SRI. GOVINDACHARY vs. D.C.I.T,

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH “A” BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. Nos.1809 & 1810/Bang/2013 (Assessment Years : 2004-05 & 2005-06) Shri Govindachary, No.17/1, Amblipura Village, Agara Post, Bellandur Gate, Varthr Hobli, Sarjapur Road, Bangalore-560 102 . …. Appellant. PAN AGBPG 9307M Vs. Dy. Commissioner of Income Tax, Central Circle 1(1), Bangalore. ….. Respondent. Appellant By : Shri G.S. Prashanth. Respondent By : Shri G.R. Reddy, CIT (D.R) Date of Hearing : 2.7.2015. Date of Pronouncement : 10.7.2015. O R D E R Per Shri Jason P Boaz, A.M. : These appeals by the assessee are directed against the combined orders of the Commissioner of Income Tax (Appeals)-VI, Bangalore dt.25.10.2013 for Assessment Years 2004-05 & 2005-06. 2. The facts of the case, in brief, are as under : 2.1 A search action under section 132 of the Income Tax Act, 1961 (herein after referred to as 'the Act') was conducted by the Income Tax Department in the case of M/s. Corporate Leisure & Property Development Pvt. Ltd. and connected persons on 26.8.2009. The assessments pursuant to the search for the impugned assessment years 2004-05 & 2005-06

2 ITA Nos.1809 & 1810/Bang/2013 were concluded by orders under section 143(3) r.w.s. 153A of the Act vide orders dt.30.8.2011 : Assessment Year Income Returned (Rs.) Income Assessed (Rs.) Date of order 2004-05 7,33,350 63,65,844 30.8.2011 2005-06 67,62,478 3,39,06,138 30.8.2011

2.2 Aggrieved by the aforesaid orders of assessment for Assessment Years 2004-05 and 2005-06, both dt.30.8.2011, the assessee filed these appeals before the CIT (Appeals) – VI, Bangalore on 13.12.2012; belatedly by 439 days as per the time prescribed under Section 249 of the Act. The learned CIT (Appeals) dismissed the assessee's appeal by way of a combined order dt.25.10.2013; since the learned CIT (Appeals) was of the view that the assessee had not established that there was sufficient cause for the delay of 439 days in filing the appeals for these two assessment years in time. In paras 2 to 6 of the impugned order for Assessment Years 2004-05 & 2005-06, the learned CIT (Appeals) has, considered and decided the matter of condonation of delay of 439 days in filing these appeals as under :- “ 2. The appeals for both the Assessment Years were filed on 13.12.2012, delayed by more than a year as per time prescribed u/s 249 of Income Tax Act. There is a delay of 439 days. The appeals are backed by an affidavit filed by the appellant’s Authorized Representative stating that :-

“Appeal before the Honourable Commissioner of Income tax (Appeals) was to be filed on or before 30-09- 2011, since the order of the Learned DCIT was received by the petitioner on 31-08-2011. The appeal is for Assessment Year 2004-05/2005-06. The appeal has been filed by me on 13-12-2012.

I was suffering from illness, was hospitalized and was advised to be on rest. I was mentally & emotionally down and I was the only decision maker to decide on the important matters. Further, the issues involved in the appeal were critical, hence I was not able to decide on the matters of appeal due to illness. Now when I have understood the implications clearly, and decided to appeal, then I am coming forward to file an appeal before your Honour. The delay in submission of appeal is beyond my control and not an intentional or a willful act. The assessments are also very high pitched and huge tax liability has been determined by the Assessing Officer, hence it has huge tax implications. Based on the above reasons I am requesting the Honourable Commissioner of Income Tax (Appeals) to admit the appeal by condoning the delay and natural justice be rendered.”

3 ITA Nos.1809 & 1810/Bang/2013 The appeals for both the years in question are being taken up together for sake of brevity and convenience. Before deciding the case on merits, the appellant’s request for condonation of delay is considered.

