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2022 (5) TMI 1548 - ITAT PUNE
Rectification of mistake u/s 254 - period of limitation - Tribunal had disposed of the appeal ex-parte on merits and dismissed the appeal filed by the assessee - Miscellaneous Application was filed after so many days (approx more than 3 years and 11 months from receipt of the order of the Tribunal) - whether the amended provisions of section 254(2) w.e.f. 01.06.2016 shall apply to the facts of the present case or not?
HELD THAT:- Undoubtedly, the present Miscellaneous Application was filed by the assessee within the period of 4 years from the receipt of the order of the Tribunal. Therefore, applying the ratio of DISTRICT CENTRAL CO-OP. BANK LTD. VERSUS UNION OF INDIA [2017 (10) TMI 691 - MADHYA PRADESH HIGH COURT] it cannot be said that the Miscellaneous Application is barred by limitation. Accordingly, we admit the Miscellaneous Application for adjudication.
We find that the Tribunal passed the order dismissing the appeal of the assessee in the absence of the appellant-assessee. Now, the appellant has filed an application in the form of an affidavit before us stating that it could not cause the appearance when the appeal was called owing to the ill health conditions of the appellant, etc. The averments made in the affidavit were not controverted by the Department. Therefore, we are satisfied that the appellant is prevented from causing appearance before the Tribunal by sufficient and reasonable cause and, therefore, it is fit case for recall the matter under rule 25 of the Income Tax Appellate Tribunal Rules, 1963. Accordingly, we recall this appeal for denovo hearing and direct the Registry to post the appeal for hearing in due course. Thus, the Miscellaneous Application filed by the appellant stands allowed.
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2022 (5) TMI 1547 - ITAT MUMBAI
Income deemed to accrue or arise in India - Royalty receipts - taxability of subscription income received by the assessee under the provisions of section 9(1)(vi) of the Act as well as under the Article– 12(3) of the India Switzerland Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- We find that the Co–ordinate Bench of the Tribunal in assessee”s own case in IMS AG (now known as IQVIA AG) [2020 (11) TMI 466 - ITAT MUMBAI], for the assessment year 2013–14, while holding that subscription fees received by the assessee is not taxable as Royalty under the provisions of DTAA.
Similar findings were also rendered in assessee's own case in IMS AG (now known as IQVIA AG) v/s DCIT [2020 (7) TMI 829 - ITAT MUMBAI] for the assessment year 2014–15. The learned Departmental Representative could not show any reason to deviate from the aforesaid orders and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the Co–ordinate Bench of the Tribunal for preceding assessment years.
Thus we uphold the plea of the assessee and delete the impugned addition in respect of subscription fees received by the assessee. Decided in favour of assessee.
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2022 (5) TMI 1546 - GAUHATI HIGH COURT
Attachment of property of petitioner - de jure owner - violation of the procedure, including the requirement to arrive at a satisfaction before forming an opinion that the property in question may be alienated during the period specified in the notice - Section 24(3) of the Prohibition of Benami Property Transactions Act, 1988.
The petitioners submits that they are ready and willing to submit the reply to the show cause notice which is an obligation under Section 24(1) of the Act and prays for time of two weeks for the said purpose.
HELD THAT:- This Court is of the view that interest of justice would be served if a period of 10 days is granted to the petitioners to submit the reply to the show cause notice dated 30.03.2022 - In the event, the reply is filed within 10 days from today i.e., 06.06.2022, the respondent authorities would consider the same strictly in accordance with the provisions laid down in Section 24 of the Act.
Writ petition disposed off.
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2022 (5) TMI 1545 - RAJASTHAN HIGH COURT
Bogus LTCG - ITAT allowing exemption claimed by the assessee u/s 10(38) - Claim disallowed by the A.O. on the basis of evidence received from investigation wing treating sale of shares of M/s Sunrise Asian Ltd., as bogus and thereby considering the same as income from other sources? - HELD THAT:- On perusal of the order of learned ITAT and reasonings given therein this court is of the view that the substantial questions of law, formulated above does not arise as ITAT has logically dealt questions of fact and law involved by way of reasoned order.
