Case Law Details
Mukesh Mittal Vs DCIT (ITAT Chandigarh)
Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, has remanded two appeals filed by assessee Mukesh Mittal back to the Commissioner of Income Tax (Appeals) [CIT(A)]. The appeals concerned penalties levied under Section 271(1)(c) of the Income Tax Act, 1961, for Assessment Years 2005-06 to 2007-08 and 2009-10. The primary issue before the ITAT was the CIT(A)’s refusal to condone a significant delay in filing the appeals.
The Assessing Officer (AO) had imposed penalties after making additions to Mittal’s income following assessments under Section 153A read with Section 143(3) of the Act. Mittal’s appeals before the CIT(A) were filed with a delay of over 32 months. The assessee sought condonation, attributing the delay to a change in legal counsel, stating a “bonafide belief” that the previous counsel had filed the appeals. However, the CIT(A) rejected this explanation, observing that the assessee had legal professional guidance and that a mistake by counsel was an insufficient reason for condonation. The CIT(A) cited the Supreme Court’s ruling in Ramlal & Ors vs Rewa Coalfields Ltd AIR 1962 SC 361, emphasizing that a party must explain the delay for each day beyond the limitation period, and that condonation is a discretionary matter, not a right. Consequently, the CIT(A) dismissed the appeals without addressing their merits.
Before the ITAT, Mittal’s counsel argued that a similar delay in his quantum appeals for the same assessment years (AYs 2005-06 to 2007-08) had already been condoned by the ITAT Chandigarh Bench “B” via an order dated November 5, 2018. This previous order had also resulted in the deletion of the additions made by the AO in those quantum assessments. The counsel conceded that this ITAT order was not available to the CIT(A) at the time of passing the impugned order, as it was issued later.
The assessee also raised several legal grounds challenging the penalty itself, including the AO’s failure to specify the exact “limb” of Section 271(1)(c) (i.e., whether it was for “concealment of particulars of income” or “furnishing inaccurate particulars of income”) in the penalty notice and order. This lack of specificity in penalty notices under Section 271(1)(c) has been a recurring issue in tax litigation. Courts, including various High Courts and the Income Tax Appellate Tribunal, have often held that such ambiguity in a penal proceeding violates principles of natural justice and can render the penalty unsustainable. For instance, in CIT v. Manjunatha Cotton & Ginning Factory (2013), the Karnataka High Court emphasized the necessity for the notice to clearly specify the limb, a principle reiterated in Pr. CIT v. Sahara India Life Insurance Company Ltd. and CIT v. SSA’s Emerald Meadows.
The ITAT, considering the totality of the facts, particularly the precedent set by its own earlier order condoning a similar delay in the quantum appeals for the same assessee and assessment years, found it appropriate to set aside the CIT(A)’s orders. The Tribunal observed that the CIT(A) had not decided the issues on their merits. Therefore, the ITAT remanded the cases back to the CIT(A) with a direction to decide them afresh. The CIT(A) is instructed to consider the ITAT’s previous order regarding the condonation of delay and to adjudicate the penalty on its merits after providing a proper opportunity of being heard to the assessee. This decision highlights the ITAT’s pragmatic approach to ensure that appeals are heard on their substantive issues, especially when procedural delays have been previously excused by a higher appellate forum on similar grounds.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
These two appeals by the Assessee are filed against the separate orders each dt. 30/06/2018 of the Ld. CIT(A)-3, Gurgaon.
2. Since the issues involved are common and the appeals were heard together so these are being disposed off by this common order for the sake of convenience and brevity.
3. The grounds raised in the ITA No. 1187/Chd/2018 read as under:
1. That the Ld. CIT (A) is not justified in not condoning the delay in filing the appeal before the Ld. CIT (A).
2. That the Ld. CIT (A) is not justified in not deciding the case on legal grounds as well as on merits.
3. That the Ld. AO has erred in not mentioning the limb of section 271(1)(c ) that has been violated by the assessee, in the notice issued u/s 274 r.w.s 271 of the Income Tax Act, 1961. Hence, the penalty proceeding is bad in law and the same is liable to be quashed.
4. That the Ld. AO is not justified in levying the penalty only on the basis of additions confirmed by the appellate authorities without bringing anything on record which proves that the appellant has made any concealment.
5. That the Ld. AO is not justified in levying the penalty without mentioning in the penalty order that whether the appellant has concealed the particulars of income or has furnished inaccurate particulars of income.
6. That the Ld. AO is not justified in invoking the provisions of Explanation 5A to section 271(l)(c ) of the I.T. Act for initiating the penalty proceedings in the assessment order.
