2022 (2) TMI 1308 - HC - Income Tax

Condonation of delay - delay of about 8 to 9 years in filing the appeals before the CIT (A) - Penalty u/s 271(1)(c) - HELD THAT - Appellant has received three penalty orders for the three assessment years as mentioned earlier. It is appellant s case that to buy peace and put an end to the dispute they paid the penalty amount as well. That is not disputed. One fine day almost 8 years later sometime in 2013 appellant received a notice calling upon to show cause as to why prosecution should not be initiated against appellant. Surprised with the turn of events appellant decided to challenge the penalty orders. The challenge was rejected by CIT(A) saying that the appeals have been filed with much delay. CIT(A) overlooked one factor that the prosecution itself has been launched 8 or 9 years after the penalty amount was paid by appellant. If the department feels that they can do this after 8 or 9 years delay in our view they must apply the same yardsticks for an assessee. We condone the delay in filing the appeals. CIT(A) is directed to consider the appeals filed by appellant in accordance with law and dispose the same within 12 weeks from the date of this order is uploaded. Appellant will forward a copy of the appeals filed alongwith the copy of this order to CIT(A) within one week of this order being uploaded. CIT(A) shall grant a personal hearing to appellant and intimate date and time of personal hearing at least 7 days in advance.

Summary

Issues:
Delay in filing appeals against penalty orders under Section 271(1)(c) of the Income Tax Act for A.Y. 1999-2000, 2001-2002, and 2002-2003.

Analysis:
The High Court addressed the issue of delay in filing appeals against penalty orders under Section 271(1)(c) of the Income Tax Act for three assessment years. The Income Tax Appellate Tribunal (ITAT) had rejected the application for condonation of delay due to the significant lapse of time between the penalty orders and the filing of appeals. However, the Court noted that the appellant had paid the penalty amount to resolve the dispute and only challenged the penalty orders after receiving a notice for potential prosecution almost 8 years later. The Court emphasized that the department's delay in initiating prosecution after the penalty was paid should be considered when evaluating the delay in filing appeals by the assessee.

The Court found that the circumstances warranted condonation of the delay in filing the appeals. Consequently, the ITAT's order rejecting the condonation application was quashed and set aside. Additionally, the order of the Commissioner of Income Tax (Appeals) rejecting the appeals was also set aside. The Commissioner of Income Tax (Appeals) was directed to consider the appeals filed by the appellant in accordance with the law and dispose of them within 12 weeks from the date of the Court's order. The appellant was instructed to provide a copy of the appeals along with the Court's order to the Commissioner of Income Tax (Appeals) within one week of the order being uploaded. Furthermore, the Commissioner of Income Tax (Appeals) was required to grant a personal hearing to the appellant with advance notice and provide an opportunity for the appellant to address any judgments or orders relied upon by the respondent.

Ultimately, the appeal was disposed of with no order as to costs, indicating that the Court found in favor of the appellant regarding the delay in filing the appeals against the penalty orders under Section 271(1)(c) of the Income Tax Act for the specified assessment years.