Case Law Details

Case Name : Mahendra Kumar Goyal Vs ACIT (ITAT Jaipur)
Appeal Number : ITA No. 251/JP/2021
Date of Judgement/Order : 25/07/2022
Related Assessment Year : 2009-10

Mahendra Kumar Goyal Vs ACIT (ITAT Jaipur)

ITAT condone delay of 9 years in filing appeal  on account of inordinate delay of about 9 years as the assessee was imprisoned to Jail under serious criminal offence which was beyond his control to file the appeal in time

CIT(A) observed in his order dated 14-09-2021 that there is inordinate delay of 9 years in filing the appeal by the assessee on the issue of demand raised as well as the penalty amount. The ld. CIT(A) in his order elaborately discussed the issue taking the recourse of various decisions of Hon’ble Supreme Court and other High Courts holding that there is no sufficient cause which justifiably prevent the assessee in late filing the after an inordinate delay of 9 years.

AR of the assesee filed a brief synopsis of the events praying that the ld. CIT(A) should have decided the issue on merit instead of dismissing the appeal of the assessee on account of inordinate delay of about 9 years as the assessee was imprisoned to Jail under serious criminal offence which was beyond his control to file the appeal in time for adjudication of the case before the ld. CIT(A). Conclusively, the ld. AR of the assessee prayed that the delay of approximate of 9 years be condoned in view of the gravity and situation of the assessee’s case and the appeal of the assessee should be adjudicated upon afresh by the ld. CIT(A) on merit.

It is worthwhile to mention that when the assessment order was passed by the AO on 27-12-2011 then the assessee Shri Mahendera Kumar Goyal, could not get the service of the assessment order and he was not aware about the passing of the assessment order. Further the penalty order u/s 271(1)(b) was passed on 28-06-2012 by the ACIT, Circle-Kota and the service of the penalty order u/s 271(1)(b) could not take place to the assessee because he was in judicial custody till 14-12-2012 after getting bail from Hon’ble Supreme Court which also indicate that the assessee was deprived off to comply with the orders of the above authorities. This entire story indicates that the because of involvement in criminal offences mentioned above and judicial custody, the assesseee was not aware of Incomes taxes hovering upon him.

ITAT held that delay made in the case of the assessee is condoned and the appeal of the assessee is restored to the file of the ld. CIT(A) for afresh decision on merit as to the issue penalty u/s 271(1)(b) of the Act but by providing adequate opportunity of being heard to the assessee.

FULL TEXT OF THE ORDER OF ITAT  JAIPUR

This appeal by the assessee is directed against the order of the ld. CIT(A) dated 14-09-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2009-10 wherein the assessee has raised following grounds of appeal.

‘’1. That on the facts and in the circumstances of the case, the order of the ld. CIT(A) is against the law and facts of the case.

2. That the ld. CIT(A) has grossly erred in dismissing the appeal of the assessee due to delay in filing of appeal without providing any opportunity of hearing which is against the principles of natural justice.

3. That the Hon’ble CIT(A) has also grossly erred in not deciding the grounds of appeal on facts of the case thereby confirming the alleged penalty levied by the AO u/s 271(1)(b) without appreciating the fact that the appellant had a reasonable cause.

2.1 Apropos Ground No. 1 to 3 of the assessee, it is noted from the available records that the assessee had filed an appeal with the grievance that the penalty amounting to Rs.10,000/- was wrongly levied by the AO u/s 271(1)(b) of the Act vide impugned penalty order dated 27-12-2011. However, the ld. CIT(A) observed in his order dated 14-09-2021 that there is inordinate delay of 9 years in filing the appeal by the assessee on the issue of demand raised as well as the penalty amount. The ld. CIT(A) in his order elaborately discussed the issue taking the recourse of various decisions of Hon’ble Supreme Court and other High Courts holding that there is no sufficient cause which justifiably prevent the assessee in late filing the after an inordinate delay of 9 years. Therefore, the ld. CIT(A) has dismissed the appeal of the assessee in view of non-filing the appeal in time by observing as under:-

‘’Thus I hold that, in this case, no ‘’sufficient cause” which justifiably prevented the Appellant from filing the appeal on time and for a period as long as approximately 9 years has been advanced. In view of the above and considering the fact that the law of Limitation is a substantive law the reason for condonation of delay adduced by the appellant are hereby rejected and the aforesaid appeal of the appellant, being barred by limitation is ,therefore, dismissed at the threshold.”