We are of the view that learned ITAT has passed the order on consideration of material and relevant facts, logical conclusion has been arrived at and the same must be allowed to rest. There is no gross violation of principles of natural justice or failure of justice, no error has crept in the order impugned of learned ITAT. The Coordinate Bench of this court in Shri Sanjay Chhabra [2022 (4) TMI 1418 - RAJASTHAN HIGH COURT] in the similar facts and circumstances has already taken a view that in the appeal at hand u/s 260A of the Act no substantial question of law arises.
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2022 (5) TMI 1544 - SC ORDER
Approval of Resolution Plan for the revival of the Corporate Debtor - discrimination of Related Party Financial or Operational Creditor - HELD THAT:- Having regard to the order passed on 16.03.2022, making all the proceedings subject to the final judgment in these appeals, no further order or direction is considered expedient or necessary at this stage.
The judgment remains reserved.
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2022 (5) TMI 1543 - RAJASTHAN HIGH COURT
Unexplained credit u/s 68 - assessee was unable to justify equity trading by picking the shares of specific companies with poor net worth - ITAT deleted the addition - HELD THAT:- ITAT has specifically held that the assessee has produced all the relevant documentary evidence to establish genuineness of the transaction and there is no contrary evidence to doubt the correctness of the evidences produced by the assessee and therefore treating the transaction of purchase and sale as sham is not justified.
ITAT has also relied upon the decision of Commissioner of Income Tax, Jaipur Vs. Smt. Pooja Agarwal [2017 (9) TMI 1104 - RAJASTHAN HIGH COURT] wherein learned ITAT has relied upon the judgment of Division Bench involving the same facts wherein the Division Bench has dismissed the appeal filed by the Revenue. Thus the order of learned ITAT requires no interference and therefore, the appeal is dismissed.
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2022 (5) TMI 1542 - DELHI HIGH COURT
Seeking grant of Regular Bail - willful defaulted in repayments and caused wrongful loss to RFL to the huge money - HELD THAT:- A perusal of record shows that chargesheet has already been filed, all materials have been collected by the investigating authorities and the evidence against the applicant is documentary in nature. In the considered opinion of this Court, the applicant is neither a flight risk, nor can there be any propensity on his part to tamper with any evidence or influence any witness inasmuch as the entire domain of evidence is documentary in nature, which exists as it is from the year 2008 onwards, unhindered, and un-tampered. The applicant is a permanent resident of Delhi and has clean antecedents. He has been languishing in jail since 8th December 2021. He has been languishing in jail since 8th December 2021.
Considering the chargesheet, first supplementary chargesheet and second supplementary chargesheet as well as the fact that other co-accused persons having been enlarged on bail by the Coordinate Bench which stand confirmed by the Hon'ble Supreme Court; and the facts and circumstances and discussion as aforesaid, this Court is inclined to allow the instant bail application seeking regular bail.
Applicant is directed to be released on bail subject to conditions imposed - application allowed.
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2022 (5) TMI 1541 - ITAT DELHI
TP Adjustment - Specified Domestic Transactions [SDT] undertaken by the assessee qualifying for ALP principle envisaged under the Act - assessee alleged that Section 92BA(1) has been omitted by the Finance Act, 2017 and, therefore, the impugned order should lapse and become invalid in law.
HELD THAT:- The undisputed fact is that as per sub-clause (1) of section 92BA of the Act, the assessee has undertaken the transaction which has exceeded the prescribed limit. It is also not in dispute that vide Finance Act, 2017 w.e.f. 01.04.2017 the said sub-clause (1) of section 92BA has been omitted. We find that the AO has made a reference u/s 92CA of the Act having observed that the assessee has entered into specific domestic transaction as the case is covered u/s 92BA of the Act.
Respectfully following the decision of the co-ordinate bench [2017 (12) TMI 1719 - ITAT BANGALORE] which has been upheld by the Hon'ble High Court of Karnataka [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] we have no hesitation in holding that the cognizance taken by the Assessing Officer u/s 92CA is invalid and bad in law. Therefore, the consequential order passed by the TPO and DRP is also not sustainable in the eyes of law.
