Case Law Details
Syedali Ebrahim Vs ACIT (ITAT Cochin)
In the case of Syedali Ebrahim vs ACIT, the Income Tax Appellate Tribunal (ITAT) Cochin addressed appeals filed by the assessee against orders from the National Faceless Appeal Centre (CIT(A)) concerning penalty levies under section 271B for Assessment Years 2010-11 to 2014-15. The assessee, an individual engaged in steel trading, had failed to submit the mandatory tax audit report under section 44AB. Consequently, the Assessing Officer levied a penalty of Rs. 1,00,000 for AY 2010-11 and presumably for the other years as well, following the assessee inability to provide an explanation to the show cause notice.
The core of the dispute before the ITAT stemmed from the CIT(A)’s decision to dismiss the assessee’s appeals solely on the grounds of a significant delay in filing – specifically, a delay of 1463 days for AY 2010-11. The assessee had explained that the delay occurred because the penalty orders and notices were served on a former Chartered Accountant who failed to inform him. The assessee stated he only became aware of the penalty orders during the Covid-19 pandemic, subsequently engaged another CA who passed away, and finally filed the appeals through a new CA. Despite this explanation citing reasonable cause, the CIT(A) deemed the assessee negligent and dismissed the appeals without evaluating the merits of the delay condonation request.
The ITAT, after considering the arguments, found that the CIT(A) erred by focusing excessively on the duration of the delay rather than examining the sufficiency of the cause provided for the delay. The Tribunal cited settled legal principles affirming that the length of the delay is less critical than the justification offered for it. Furthermore, the ITAT highlighted that the limitation period for filing an appeal commences from the date the appellant gains knowledge of the order, not merely the date the order was passed or served in a manner unknown to the assessee. Given that the CIT(A) had not adequately assessed the bona fides of the assessee’s explanation for the delay, the ITAT concluded that a de novo consideration was necessary to meet the ends of justice. Accordingly, the ITAT remanded the appeals for all the concerned assessment years back to the CIT(A) for fresh disposal, directing that the assessee be given an opportunity to be heard.
FULL TEXT OF THE ORDER OF ITAT COCHIN
These appeals filed by the assessee are directed against the orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 26.06.2024 for Assessment Years (AYs) 2010-11 to 2014-15.
2. Since identical issues are involved, these appeals are heard together and disposed of vide this common order. For the sake convenience and clarity, I shall adjudicate the appeal for AY 2010-11 as the lead case and the findings of this year will mutatis mutandis apply to the other assessment years.
3. Brief facts of the are that the appellant is an individual carrying on the business of trading in steel rods in the name and style of M/s. Giant Steels. The appellant filed return of income for AY 2010-11 on 08.10.2010 declaring total income of Rs. 3,66,520/-. The ACIT, Circle 2(1), Thiruvananthapuram (hereinafter called “the AO”) initiated penalty proceeding proceedings u/s. 274 r.w.s. 271B of the Income Tax Act, 1961 (the Act) on noticing that the appellant had failed to submit the prescribed audit report as envisaged under provisions of section 44AB of the Act. In respect of show cause notice the appellant could not file any explanation. In the circumstances the AO had proceeded with levy of penalty of Rs. 1,00,000/- for AY 2010-11 vide order dated 26.11.2019.
4. Being aggrieved, an appeal was filed before the CIT(A), with a delay of 1463 days. It was submitted that the delay had occurred as the show cause notice as well as the penalty orders were served on the erstwhile Chartered Accountant, who had failed to inform the appellant. Subsequently it is only during the Covid-19 pandemic period the appellant came to know about passing of penalty orders for AYs 2010-11 to 2014-15. Immediately he approached another Chartered Accountant who passed away on 22.09.2022. Finally the appeal came to be filed on 38.12.2023 through another Chartered Accountant. Thus, it was explained that the appellant was prevented by reasonable cause in filing the appeal before the CIT(A). However, the CIT(A) dismissed the appeal in limine on the ground of delay by holding that the appellant was guilty of negligence.
5. Being aggrieved, the appellant is in appeal before me in the present appeal.
6. I heard the rival contentions of both the parties and perused the material available on record. The solitary issue that arises for my consideration is whether the CIT(A) was justified in refusing to condone the delay. At the outset I find that the date of the order levying penalty cannot be presumed to be the date of service of the order. It is now settled law as held by the Hon’ble Delhi High Court that the limitation period would being from the date the appellant had knowledge of the order, which has to be reckoned for the purpose of computing the limitation period, not the date of service. Further I find that the CIT(A) had failed to give a finding on the bona fides of the explanation given for the delay in filing the appeal before him. The tenor of the order of the CIT(A) would indicate that he simply got carried away by the length of the delay. It is settled position of law that for the purpose of condonation of delay the length of delay does not matter. What is to be considered is whether there is sufficient cause for the delay or not. In the circumstances I am of the considered opinion that in order to meet the ends of justice the matter requires remand to the file of the CIT(A) for de novo disposal of the appeal after affording opportunity of being heard to the appellant.
7. The above discussion sand find shall mutatis mutandis apply to the appeals for AYs 2011-12 to 2014-15.
8. In the result, appeals filed by the appellant stand allowed for statistical purposes.
Order pronounced in the open court on 23rd January, 2025.
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