ITAT condones Delay in filing Appeal as Assessee was Imprisoned

2.2  During the course of hearing, the ld. AR of the assesee filed a brief synopsis of the events praying that the ld. CIT(A) should have decided the issue on merit instead of dismissing the appeal of the assessee on account of inordinate delay of about 9 years as the assessee was imprisoned to Jail under serious criminal offence which was beyond his control to file the appeal in time for adjudication of the case before the ld. CIT(A). Conclusively, the ld. AR of the assessee prayed that the delay of approximate of 9 years be condoned in view of the gravity and situation of the assessee’s case and the appeal of the assessee should be adjudicated upon afresh by the ld. CIT(A) on merit.

Date Events
06-05-2011 That FIR was lodged against the 6 persons named as Purshottam Mittal, Sumit Mittal, Hukum Chand Mittal, Dinesh Mital, Vimal Mital, Shyam Bihari Sharma u/s 420, 406 of the Indian Penal Code 1860 before Police Bapawar, Kota, Rajastha (Copy of FIR is placed by the ld.AR
27-12-2011 That order was passed us/ 144/143(3) against the assessee creating the demand of Rs.6,01,790/-
30-12-2011 That in view of the aforesaid FIR dated 6-05-2011 the Investigation conducted by the Investigation Officer and the assessee  Shri Mahendra Kumar Goyal was alleged of Offence u/s 420, 406, 468, 471, 120B of Indian Penal Code 1860 and assessee Shri Mahendra Kumar Goyal was arrested by the Police (copy of Memo of arrest is placed by the ld. AR.)
31-12-2011 That Postal Authority reached to the address of the assessee appellant and to serve the order passed u/u 144/143(3) of the Act dated 27-12­2011 and claimed that the asessee had refused to take the order whereas the assessee was already arrested on 30-12-2011 copy of the postal authority remark is placed by the ld. AR.)
28-06-2012 The order was passed against the assessee appellant imposing penalty of Rs.10,000/- u/s 271(1)(b) of the Act and the same was sent through registered post on 29-06-2022
30-06-2012 That postal authority reached to the address of the assessee appellant to serve order passed u/s 271(10(b) dated 28-06-2012 and claimed that the assessee had refused to take the order whereas the assessee was judicial custody since 30-12-2011 (Copy of the postal remark is placed by the ld.AR)
14-12-2012 That the assessee Shri Mahendra Kumar Gouyal after spending almost one year in Jail was released on Bail from the Hon’ble Apex Court in Criminal Appeal No. 2067 of 2012 (Copy of order dated 14­12-2012 is placed by the ld. AR)
08-07-2020 That since the assessee was in judicial custody from 30-12-2011to 14-12-2012, the assessment proceedings and penalty proceedings conducted against the assessee and consequential demand was not in his knowledge and as soos as this fact came to the knowledge of the assessee, he had filed an application before the Assessing Officer for certified copy of order dated 27-12-2011 passed u/s 143(3)/144 of the Act and order dated 28-06-2012 passed u/s 271(1)(b) of the Act
13-07-2020 That in response to the application dated 8-07-20120 assessee received the order dated 27-12-2011 passed u/s 143(3)/144 of the Act and order dated 28-06-2012 passed u/s 271(1)(b) of the Act alongwith the demand notice
12-08-2020 That assessee without any further delay filed the appeal against the order passed us/ 271(1)(b) dated 28-06-2012 by taking the date of service order is 8-07-2020
14-09-2011 That ld. CT(A) vide its ordere dated 14-09-2021 dismissed the appeal of the assessee on the ground of delay in filing of appeal without considering the justification given by the assesee and merely relying upon the remark of postal authority that assessee had refused totake the order when assessee him in the judicial custody

Further, it is also pertinent to mention here that the assessee had complied with the notice issued u/s 143(2) dated 25-08-2010n and 142(1) dated 24-05-2011, and further noices dated 03-09-2010,

24,05,-2011, 14-07-2011, 01-08-2011, 08-08-2011 and merely for the non-compliance of notice dated 22-08-2011 the penalty was imposed.

