Case Law Details
Ulahannan Mudakkalayil Leela Vs ITO (Kerala High Court)
Penalty Appeal Cannot Be Dismissed When Related Assessment Appeal Pending – Tribunal Condoned Delay in Assessment & HC Extends Relief to Penalty Appeal
The petitioner, a 75-year-old licensed stamp vendor, challenged order of CIT(A)-NFAC rejecting her appeal against a penalty order u/s 271(1)(c) for AY 2016-17, solely on the ground of 525 days’ delay in filing.
Earlier, the assessment order for the same year had also been challenged belatedly (651 days). Though CIT(A) dismissed that appeal, the ITAT condoned the delay & remanded the assessment appeal for adjudication on merits. That appeal is still pending. Meanwhile, penalty proceedings based on the same assessment order were initiated & her appeal was dismissed for delay.
The Court observed that since the very assessment order forming the basis of penalty is under challenge & pending fresh adjudication, the penalty appeal could not have been dismissed on mere technical grounds. Once ITAT condoned a longer delay for the assessment appeal, consistency demanded that the penalty appeal also be restored for merits adjudication.
Accordingly, the HC quashed CIT(A)’s order & directed CIT(A) to restore the penalty appeal after condoning delay, & decide it afresh on merits after giving opportunity of hearing. Till then, recovery of penalty demand was stayed.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a 75 years old licensed Stamp Vendor and an income tax assessee. This writ petition is submitted by her, being aggrieved by the rejection of her appeal submitted against an order of penalty under Section 271(1) c of the Income Tax Act, on the ground of delay as evidenced by Ext.P6.
2. The facts that led to the filing of this writ petition are as follows: Earlier, pertaining to the assessment year 2016-2017, Ext.P2 order of assessment was passed by the assessing authority. As against the same, an appeal was submitted by the petitioner before the first appellate authority, with a petition to condone the delay of 651 days. The first appellate authority rejected the said appeal, against which, the petitioner submitted a second appeal before the Income Tax Appellate Tribunal, Cochin Bench, which resulted in Ext.P3 order. In the said order, the first appellate order was set aside, and the matter was remitted to the first appellate authority with a direction to restore the appeal after condoning the delay. Now the said appeal is pending before the first appellate authority.
3. In the meantime, the penalty proceedings were initiated against the petitioner based on the aforesaid assessment order, against which, an appeal was submitted by the petitioner before the first appellate authority. The said appeal was rejected as per Ext.P6 order passed by the first appellate authority, on the ground that there was a delay of 525 days in filing appeal. It was in these circumstances this writ petition is submitted.
4. I have heard, Sri.Joy C Paul, the learned counsel for the petitioner and Sri.Jose Joseph, the learned Standing Counsel for the respondents.
5. As mentioned above, the challenge against Ext.P6 order passed by the appellate authority by which the appeal submitted by the petitioner against the penalty proceedings was rejected on the ground that the petitioner could not satisfactorily explain the delay of 525 days in filing the appeal. However, while considering the challenge against Ext.P6, the crucial aspect to be noticed is that, as against the assessment order for the very same assessment year, which formed the basis of the penalty proceedings, even though the first appellate authority rejected the appeal submitted against such assessment order on the ground of delay of 651 days, the same was later interfered with by the appellate Tribunal, and the matter was remitted to the first appellate authority for considering the matter afresh on merits. The said appeal is now pending consideration. The findings in the said appeal, would have some bearing on the proceedings of penalty, which was the subject matter in Ext.P6 appeal. Therefore, it is a case in which, a lenient view ought to have been taken, by the appellate authority. It is also to be noted that, the Tribunal directed to condone the delay of higher extent, in respect of the appeal filed against the assessment order, and thus restored the appeal which was originally rejected by the appellate authority. This was done to enable the petitioner to get the contentions considered on merits.
6. In such circumstances, taking note of the aforesaid aspect, I am of the view that, the interest of justice would require the matter to be considered on merit, instead of rejecting the contentions merely on technicalities and without going into the sustainability of the penalty order. Moreover, as observed above, the appeal against the assessment order is pending consideration before the first appellate authority, the final outcome of which, may have an impact on the proceedings of penalty as well. Therefore, I find that this is a fit case in which the powers of this Court under Article 226 of the Constitution of India are to be invoked, to ensure that the appeal submitted by the petitioner is considered on merit.
In such circumstances, this writ petition is disposed of, quashing Ex.P6 order passed by the first appellate authority, with a direction to restore the appeal submitted by the petitioner against the order of penalty, after condoning the delay and pass orders on the same on merits, after giving the petitioner an opportunity for being heard. It is also ordered that, until such a decision is taken, the recovery proceedings pursuant to the order of penalty, which is the subject matter in Ext.P6 shall be kept in abeyance.
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