“We are of the view that, due to the illness of the assessee and the treatment he underwent during the period of delay in filing the appeals, he was prevented by sufficient cause from filing the said appeals in time. Further, we are of the opinion that if the delay of 122 days in filing the said four appeals is condoned and the appeals are admitted for adjudication on merits of the case, there shall be no loss to revenue as legitimate taxes payable in accordance with law alone will be collected. In this view of the matter, we are of the considered opinion that this is a fit case for condonation of the delay of 122 days in filing the appeals for Assessment Years 2006-07 to 2009-10 against the orders of the Assessing Officer dt. 30.8.2011, and do so. It is ordered accordingly.” 4. I find that in the case of A.Y. 2006-07 to 2009-10 for which the order of Hon’ble ITAT relates to, the appeals were filed on 31.01.2012, the assessment order being dated 30.08.2011 in those cases also and there was delay of 122 days. As against this, for the present appeals, i.e. A.Y. 2004-05 to 2005-06, the delay is much more, even beyond one year, actually 439 days. In fact, the appeals have been filed only on 13.12.2012. The appellant is unable to explain this further delay beyond 31.01.2012 (as in cases of appeals covered by the ITAT Order) by any illness or hospitalization for the entire period of delay. Moreover, it is seen from record that before the Assessing Officer, in the course of penalty proceedings initiated u/s 271(1)(c), the appellant vide reply dated 09.09.2011 in respect of both the years in question has stated that:-

4 ITA Nos.1809 & 1810/Bang/2013 “Subject: Notice u/s 274 read with Section 271 Dated 30th August, 2011 – Our reply thereon Reference No : DCIT/CC-1(1)/11-12 Assessee: GOVINDACHARY Assessment Year : 2005-06 PAN NO. AGBPG 9307M

In connection with the above I have received an Assessment order along with the Notice U/s. 274 read with Section 271 of the Income Tax Act, 1961 to show cause why an order imposing penalty should not be passed U/s. 271(1)(C) of the IT Act, 1961. The additions to the returned income were accepted by me in order to buy peace and to co-operate with the department for the early closure of assessment proceedings. Further I had to declare an additional income as per the noting mentioned in the show cause notice. I could not verify and substantiate the notings for want of time and I could not access the supporting documents in time and also could not reconcile and explain the notings due to time factor. Hence I came forward voluntarily to offer the income for taxation. I wish to state that, I came forward voluntarily to offer such additional income in good faith in order to avoid any kind of litigations and also to close the assessment proceedings at the earliest possible time so that I can concentrate on my business which at present I am unable to do so. Further I have already justified with the detailed reply submitted to you at the time of assessment proceedings substantiating that there is no concealment of income and the above such offering was made only in order to buy peace and to co-operate with the assessment proceedings. All the incomes offered for tax was only because of want of supporting which could not be furnished in time which is due to lack of time or time factor. I was made to accept the above offering of income to tax by basing reliance on the documentary evidences which was against me. Further few transactions were old and due to non creation of nexus between the receipts/payments/documents/supporting/oral communications/practical circumstances or situations, finally it led to acceptance and was offered as income. I made sincere attempt to analyse all the noting listed in the show cause notice issued by the authorities and based on which I voluntarily offered the income to tax. I reiterate that the above such offering of income to tax was only to buy peace and to co-operate with the department to close the proceedings and to avoid protracted litigation so as to concentrate on my business and also in good faith that the assessment authorities would not levy penalty. In the case of CIT Vs. Harkaran Das Ved Pal [(2009) 177 TAXMAN 0398 (Delhi)] it was held by the honourable Delhi high Court in Para 23 thereof that “We have already noted that because the assessee had surrendered the amount bonafide and for the purposes of buying peace and avoiding protracted litigation, it did not follow that there was a determination of undisclosed income in the terms stipulated in Section 158 BC or 158 BB of the said Act. Once this is recognized, there is no question of imposing a penalty under section 158 BFA of the said Act. So, though we hold that the Tribunal was not required to consider the question of concealment of income and/or furnishing of inaccurate particulars of income, the Tribunal was correct in arriving at the conclusion in the earlier part of its decision as noted above that there was no evidence relatable to the

