalty

proceedings were initiated on the addition made, the notice

relating to which were sent at the correct address of the assessee

that the assessee became aware of the fact that an order has been

passed and consequently approached the A.O. for the same and

on procuring the same immediately thereafter filed the appeal to

the CIT(A). Ld.Counsel for the assessee drew our attention to his

submissions filed before us in writing, narrating the sequence of

events in this regard as under:

“1. It is submitted that the Appellant had never received the Enquiry Notices, dated 12.03,2009 and 26.06.2009, issued by the Ld. AO before the opening of her Case under Section 148 of the Act. Further, the Appellant had not received Notice dated 30.03.2010, issued by the Ld. AO under Section 148 of the Act for initiating the Assessment Proceedings under Section 148 of the Act. Also the Appellant never received Notices, dated 07.12.2010 and 16.12,2010, issued by the Ld. AO during the course of above said Assessment Proceedings. 2. The reason for the non-receipt of any of the above said Notices was that the Address of the Appellant mentioned on the above said Notices is just "Rani Jhansi Road, Ludhiana". All the above said Notices are placed at Pages 4 to 8 of the Paper Book, Whereas the actual address of the Appellant was B- IX- 718, Gokul Road, Ludhiana and B-19-549/A, College Road, Civil Lines, Ludhiana. 3. Even the Assessment Order was not received by the Appellant due to the reason that the Address of the Appellant mentioned on the above said Order is just "Rani Jhansi Road, Ludhiana". 4. Actually the Appellant received a Notice dated 20.05.2011 from the Ld. AO initiating Penalty Proceedings under Section 271(1)(c) of the Act, which is placed at Page No.9 of the Paper Book. The address mentioned on this Notice is correct, against which the Appellant's Counsel appeared on 06.06.2011 The Copy of Letter filed by the Appellant's Counsel on 06.06,2011 is enclosed at Page No. 10 of the Paper Book. 5. Another Notice initiating Penalty Proceedings dated 30.05.2011 was received by the Appellant with correct address and is placed at Page No. 11 of the Paper Book. 6. The Appellant's Counsel filed his Reply dated 08.06.2011 which is placed at Page No. 12 of the Paper Book. 7. As per the Letters, dated 06.06.2011 and 08.06.2011, filed by the Appellant, it was submitted that no Notice or Assessment Order or Demand Notice or Penalty Notice had ever been received by the Appellant and therefore deposited an amount of Rs.100 for the inspection of the Assessment File

of the Appellant. The copy of the above Challan is placed at Page No, 13 of the Paper Book. On the basis of the above Challan, the Appellant received the above said Notices placed at Pages No. 4 to 8 of the Paper Book and the Assessment Order. 8. Even the Assessment Order under Section 144 r.w.s. 148 of the Act had been issued by the then Assessing Officer on 08.06.2011, as stamped and signed by the then Assessing Officer. Therefore, the above Assessment Order had been issued by the then Assessing Officer on the request of the Appellant on 08.06.2011. 9. Thereafter, on 14.06.2011, the Appellant filed an Appeal Fee of Rs. 1,000/- to file an Appeal against the above said Assessment Order before the Ld. CIT(A), Ludhiana. The Copy of above said Challan is placed at Page No. 14 of the Paper Book. 10. Finally, the Appeal before the First Appellate Authority was filed on 15.06.2011 and the Copy of Form of Acknowledgment dated 15.06.2011 with regard to the above said Appeal filing is placed at Page No. 15 of the Paper Book. 11. Again, the Appellant filed a Letter dated 17.06.2011 before the Ld. AO mentioning the above facts and requested for the stay of Penalty Proceedings the same is placed at Page No. 16 of the Paper Book. 8.2. Referring to the same, Ld.Counsel for the assessee pointed