Applicability of provisions of section 40A(2) of the Act on the impugned transactions cannot be ruled out - As in the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. The AO is directed to examine the impugned transaction in light of provisions of section 40A(2) of the Act after affording reasonable and sufficient opportunity of being heard to the assessee.
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2022 (5) TMI 1540 - ITAT PUNE
Revision u/s 263 - CIT observed that the assessee contravened the provisions of section 40A(3) and also that the income declared during the course of survey on account of excess stock was not declared - These issues were found not to have been considered by the Assessing Officer at the time of completing the assessment - Pr.CIT proceeded ex parte and held the assessment order to be erroneous and prejudicial to the interests of the Revenue - HELD THAT:- Pr.CIT did not himself adjudicate on the two issues espoused by him for revision primarily on the ground that the assessee did not furnish any reply by the stipulated date.
Though the assessee furnished its reply giving necessary details on 15.03.2021, being, the same date as given by the ld. Pr.CIT for making submissions, the ld. Pr.CIT passed order on 18.03.2021 without taking note of such replies. This shows that the impugned order has been passed without considering the replies of the assessee. Under these circumstances, we are of the considered opinion that it would be in the fitness of things if the impugned order is set aside and the matter is restored to the file of the ld. Pr.CIT.
We order accordingly and direct him to pass the revisionary order afresh as per law after allowing reasonable opportunity of hearing to the assessee and taking into consideration the replies already filed by the assessee and any further reply that the assessee may seek to lodge.
Appeal is allowed for statistical purposes.
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2022 (5) TMI 1539 - DELHI HIGH COURT
Seeking release of goods - redemption fine and penalty provided in the adjudication order has been paid by the petitioner, which was the condition for the release of the subject goods - HELD THAT:- There are no reason for not releasing the goods - However, since an appeal has been lodged, the respondents are given two weeks commencing from the receipt of a copy of this order to have the appeal listed and to seek appropriate orders, failing which, the goods will be released to the petitioner.
The writ petition is disposed of.
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2022 (5) TMI 1538 - ITAT CHENNAI
TP Adjustment - treatment of impairment losses as operating in nature - computing assessee’s PLI - computation of correct margins of the assessee - as argued that the expenditure was extra-ordinary in nature since the factory assets were revalued on account of closure of manufacturing operations and the assets were disposed-off in the subsequent years - HELD THAT:- From the facts, it is discernible that the impairment losses arose due to extra-ordinary circumstances. The factory assets were revalued on account of closure of manufacturing operations and the assets were disposed-off in the subsequent years. The assessee customer did not purchase the quantity committed by them prior to setting up of plant and the assessee was unable to utilize the idle capacity. Owing to adverse market conditions, the assessee decided to discontinue manufacturing operations which could not be said to be routine business activities since the same would dent assessee’s financial substantially. This event could be considered as one-off event and not part of routine business activities. This fact has adequately been highlighted by the assessee in its financial statements.
Depreciation and amortization (including impairment loss) has jumped from 222.43 Lacs in earlier year to Rs.677.93 Lacs in this year. No such losses have been observed in the summarized financial statements of the comparable entities as extracted by Ld. TPO .
Therefore, the impairment losses in our considered opinion, have to be treated as non-operating expenditure and the same are to be excluded while computing assessee’s PLI.
The decision of Delhi Tribunal in Insofer Mfg. India Pvt. Ltd. [2020 (8) TMI 928 - ITAT DELHI] also support the view that the impairment losses were not related to normal business operation and therefore, could not be treated as operating expenditure to compute assessee’s PLI.
Selection of M/s Jolly Boards Ltd as comparable - We find that this entity is in composite business i.e., manufacturing as well as in realty and property development. However, segment-wise or product-wise performance has not been provided. Its other income includes profit on sale of investments and income (net) from property development. Therefore, in such a case, in the absence of segmental results, it would be very difficult to derive the segment-wise financial results by apportioning indirect expenditure as directed by Ld. DRP. This entity could not be held to be comparable to the assessee. We direct Ld. TPO / AO to exclude this entity from final set of comparable. The grounds raised by the assessee, in this regard, stand allowed.