5 ITA Nos.1809 & 1810/Bang/2013 search de hors the surrender made by the assessee and, therefore the penalty which had been imposed by the Assessing Officer under Section 158 BFA (2) was liable to be cancelled.” For the facts mentioned above and for the fact that I have cooperated in all the assessment proceedings and that I came forward voluntarily and in good faith accepted to offer such income as an additions to the returned income and in order to buy peace and to close the proceedings smoothly and on the assurance that I would not be levied penalty, I accepted to offer such additional income to tax. Hence I would request your good self to kindly consider all my above submissions and please do not levy any penalty and please drop the penalty proceedings as initiated in the above referred notice so that it will help me to concentrate on my business. I hope you would oblige my request favourably.” 5. It is clear from the above, that the appellant has accepted the additions made by the Assessing Officer and requested for dropping of penalty proceedings accordingly. It is also on record that the Assessing Officer has not levied any penalty u/s 271(1)(c) in this case, on the basis of the appellant’s submissions. This is clearly in the knowledge of the appellant and subsequently, after having taken the stand that penalty should not be levied on account of his voluntary acceptance to the additions made for which ‘no appeal has been filed’ and after exhausting the time for levying of penalty, the appellant has come up with the present appeal, way beyond the time allowed u/s 249 of Income Tax Act. This act of the appellant is not a bonafide one and the delay in such circumstances cannot be considered to be one in good faith. This inordinate delay in filing the appeal by 439 days and under such circumstances of the case, is not condoned as not being a bonafide delay in filing the said appeals and cannot be attributable to any illness on part of the appellant as claimed. The submissions made by the appellant on merit are not being considered. 6. In the result, the appeals are dismissed as not maintainable.” 3.1 Aggrieved by the combined orders of the CIT (Appeals) – VI, Bangalore for Assessment Years 2004-05 and 2005-06, dt.25.10.2013 the assessee has preferred these appeals before the Tribunal raising almost identical grounds for both assessment years. We, therefore, extract hereunder the grounds raised for Assessment Year 2004-05 :-

6 ITA Nos.1809 & 1810/Bang/2013 “1. The order of the authorities below in so far as it is against the appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the appellant’s case. 2. The appellant denies himself to be assessed on a total income of Rs.63,65,844 as against the Rs.7,33,350 as declared by the appellant. 3. The learned CIT (Appeals) erred in not condoning the delay of 439 days in filing the appeal under the facts and circumstances of the case. 4. The learned CIT (Appeals) erred in not adjudicating the matter on merits under the facts and circumstances of the case. 5. The assessment is bad in law as the mandatory conditions to invoke the jurisdiction under Section 153A of the Act did not exist, or havingnot been complied with and consequently the assessment made is bad in law for requisite jurisdiction. 6. The authorities below erred in not working out the ‘Peak Credit’ for the additions made under the facts and circumstances of the case. 7. The authorities below erred in not granting the benefit of ‘Telescoping’ to the appellant under the facts and circumstances of the case. 8. The appellant denies himself liable to be levied interest under Section 234B of the Act and further the computation of interest under Section 234B was not provided to the appellant as regard to the rate, period and method of calculation of interest under the facts and circumstances of the case. The appellant expressly urges that the period of levy of interest is not in accordance with section 234B of the Act. 9. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 10. For the above and other grounds tht may be urged at the time of the hearing, the appellant prays your Honour to consider the facts and circumstances of the case and justice be rendered.” 3.2.1 Before us, at the outset, the learned Authorised Representative was heard in support of the grounds raised at S.No.3 (supra) i.e. in respect of the non-condonation of delay of 439 days in filing the appeals for Assessment Years 2004-05 and 2005-06 before the CIT (Appeals). As per the submissions put forth and the Affidavits filed before the learned CIT (Appeals) for the condonation of delay of 439 days in filing the appeal, the learned Authorised Representative contended that the assessee was under ill, was hospitalised and under constant treatment during the period in while the delay in filing the appeals for Assessment Years 2004-05 and 2005-06. It is submitted that being unwell during this period, the delay in filing the aforesaid appeals for Assessment Years 2004-05 and 2005-06 were due to reasons beyond the assessee's control and constituted sufficient and reasonable cause.