out that the notices for the assessment proceedings and even the

assessment order was sent at the address ‘Rani Jhansi Road,

Ludhiana’, whereas the actual address of the assessee was B-IX-

718, Gokul Road, Ludhiana and B-19-549/A, College Road Civil

Lines, Ludhiana and, therefore, the assessment order was not

received by the assessee. It was further pointed out that the

notice initiating penalty proceedings was issued at the correct

address and on receiving the said notices, the assessee filed

letters stating that it had neither received any assessment order

or demand notice and also deposited an amount of Rs.100/- for

inspection of the assessment file of the assessee. In response to

this letter of the assessee, which was dated 8.6.2011, assessment

order was issued to the assessee as stamped and signed by the

then A.O. and immediately thereafter, on 14.6.2011, appeal was

filed to the CIT(A). Copies of all documents referred to by the

assessee were also filed before us. The Ld. counsel for assessee

stated that for the aforesaid reasons the appeal filed before the

CIT(A) was delayed. The Ld. counsel for assessee further stated

that no opportunity of hearing was given by the CIT(A) who had

passed the order refusing to admit the assessee’s appeal. At this

juncture, the Ld. counsel for assessee was asked at Bar whether

any application was filed before the CIT(A) explaining he delay

and seeking condonation of the same, to which, the Ld. counsel

for assessee replied in the negative. The Ld. counsel for assessee

also pointed out that the CIT(A) passed the order after five years

of filing of the appeal. Drawing our attention to this fact from the

body of the order of the CIT(A) which contained the details of date

of filing of the appeal on 15.6.2011 and date of the order on

31.8.2016, it was pointed out that the CIT(A) took five years to

refuse to admit the appeal and did not consider it necessary in

this period to even afford an opportunity of hearing to the

assessee to explain the reasons for delay in filing the appeal

before him.

made by the Ld. counsel for assessee as above.

the delay in filing of appeal before us, we find that the delay

could not be attributed to the assessee and was for no fault of the

assessee but was on account of the laxity on the part of the Ld.

counsel for assessee who has admitted to the same on oath. The

assessee, we find, has justifiable reasons for the delay. We

further note that by filing of appeal late no benefit is drawn by

the assessee, nor can it be said that if the delay is condoned any

loss or handicap is visited upon the Revenue. It can also not be

said that by late filing of the appeal by the assessee a vested

right stood created in favour of the Revenue which stood upset if

the delay is condoned. Accordingly, being satisfied by the

explanation of the assessee we hold that the delay of 106 days

has occurred in the peculiar facts and circumstances of the

aforesaid case for the reason beyond the control of the assessee.

The delay is accordingly, condoned.

notices for hearing in the assessment proceedings and the

assessment order was sent at the wrong address of the assessee

and that the notices issued for initiating penalty was sent at the

correct address of the assessee, we find merit in the contention of

the assessee that it became aware only on receiving penalty

notices, that an assessment order had been framed on him. We

have also noted that immediately thereafter the assessee

requested the AO to furnish a copy of the assessment order and

thereafter filed appeal to the CIT(A) within the stipulated time of

receiving the same. In view of the same ,we agree that the

assessee had justifiable reasons for the delay in filing of appeal

before the CIT(A). Also, we find, that the Ld.CIT(A) has refused to

admit the appeal of the assessee , without giving any opportunity

to the assessee to explain the reasons for the delay in filing of the

appeal, and this despite the fact that he himself took five years to

pass the order. This is nothing but a glaring example of violation

of all principles of natural justice. We, therefore, set aside the

order of the Ld.CIT(A) in refusing to admit the appeal of the

assessee. Consequently, having restored the appeal of the

assessee before the CIT(A),we hereby direct him to adjudicate the

entire appeal afresh after giving due opportunity of hearing to the assessee, and thereafter pass an order in accordance with law.

ITA No.326/Chd/2018:

Order pronounced in the Open Court.

Sd/- Sd/- संजय गग� अ�नपणा� ग�ता (ANNAPURNA GUPTA) (SANJAY GARG ) �याय�क सद�य/ Judicial Member लेखा सद�य/ Accountant Member �दनांक /Dated: 17th December, 2018 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :

आदेशानसार / By order, सहायक पंजीकार/ Assistant Registrar