FEM CARTING PVT. LTD.,SURAT vs. THE INCOME TAX OFFICER, WARD 1(2), SURAT

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ITA 2160/AHD/2013Status: DisposedITAT Ahmedabad09 October 2017AY 2005-064 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal. It held that the penalty was premature as the quantum addition on which it was based had been set aside for re-adjudication. The Tribunal found the assessee's explanation for the delay plausible, citing the son's illness and death.

What were the facts?

The assessee filed appeals against ex parte assessment and penalty orders with a delay of approximately four-and-a-half years. The CIT(A) dismissed the appeals due to insufficient reasons for the delay. The delay was attributed to the Managing Director's son's critical kidney illness and subsequent death.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) should be condoned. Whether the penalty under Section 271(1)(c) was imposable when the underlying addition was set aside.

Which sections of the Income-tax Act were involved?

Section 144,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CAMP AT SURAT

Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH

For Appellant: Shri Rasesh Shah
Hearing: 08/03/2017Pronounced: 09/03/2017

PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against the order of the ld.CIT(A)-1, Surat dated 20.6.2013 passed for the Asstt.Year 2005-06.

2.

Sole grievance of the assessee is that the ld.CIT(A) has erred in not condoning the delay in filing appeal before the

ITA No.2160/Ahd/2013 2

ld.CIT(A) and confirming the penalty amounting to Rs.14,10,367/-. 3. Brief facts of the case are that assessment order was passed under section 144 of the Income Tax Act, 1961 on 30.11.2007. The ld.AO has passed a penalty order on 29.5.2008. Both these orders were ex parte. The assessee has filed appeals against both these orders before the ld.CIT(A). There was a delay of roughly four-and-half years in filing both the appeals. The ld.CIT(A) has dismissed both the appeals on the ground that the assessee failed to disclose sufficient reasons for not filing the appeal in time. In the quantum appeal, the delay was almost four to five years, whereas in the penalty appeal, delay was roughly four-and- half years.

4.

The ld.counsel for the assessee at the very outset submitted that the assessee challenged the addition in appeal before the Tribunal in ITA No.2158/Ahd/2013. The Tribunal has condoned the delay in filing the appeal and restore the issue regarding the addition to the file of the ld.CIT(A). According to the ld.counsel for the assessee, the explanation of the assessee is identical for both the appeals. He has placed on record copy of the affidavit as well as copy of the application filed in both the appeals. The ld.DR was unable to controvert the contentions raised by the ld.counsel.

ITA No.2160/Ahd/2013 3

5.

We have duly considered rival contentions and gone through the record. We find that main reason assigned by the assessee for not prosecuting its income tax proceedings before the AO as well not filing the appeal in time was that son of Managing Director was suffering from kidney disease. He was under mental stress because both the kidneys of his 17 years old son Shri Dinesh Singh were failed and ultimately he died on 1.3.2013. During this period, he did not pay attention towards his business as well as these proceedings. This explanation of the assessee was considered by the ITAT as plausible one for not filing the appeal in time. In the present appeal, we wish to condone the delay for two reasons, viz. basis for visiting the assessee with penalty has been extinguished, because Tribunal has already set aside the issue and restored this issue to the file of the ld.CIT(A) for re-adjudication. We find that sub-clause (iii) of section 271(1)(c) provides 6. mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the

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addition made to the income of the assessee. Since addition on which penalty was imposed has been set aside to the file of the ld.CIT(A) for reconsideration, charging of penalty at this stage is premature. In view of the above, it is to be observed that penalty will not be imposable upon the assessee on merit unless quantum additions are being sustained. If we do not condone the delay, then we will be legalizing injustice on technical ground. The second reasons which prevailed upon us is that the Tribunal in the quantum proceedings was convinced with the explanation of the assessee, therefore, without any strong reason, we should not deviate ourselves from the conclusion of Coordinate Bench. For these two reasons, we condone the delay in fling the appeal before the ld.First Appellate Authority, and restore the issue involved in the appeal before the ld.CIT(A) for re- adjudication on merit.

7.

In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 9th March, 2017 at Surat Camp.

Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat Camp; Dated 09/03/2017

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