2017 (3) TMI 1935 - AT - Income Tax

Condonation of delay filing appeal before CIT(A) - assessee filed the appeal before the CIT (Appeals) after a delay of 1460 days - assessee has submitted that this is a case of wrong advise and the assessee filed the appeal against the assessment order after the penalty u/s 271(1)(c) was levied - as submitted that the assessee accepted the addition / disallowance on the condition that no penalty would be levied as the assessee did not want his business effected due to involvement of multiple litigation but as assessee did not challenge the assessment order however subsequently the AO levied the penalty u/s 271(1)(c) HELD THAT - It is the case of the assessee that since the assessee accepted the proposed addition made by the Assessing Officer with the belief that no penalty u/s 271(1)(c) will be levied by the A.O. Assessee decided not to challenge the assessment order. However when the Assessing Officer levied the penalty under Section 271(1)(c) of the Act the assessee challenged its decision and then filed the appeal. This change of decision based on the order passed by the AO u/s 271(1)( c ) cannot be a reasonable explanation for such inordinate delay of 1468 days in filing the appeal. It is a clear case that the assessee decided not to file the appeal against the assessment order till the penalty u/s 271(1)(c) was passed Thus the assessee never wanted to challenge the assessment order and therefore there is no reason/cause which has prevented the assessee from filing the appeal before the CIT (Appeals). The only explanation of the assessee is that the assessee consented to the addition made in the assessment order with the condition that the AO would not levy any penalty however such a condition cannot be imposed on the assessment authorities and therefore it cannot be taken as a reasonable cause for not filing the appeal before the CIT (Appeals). When the assessee was not prevented by any circumstances or reasons which were beyond the control of the assessee to file the appeal then the reason explained by the assessee for such an inordinate delay cannot be considered as prudent or bona fide or reasonable cause for not filing the appeal. The decision in the appeal against the penalty order will not change the character of the reasons explained by the assessee. Accordingly no interference is called for in the impugned order of the CIT (Appeals) for not condoning the delay. Appeal of assessee dismissed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Merits of the case if the delay is condoned.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:

The primary issue in this case is the condonation of a significant delay of 1460 days in filing the appeal by the assessee before the Commissioner of Income Tax (Appeals) [CIT (Appeals)]. The assessee argued that the delay was due to wrong advice and a bona fide belief that no penalty would be levied under Section 271(1)(c) of the Income Tax Act, 1961. The assessee claimed that they accepted the addition/disallowance on the condition that no penalty would be levied to avoid multiple litigations affecting their business. However, when the penalty was eventually levied, they were advised to challenge the assessment order along with the penalty order, leading to the delay.

The Tribunal considered the rival submissions and relevant material on record. The Tribunal noted that the assessee’s explanation for the delay was not reasonable or bona fide. The assessee's decision not to challenge the assessment order initially and only to file an appeal after the penalty was levied did not constitute a valid reason for such an inordinate delay. The Tribunal emphasized that the assessee’s casual and imprudent approach, deciding not to challenge the assessment order for around four years, indicated a lack of due diligence and prudence.

The Tribunal referred to the Hon’ble Madras High Court’s decisions in the cases of Mrs. P.S. Rajeswari Vs. ACIT and Inderchand D. Kochar Vs. ACIT, which highlighted the need for a strict approach in cases of inordinate delay and the importance of due diligence and caution. The Tribunal concluded that the assessee’s explanation for the delay did not meet the criteria of being prudent, bona fide, or reasonable cause, and thus, the delay could not be condoned.

2. Merits of the Case if the Delay is Condoned:

Since the Tribunal decided not to condone the delay, the merits of the case were not adjudicated. The Tribunal noted that other grounds of the assessee's appeal became infructuous due to the dismissal of the appeal on the ground of limitation.

Conclusion:

The Tribunal upheld the CIT (Appeals)'s decision to decline the condonation of the delay, emphasizing that the assessee's explanation for the delay was not reasonable or bona fide. Consequently, the appeal of the assessee was dismissed, and the merits of the case were not considered. The order was pronounced in the open court on 22.03.2017.