Determination of ALP of management fees paid by the assessee to its AE - The opinion of lower authorities that the services should be need based or the same should bring benefits to the assessee has no logic since the requirement of the services has to be assessed from assessee’s point of view. The assessee had filed email communications etc. in support of receipt of services which has been billed on monthly basis by AE. Therefore, to determine of the ALP of these transactions, merely on the basis of presumptions, could not be held to be sustainable.
The decision of Chennai Tribunal in Siemens Gamesa Renewable Power (P.) Ltd. [2017 (11) TMI 1743 - ITAT CHENNAI] held that the ALP of management fees could not be taken as nil in the absence of a valid comparable. The lower authorities could not simply arrive at a conclusion that the quality and volume of services as received by the assessee were not commensurate with the payment made. In this order, the bench has referred to various other decisions taking the same view. We find that ratio of this decision is squarely applicable to the facts of the present case. Accordingly, we direct Ld. TPO / AO to delete this TP adjustment. The grounds thus raised stand allowed.
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2022 (5) TMI 1537 - ITAT BENGALURU
Disallowance of depreciation claimed on Investments held to Maturity (HTM) - HELD THAT:- We notice that the Ld CIT(A) has followed the subsequent decision rendered by the jurisdictional Hon’ble Karnataka High Court in the assessee’s own case [2013 (7) TMI 656 - KARNATAKA HIGH COURT] and also the decision rendered by Tribunal in the case of Corporation Bank [2015 (3) TMI 1360 - ITAT BANGALORE] in deciding this issue in favour of the assessee.
Since the assessee has claimed depreciation only for income tax purposes, both the assessee and the assessing officer shall ensure that the profit/loss arising on sale of these investments should be ascertained by considering the value of investments as per income tax records and not as per books of account.
Disallowance made u/s 14A - AO noticed that the assessee did not make any disallowance u/s 14A of the Act even though it has earned tax free income during the year under consideration - CIT(A) took the view that the AO has not recorded dissatisfaction over the claim of the assessee with regard to the disallowance to be made u/s 14A - HELD THAT:- Hon’ble Supreme Court in the case of South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] has expressed the view that the provisions of sec.14A would not be attracted when the income received on shares and securities held as stock in trade is assessed as business income.
As held in AY 2012-13 we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining this issue afresh. In the set aside proceedings, the AO should also consider the effect of the decision rendered by Hon’ble Supreme Court in the case of South Indian Bank [2021 (9) TMI 566 - SUPREME COURT]. The assessee is free to make all contentions on this issue before the AO.
Disallowance made u/s 36(1)(viia) - deduction towards Provision for bad and doubtful debts (PBDD) - whether the bad debts relating to non-rural branches are also required to be first debited to PBDD a/c and then the excess amount over and above the balance available in PBDD alone could be allowed as bad debts u/s 36(1)(vii) of the Act? - HELD THAT:- In the instant case, the assessee has claimed deduction towards PBDD under clause (a) to sec. 36(1)(viia) of the Act, meaning thereby, the clause (a) is applicable to rural advances only as per the decision given by Hon’ble Supreme Court in the case of Catholic Syrian Bank[2012 (2) TMI 262 - SUPREME COURT] - Hence the bad debts relating to non-rural branches are not required to be adjusted against PBDD allowed under clause (a) of sec. 36(1)(viia) of the Act in terms of the proviso to sec. 36(1)(vii) and sec. 36(2)(v) of the Act.
We are unable to agree with the view expressed by Ld CIT(A) on this issue. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the bad debts relating to non-rural branches u/s 36(1)(vii) of the Act without adjusting the same against the PBDD a/c, since the said PBDD a/c relates to rural advances only.