7 ITA Nos.1809 & 1810/Bang/2013 3.2.2 The learned Authorised Representative further submitted that the learned CIT (Appeals) had failed to appreciate the assessee's case properly, as no rational person would deliberately delay the filing of appeals whereby his interest would be jeopardized, especially when as in the case on hand the demands raised was large, viz. Rs.36,83,021 for Assessment Year 2004-05 and Rs.1,54,40,330 for Assessment Year 2005-06. It was further submitted that if the assessee's application for condonation of delay of 439 days in filing these two appeals were rejected, the assessee would be put to great hardship. It is also submitted that even though the assessee had agreed to the additions made by the Assessing Officer in the order of assessment for Assessment Years 2004-05 and 2005-06, such action cannot take away the assessee's statutory right to appeal as provided in law to the assessee. It is also submitted that the action of the Assessing Officer in dropping the penalty proceedings on the prayers of the assessee is an independent and separate proceeding and the Assessing Officer should have independently applied his mind to the facts of the case and not taken into account only the fact that the assessee had not preferred appeals against the additions to income which were agreed to in assessment proceedings. 3.2.3 In support of the assessee's plea for condonation of delay of 439 days in filing the appeals before the learned CIT (Appeals) for Assessment Years 2004-05 and 2005-06, the learned Authorised Representative placed reliance on the following judicial pronouncements of various Courts and Tribunals :- i. Collector, Land Acquisition V MST Katiji (167 ITR 471) (SC) ii. CIT V Sanmac Motor Finances Ltd. (322 ITR 308) (Mad) iii. CIT V ISRO Satellite Centre (ITA No.532/2008 dt.28.12.2011) of the Karnataka High Court. iv. Raghavendra Constructions V ITO (ITA No.425/Bang/2012 dt.14.12.2012) v. Shakuntala Hegde (L/R of R.K. Hegde) V ACIT in ITA No.2785/Bang/2004. vi. vi) Improvement Trust Ludhiana V Uijagar Singh & Others (Civil Appeal No.2395 of 2008).

3.2.4 The learned Authorised Representative submitted that the assessee also placed reliance on the order of the co-ordinate bench in the assessee's own case in ITA No.116 to 119/Bang/2013 dt.30.4.2013 for Assessment Years 2006-07 to 2009-10 wherein the Tribunal

8 ITA Nos.1809 & 1810/Bang/2013 had condoned the delay of 122 days in filing of the appeals before the learned CIT (Appeals) due to the illness of the assessee, hospitalization and the treatment he underwent during the entire period of delay in filing the appeals. It is prayed that since the circumstances of illness of the assessee prevailing on the same for the impugned assessment years 2004-05 and 2005- 06, the delay of 439 days in filing the appeals for these two years be condoned and the matter be restored to the file of the learned CIT (Appeals) with directions to dispose off the said appeals on merits. 3.3 Per contra, the learned Departmental Representative vehemently opposed the assessee's plea for condonation of the delay of 439 days in filing the appeals for Assessment Years 2004-05 and 2005-06 submitting that the delay of 439 days should not be condoned in a routine manner. The learned Departmental Representative pointed out that while the delay of 122 days was treated as unexplained by the Tribunal order in the assessee's case for Assessment Years 2006-07 to 2009-10 (supra), on the basis of the assessee's illness, treatment, including bed rest; for Assessment Years 2004-05 and 2005-06 the learned CIT (Appeals) observed that the assessee is unable to explain and prove with documentary evidence, the delay beyond the period of 122 days by any illness, treatment, hospitalization. The learned Departmental Representative submitted that in view of the above, the assessee’s appeals ought to be dismissed at the threshold by not condoning the delay of 439 days in filing these appeals. 3.4.1 We have heard both parties and perused and carefully considered the material on record, including the judicial decisions cited. The Hon'ble Apex Court in the case of Vedabai alias Vaijayanatabai Baburao Patil V Shantaram Baburao Patil & Ors (2002) 253 ITR 798 has held that while exercising discretion, distinction should be made between a case where the delay is inordinate and a case where the delay is of a few days, which may deserve a liberal approach. The exercise of discretion, their Lordships observed, would depend on the facts of each case and no hard or fast rule can be laid down in this regard. In the above cited case, the application for condonation of delay in filing the appeal was 7 days. In the case of Ganga Sahai Ram Swarup V ITAT (2004) 271 ITR 512 (All) the delay was of 12 days in filing the appeal and it was held therein that a liberal view ought to be taken, as there was a delay of

