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.