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2022 (5) TMI 1536 - ITAT SURAT
Disallowance of carry forward of loss - assessee filed its return was beyond the date - as per AO where the assessee has some capital loss or business loss from business or profession to be carried forward, the assessee should file its return of income within due date as prescribed u/s 139(1) - assessee filed return of income on the last date of filing, however, due to technical snag in the website of the partner on the date of filing return, the acknowledgement was received eleven minutes past 12:00 and the date of acknowledgement of return was reflected as 01/1/2015 instead of 30.10.2015 - CIT(A) held that the delay of 11 minutes is bonafide - HELD THAT:- We find that in the case of Regen Infrastructure & Services (P) Ltd. [2016 (3) TMI 875 - MADRAS HIGH COURT] has held that when the delay in filing of the return was due to technical snags in the website of department, and return could not be uploaded and due to which the carry forward loss could not be denied to the assessee.
Also in the case of ACIT Vs M/s Noel Pharma [2013 (11) TMI 1731 - ITAT HYDERABAD] has also held that when delay was not because of any lapse on the part of assessee but due to technical reasons in uploading the return electronically and due to delay of few hours in getting connectivity and the date was changed from 30th September to 01st October. Thus, we affirm the order of the ld. CIT(A).Decided in favour of assessee.
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2022 (5) TMI 1535 - ITAT BANGALORE
TP Adjustment - Comparable selection - functional dissimilarity - HELD THAT:- Companies functionally dissimilar with that of assessee as engaged in provision of IT enabled services need to be deselected from final list.
Working capital adjustment to iron out the differences, existing between the assessee in the comparables - As relying on case of Huawei Technologies India Pvt.Ltd [2018 (10) TMI 1796 - ITAT BANGALORE] we direct the Ld.AR AO/TPO to grant the working capital just and in accordance with law, in respect of the comparables that it is finally retained.
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2022 (5) TMI 1534 - ITAT BANGALORE
TP adjustment made in respect of manufacturing segment - manufacturing segment consisted of manufacturing and distribution of desktops and note books - assessee had benchmarked the international transactions in manufacturing segment under internal CUP method - TPO adopted TNM method and accordingly made transfer pricing adjustment - HELD THAT:- As in in assessment year 2015-16 [2020 (3) TMI 471 - ITAT BANGALORE] we set aside the order passed by the A.O. on this issue and restore the same to the file of TPO/AO with the direction to apply CUP method as most appropriate method and examine ALP accordingly, after providing adequate opportunity of being heard to the assessee.
TP adjustment made in relation to “Advertising, marketing and promotion expenditure (AMP expenses) - HELD THAT:- We direct AO/TPO to first examine the applicability of decision rendered by Hon’ble Delhi High court in the case of Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] to the facts of the present case and accordingly first determine the question as to whether the AMP expenses would fall under the category of international transaction. If it is held to be not an international transaction, then the question of making any transfer pricing adjustment will not arise. After hearing the assessee and examining the facts afresh, the AO/TPO may take appropriate decision in accordance with law.
Disallowance of provision for warranty - HELD THAT:- Identical disallowance made by the AO in assessment year 2011-12 has since been allowed by Hon’ble High Court of Karnataka [2021 (2) TMI 1337 - KARNATAKA HIGH COURT] in the assessee’s own case following the decision rendered in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] by holding that no substantial question of law has arisen on this issue. Accordingly, following the decision rendered by the coordinate bench as well as Hon’ble jurisdictional High Court, we direct the A.O. to delete the disallowance relating to provision for warranty.
Addition of “provision for warranty” to the net profits under Explanation 1 to sec. 115JB for the purpose of computing book profits, holding the same as ‘contingent liability’ - HELD THAT:- We hold that there is no requirement of making addition of provision for warranty to the net profit for computing book profit u/s 115JB of the Act. Accordingly, the AO is directed to delete the same. The order passed by Ld CIT(A) on this issue stands set aside.
Addition of “provision for compensated absence” (Provision for leave encashment) treating it as contingent liability while computing book profit u/s 115JB - HELD THAT:- We notice that an identical issue has been considered in the assessee’s own case in assessment year 2011-12 and the Tribunal held that the provision for leave encashment need not be added back to book profits for the purpose of computing tax liability u/s 115JB of the Act. Thus we hold that the provision for compensated leave (provision for leave encashment) need not be added to the net profit for the purpose of computing book profit u/s 115JB of the Act as the same is not contingent liability.