9 ITA Nos.1809 & 1810/Bang/2013 only a very short period. Even in the land mark decision on the issue of condonation, Collector, Land Acquisition V MST Katiji (supra), cited by the assessee, wherein the Hon'ble Apex Court laid down that courts should have a liberal and practical approach in exercising its discretionary powers of condonation of delay, the delay was of 4 days. 3.4.2 In the case on hand, the undisputed facts on record show that the orders of assessment for the six assessment years 2004-05 to 2009-10 were all concluded vide orders dt.30.8.2011. In respect of four assessment years 2006-07 to 2009-10, the assessee furnished the appeals before the CIT (Appeals) on 31.1.2012 and thereby there was a delay of 122 days. The delay of 122 days in filing the appeals for Assessment Years 2006-07 to 2009- 10 was condoned by a co-ordinate bench of this Tribunal vide order in ITA No.116 to 119/Bang/2013 on the grounds of the assessee's illness and treatment, and rest etc for the period of delay in filing the appeal was accompanied by medical certificates, examination certificates evidencing the same. 3.4.3 In respect of the Assessment Years 2004-05 and 2005-06, even though the orders of assessment were passed vide orders dt.30.8.2011; which was the very same date on which the orders of assessment for Assessment Years 2006-07 to 2009-10 were also concluded; the assessee did not file the appeals before the learned CIT (Appeals) for these two years along with the appeals for Assessment Years 2006-07 to 2009-10. Rather the assessee filed the appeals for Assessment Years 2004-05 and 2005-06 before the CIT (Appeals) only on 31.12.2012; thereby leading to a delay of 439 days in filing these appeals. From a perusal and careful appreciation of the Affidavits dt.13.12.2012 filed before learned CIT (Appeals) for both these two years, we are of the opinion that the assessee has not been able to explain the further delay in filing these appeals beyond the period of 122 days i.e. on 31.1.2012, the date of which the appeals for Assessment Years 2006-07 to 2009-10 were filed before the CIT (Appeals). We are in agreement with the CIT (Appeals)’s observation that the assessee has not been able to explain the delay of the remaining 317 days (viz. 439 less 122) from 31.1.2012 to 13.12.2012, the day on which the appeals for Assessment Years 2004-05 and 2005-06 were filed before the learned CIT (Appeals) by documentary proof of any illness or hospitalization for the period of delay.

10 ITA Nos.1809 & 1810/Bang/2013 3.4.4 The learned CIT (Appeals) in the impugned order at paras 4 & 5 of her order observed that for Assessment Years 2004-05 and 2005-06, the assessee had accepted all the additions/disallowances made by the assessee and pleaded for dropping of penalty proceedings initiated under Section 271(1)(c) of the Act. The pleadings of the assessee in his letter dt.9.9.2011 for both assessment years has been extracted at para 2.2 of this order (supra). It is also a matter of record that the Assessing Officer has not levied penalty under Section 271(1)(c) of the Act, apparently only in view of the assessee pleadings for dropping of penalty proceedings since he had accepted the additions made to his income for these two years by the Assessing Officer. In the factual matrix of the case, we agree with the observation of the learned CIT (Appeals) that it is only subsequent to the dropping of penalty proceedings by the Assessing Officer, in view of the assessee's stand that penalty should not be levied on account of his voluntary acceptance of the additions made for which no appeal has been filed, and after exhausting the period for levy of the said penalty, the assessee filed the appeals for Assessment Years 2004-05 and 2005-06, 439 days belatedly, beyond the time permitted under Section 249 of the Act. In our view, the learned CIT (Appeals) has clearly brought out the fact that decision of the assessee not to file the appeals of Assessment Years 2004-05 and 2005-06 on 31.1.2012, when he filed the appeals in his own case for Assessment Years 2006-07 to 2009-10, was a conscious one, made with the intention to get the penalty proceedings initiated under Section 271(1)(c) of the Act dropped by the Assessing Officer by pleading that he had voluntarily accepted the additions made for which he had not filed appeals. 3.4.5 In our view, the assessee's averments in the Affidavits for condonation of delay filed before the learned CIT (Appeals) and the submissions filed are merely self serving statements, the veracity of which are not backed up or established by any documentary proof of illness for the period of delay beyond 122 days, as claimed. In the written submissions filed before CIT (Appeals), the assessee vide letter dt.12.7.2013, has pleaded in para 8 thereof that appeals were not filed because of wrong professional advise. There is nothing brought on record to prove wrong professional advise and as to how and when correct legal advise to file appeal was given. Apart from the above, the stand taken in the written submissions are