7. That the Ld. AO is not justified in levying the penalty amounting to Rs. 1,61,550/-.
8. That without prejudice to above grounds of appeal the appellant disputes the quantum of penalty levied.
9. That the appellant craves leave for any addition or amendment in the grounds of appeal till the disposal of the same.
Similar grounds have been raised in ITA No. 1213/Chd/2018 for the A.Y. 2007-08, the only difference is in the amount of penalty levied by the A.O.
From the above grounds it would be clear that the grievance of the assessee relates to the action of the Ld. CIT(A) in not condoning the delay in filing the appeal before him.
4. Facts of the case in brief are that the A.O. levied the penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), since the additions were made while passing the assessment under section 153 A r.w.s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’). The appeal filed before the Ld. CIT(A) was belated and the assessee furnished the application for condonation of delay stating therein as under:
“Mukesh mittal (herein after referred as assessee) S/o Shri Ram Kumar, R/o H.No-515, Sector-16, Panchkula. (HaryanaJ do hereby solemnly affirm and declare as under.-
1. That the assessee has received the penalty orders of Ld. AO for A Yrs 2005-06, 2006-07, 2007-08 and 2009-10 on 30.03.2015 and all the said orders of Ld. AO were given to the old counsel of the assessee for taking further remedial action against the said orders i.e. to file the appeals before the Ld.CIT(A).
2. That the assessee was under bonafide belief that the further remedial action against the said penalty orders of Ld. AO have been taken by the old counsel of the assessee i.e. the appeals have been filed before Ld. CIT(A) for all the AY’s 2005-06, 2006-07, 2007-08 & 2009-10.
3. That when the assessee changed his counsel for the purpose of his accounts and taxation matters, only then the assessee came to know from his new counsel that the appeals against the penalty orders of Ld. AO for AY 2005-06, 2006-07, 2007-08 and 2009-10 have not been filed by the old counsel of the assessee before the Ld. CIT(A).
4. That when the fact of non filing of appeal before the Ld. CIT(A) for AY’s 2005-06, 2006-07,2007-08 & 2009-10 against the Ld. AO’s penalty orders are filed.”
However the Ld.CIT(A) did not find merit in the submissions of the assessee and dismissed the appeal by rejecting the application for condonation of delay in filing the appeal. The Ld. CIT(A) did not discussed the issue on merit but observed in para 4 of the impugned order as under:
“The penalty order in this case was passed on 27.03.2015 and received on 30.03.2015 and the appellant had to file the appeal within one month of receipt of the order . However, the appeal was filed on 12.01.2018, thus delayed by more than 32 months. The submissions of the appellant cannot be accepted as the appellant had guidance of legal professionals and mistake by counsel not to file appeal cannot be accepted as reason for condonation of delay in the case of the appellant.
It has been held by the various courts that condonation of delay can be looked into if the appellant has acted with reasonable diligence in the prosecuting of his appeal.
Further, it has been held by Hon’ble Supreme Court in the case of Rankak & Ors vs Rewa Coalfields Ltd AIR 1962 SC 361 that in cases of condonation of delay, party has to show reason for delay on the last day of limitation period and thereafter for each day. Condonation is not a matter of right and court has to exercise the discretionary jurisdiction.
In view of the facts of the case and judicial pronouncement discussed, condonation of delay in filing of appeal is rejected.”
5. Now the assessee is in appeal.
6. Counsel for the assessee submitted that a similar delay in filing the appeal on quantum was a subject matter of adjudication before the ITAT Chandigarh Bench “B” Chandigarh wherein the delay was condoned in ITA Nos. 37 to 39/Chd/2018 for the A.Y’s 2005-06 to 2007-08 vide order dt. 05/11/2018, copy of the said order was furnished which is placed at page no. 11 to 15 of the assessee’s compilation. It was further submitted that the addition made for the aforesaid Assessment Years were deleted. The Ld. Counsel for the Assessee however admitted that the said order dated 05/11/2018 passed by the ITAT was not available to the Ld. CIT(A).
7. In his rival submissions the Ld. CIT(A) supported the orders of the authorities below.
8. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it appears that the circumstances for delay in filing the appeal before the Ld. CIT(A) were similar as were before the ITAT in filing the appeal on quantum in ITA No. 37 to 39/Chd/2018 for the A.Y. 2005-06 to 2007-08 wherein a similar delay has been condoned vide order dt. 05/11/2018. However, the said order was not available to the Ld. CIT(A) as the impugned order has been passed by the Ld. CIT(A) earlier than the said order dt. 05/11/2018. It is also an admitted fact that the Ld. CIT(A) had not decided the issue on merit, we therefore by considering the totality of the facts deem it appropriate to set aside these cases back to the file of the Ld. CIT(A) to be decided afresh, after considering the aforesaid referred to order of the ITAT and decide the issue in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
9. In the result, both the above appeals of the Assessee are allowed for statistical purposes.
(Order pronounced in the open Court on 01/08/2019).
Author Bio