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2022 (5) TMI 1533 - ITAT CHANDIGARH
Late payments towards EPF and ESI u/s 36(1)(va) - payment before furnishing the return of income u/s 139(1) - HELD THAT:- Addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees’s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va)
Since the facts involved in the present case are identical to the facts involved in the case of Raja Ram Vs. ITO, Yamunanagar [2021 (11) TMI 370 - ITAT CHANDIGARH]. So respectfully following the aforesaid referred to order of the Coordinate Bench of the Tribunal, the disallowance sustained by the Ld. CIT(A) is deleted - Decided in favour of assessee.
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2022 (5) TMI 1532 - ITAT AMRITSAR
Assessment u/s 153A - addition/disallowance made qua unabated assessment - incriminating material as found consequent to search conducted u/s 132 or not? - HELD THAT:- Respectfully following decision on the identical facts in the case of “Smt. Sanjana Mittal [2019 (3) TMI 1757 - ITAT AMRITSAR], and “Krishna Kumar Mittal [2021 (12) TMI 1434 - ITAT AMRITSAR] we hold that in the absence of incriminating material, no addition can be made qua unabated assessment for the year under consideration in the case of both the appellant assesses - Decided in favour of assessee.
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2022 (5) TMI 1531 - PUNJAB AND HARYANA HIGH COURT
Maintainability of review application - HELD THAT:- Under the garb of the instant review application an attempt is being made to have a re-hearing of the matter - The same is not permissible in law and would not fall in the scope and parameters of review laid down under order XLVII Rule 1 of the CPC.
Review application stands dismissed.
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2022 (5) TMI 1530 - ITAT PUNE
Disallowance of provision for obsolescence of inventory - valuation of the so-called obsolete inventory and whether the provision of obsolete inventory is allowed or not - HELD THAT:- As respectfully following the order of Hon’ble ITAT [2022 (3) TMI 1518 - ITAT PUNE] we remand the issue to the file of the Assessing Officer with a direction that the provision for obsolete stock to be allowed as deduction subject to Assessing Officer himself satisfying that the valuation is done based on the principle of cost, or market price or net realisable value whichever is less. Accordingly, the Ground No.1 is allowed for the statistical purpose.
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2022 (5) TMI 1529 - ITAT CHENNAI
Condonation of delay - reasons for the delay of 1125 days by stating that the assessee received the order of the Ld. CIT(A) on 30.09.2017, which was handed over by her to the auditor - assessee was under the belief that auditor have filed the appeal before the Tribunal in time, though, it was not done so by the auditor, fact of which came to her knowledge at a later point of time - HELD THAT:- Shri. Dhool Chand Varma, FCA appeared on behalf of the assessee before the Ld. AO in the assessment proceedings. From the order of Ld. CIT(A), it is noted that Shri. K. Meenakshi Sundaram, ITP, appeared before the first appellant authority and represented the matter of the assessee in appeal. Even before us, the assessee is represented by Shri K. Meenakshi Sundaram, ITP.
These facts show that for attending the proceedings before the authorities below, competent professional engagements were made by the assessee for effective representation of her case at various stages. The general and vague reasons given to explain the delay of more than 3 years by passing the buck on the shoulders of auditor does not speak about the reasonable and responsible approach in handling the matter, wherein the tax demand is involved.
With the demand of such an amount remaining outstanding on the part of the tax payer, there is a reasonable expectation of being vigilant and responsible in taking up these matters in a diligent way.
The facts so narrated and explained by assessee through the petition for condonation of delay in filing the instant appeal do not convince us in order to proceed us to condone the delay and admit the appeal for adjudication. Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The facts otherwise noted from the assessment order and the first appellant authority in respect of professional representation before the authorities below do not favour the assessee in order to support the contentions made in the petition for condonation of delay. Accordingly, we dismiss the petition for condonation of delay filed by the assessee in the instant appeal. Appeal filed by the assessee is dismissed.
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