11 ITA Nos.1809 & 1810/Bang/2013 contrary to the Affidavit for condonation of delay filed by the assessee before CIT (Appeals) which are extracted in para 2 of CIT (Appeals) order. The assessee in its averments has not made out of a case that there was reasonable cause which being beyond the control of the assessee, that prevented him from filing the appeals in time before the Tribunal. The delay of 439 days cannot be condoned merely because the assessee's case calls for sympathy or merely out of benevolence. For the exercise of discretion in condoning the delay, it must be established beyond the shadow of doubt that the assessee was diligent and was not guilty of negligence on his part. Sufficient cause as contemplated in the limitation provisions must be a cause which is beyond the control of the party. In the case on hand, the factual matrix, in our view, clearly establishes that the delay was not on account of the assessee's illness, but due to a conscious decision on the part of the assessee to file the appeals belatedly. Therefore in our opinion, in the factual matrix of this case there exists no sufficient and reasonable cause for the inordinate delay of 439 days in filing the appeals for Assessment Years 2004-05 and 2005-06 by the assessee. In coming to this finding, we draw support from the decisions of the Hon'ble Apex Court in the case of MST Katiji (supra), Vedabai alias Vaijayanatabai Baburao Patil (supra), of the Hon'ble Allahabad High Court in the case of Ganga Sahai Ram Swaroop (supra) and of the ITAT, Chennai Bench (Third Member) in the case of JCIT V Tractors & Farm Equipments Ltd. (2007) 104 ITD 149 (Chennai) (TM). The cases cited by the assessee of various courts and of the co-ordinate benches of this Tribunal (supra), have been duly considered and with due respects we find the factual matrix different therein. We have considered the factual matrix of this case to reach the finding that there existed no sufficient and reasonable cause for the inordinate delay of 439 days in filing the appeals as the assessee has also not been able to establish that he was prevented by sufficient causes beyond his control from filing these appeals on time. In this view of the matter, we are of the view that, in the case on hand, the cause of substantial justice would not be served by condoning the inordinate delay of 439 days in filing these appeals for which no documentary proof of illness, treatment, hospitalization, etc. for the period in question have been given. We accordingly reject these petitions for condonation of delay for Assessment Years 2004-05

12 ITA Nos.1809 & 1810/Bang/2013 and 2005-06. Consequently, the assessee's appeals for Assessment Years 2004-05 and 2005- 06 are not admitted for adjudication on merits and are dismissed in limine. 4. In the result, the assessee's appeals for Assessment Years 2004-05 and 2005-06 are dismissed. Order pronounced in the open court on 10th July, 2015.

Sd/- Sd/- (N.V. VASUDEVAN) (JASON P BOAZ) Judicial Member Accountant Member *Reddy gp

Copy to : 1. Appellant 2. Respondent 3. C.I.T. 4. CIT(A) 5. DR, - A Bench. 6. Guard File. (True copy) By Order

Asst. Registrar, ITAT, Bangalore