Thus the penalty imposed by the Assessing Officer is completely arbitrary and baseless it deserves to be deleted in its entirety.

2.3  On the other hand, the ld. DR relied on the order of the ld. CIT(A).

2.4 We have heard both the parties and perused the materials available on record. The Bench noted from the record that the assessment order dated 27-12­-2011 u/s 143(3)/ 144 was passed by the AO, Penalty Order dated 28-06-2012 u/s 271(b) of the Act was passed by the ACIT, Circle-1,, Kota. The first appeal order is passed by ld. CIT(A), NFAC, Delhi on 14-09-2021 against the Penalty order dated 28-06-2012 of the ACIT, Circle-1, Kota on the ground of barred by limitation i.e. long delay of filing the appeal of approximate 9 years by the assessee. From the brief synopsis of the event that the assessee was under judicial custody in serious offences mentioned hereinabove from 30-12-2011 to 14-12­2012 and the assessee was released on bail in connection with FIR No.43/20011 dated 6-5-2011 by the Hon’ble Supreme Court on 14th Dec. 2012 in Criminal Appeal No. 2067 of 2012. It can be well imagine that it becomes a herculean task for a person to approach from Lower Court to Hon’ble Supreme Court in getting bail. Further, it is also noted from the Speed Post letter issued to Shri Mahendra Kumar Goyal wherein the postal authority has explicitly given his remark d that ‘’ REFUSED TO ACCEPT ( Sd/- postman DATED 31-12-2011) which indicate that the postal authority has not contacted the concerned person but mentioned his remarks in normal course as the Shri Mahendera Kumar Goyal, assessee was in Judicial Custody on 30-12-2011 which does not show appropriate reasoning or observation by the Revenue Authority. It is worthwhile to mention that when the assessment order was passed by the AO on 27-12-2011 then the assessee Shri Mahendera Kumar Goyal, could not get the service of the assessment order and he was not aware about the passing of the assessment order. Further the penalty order u/s 271(1)(b) was passed on 28-06-2012 by the ACIT, Circle-Kota and the service of the penalty order u/s 271(1)(b) could not take place to the assessee because he was in judicial custody till 14-12-2012 after getting bail from Hon’ble Supreme Court which also indicate that the assessee was deprived off to comply with the orders of the above authorities. This entire story indicates that the because of involvement in criminal offences mentioned above and judicial custody, the assesseee was not aware of Incomes taxes hovering upon him. Taking into consideration and facts of the case, we rely on the decision of Hon’ble Supreme Court in the case of N Balakrishnan vs. M. Krishnamurthy [1998 (9) TMI 602 – Supreme Court; Other Citation 2008 (228) E.LT. 162 (SC), 1998 AIR 3222, 1998 (1) Suppl SCR 403, 1998 (7) SCC 123, 1998 (6) JT 242, 1998 (5) SCALE 105], it was averred/held, as follows, by the Hon’ble Supreme Court:

‘’’’. 9 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.

10. The reason for such a different stance is thus:

The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice. The time-limit fixed for approaching the court in different situations is not because on the expiry of such time a bad cause would transform into a good cause.

11. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused reason of legal injury……………….. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). 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 idea is that every legal remedy must be kept alive for a legislatively fixed period of time.

12 A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate……

13 It must be remembered that in every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation………. ’’

In view of the above facts, circumstances of the case and the decision of Hon’ble Supreme Court (supra), the delay made in the case of the assessee is condoned and the appeal of the assessee is restored to the file of the ld. CIT(A) for afresh decision on merit as to the issue penalty u/s 271(1)(b) of the Act but by providing adequate opportunity of being heard to the assessee. Thus the appeal of the assessee is allowed for statistical purposes.

4.0. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 25/07/2022

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