TMI Blog2022 (10) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed on such satisfaction would not survive. Hence, penalty needs to be deleted. Therefore, we delete the penalty imposed u/s 271(1)(c) of the Act. - Decided in favour of assessee. - ITA No. 690/SRT/2018, ITA No. 691/SRT/2018, ITA No. 692/SRT/2018 - - - Dated:- 7-10-2022 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Respondent : Shri Shaurya Shaswat Shukla, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captioned three appeals filed by the Assessees, pertaining to the different Assessment Years (AYs) 2004-05 to 2006-07, are directed against the common order passed by the Learned Commissioner of Income Tax (Appeals)-3, Surat [in short the ld. CIT(A) ] dated 16.02.2015 which in turn arise out of penalty orders passed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been clubbed and heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.690/SRT/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the assessee and the appellant before the Hon'ble ITAT at Surat was only the Department. (3) That the above issue was brought to my notice by Advocate Shri Manish J. Shah and it was advised to file an appeal against the levy of penalty u/sec. 271(1)(c) read with Explanation 3 and pray for condonation of delay and further pray that this appeal may kindly be heard alongwith the relevant appeals preferred by the Department. (4) That is was on account of a bonafide belief on the part of the assessee that penalty u/sec. 271(1)(c) was deleted in toto by the Hon'ble CIT(Appeals) the impugned appeal was not filed earlier and that there was no malafide intention on the part of the assessee gain any undue advantage by delayed filling of the said appeal. (5) That the above stated statements are true and correct to the best of my knowledge and belief. I know that making of false affidavit is a criminal offence. 5. Based on the contents of the affidavit, Learned Counsel submitted that assessee was not aware that penalty has been initiated against him by the Department. The assessee came to know about initiation of penalty, when he approached the advocate Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, however, the ld. CIT(A) has specially mentioned in his order vide para no. 35.1 at page no.27 of his order, that penalty under section 271(1) (c ) of the Act is initiated on the assessee, hence there is no burden on the Revenue Authorities to explain the delay. Moreover, to issue the penalty notice is just a formality, in fact the penalty was initiated by ld CIT(A) therefore the assessee ought to have filed the appeal on time. This way, ld DR submitted that such huge delay should not be condoned. 8. We have heard both the parties on this preliminary issue. Since the notice was not issued to the assessee, therefore assessee was not aware whether a penalty proceeding was initiated against him or not and therefore he could not file appeal before the Tribunal on time, hence such delay should be condoned. For that reliance can be placed on the judgment of the Hon'ble Supreme Court in the case of M. K. Prasad vs P. Arumugam, Civil Appeal No.4779 of 2001, order dated 30.07.2001, wherein it was held as follows: In construing S.5 it is relevant to bear in mind two important considerations. The first consideration is that the expiration of the period of limitation prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In that context the court observed: It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammelled by the conclusion of the lower court. In the instant case, the appellant trie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty as per Explanation 3 to Section 271(1)(c) of the Act, observing as follows: 35.1 However, no return of income in these cases were filed u/s 139(1) or 139(4) (except AY 2008-09) and the time limit u/s 153(1) had expired from AY. 2004-05 to AY.2006-07, before the notices u/s 153C were issued. Therefore, penalty equivalent to 100% of tax on returned income for AY.2004-05, 2005-06 and 2006- 07 is confirmed in view of Explanation-3 to section 271(1)(c). 11. Aggrieved by the above order of learned CIT(A), the assessee is in appeal before us. 12. Shri Rasesh Shah, Ld. Counsel for the assessee begins by pointing out that no doubt, in the appellate proceedings, ld. CIT(A) has initiated the penalty as per Explanation 3 to Section 271(1)(c) of the Act, as no return of income in these three cases were filed u/s 139(1) or 139(4) of the Act and the time limit u/s 153(1) of the Act, had also expired to file return of income for assessment years 2004-05 to AY.2006-07. However notice of penalty under section 271(1)(c) of the Act, has not been issued to these assessees till date. Therefore, assessee was not aware, as to on what account he is being penalized and what are the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer levied penalty under section 271(1)(c) vide order dated 23.12.2012 for concealing income and furnishing inaccurate particulars of income, @100% of tax sought to be evaded. On further appeal before ld. CIT(A), deleted the penalty levied by Assessing Officer holding that in respect of additions on account of premium payable, cost of acquisition, cost of improvement and cost of transfer, there has been no suppression of material facts. The ld CIT(A) also relied on the judgment of Hon`ble Supreme Court in the case of Reliance Petro Products Ltd. (reported in 322 ITR 158) and stated that mere making of a claim does not amount to concealment. Therefore, the penalty levied in all above assessment years were cancelled in respect of additions pertaining to these items. 18. However, during the appellate proceedings, ld. CIT(A) has initiated penalty equivalent to 100% of tax on return of income for AY.2004-05, 2005-06 and 2006-07, as per Explanation 3 to section 271(1)(c) of the Act. We note that so far initiation of penalty proceedings are concerned, no doubt it is correct. However, we note that assessee has not been issued any notice under section 271(1)(c) of the Act, before ..... 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