2015 (4) TMI 904 - AT - Income Tax

Delay in filing of appeal - Affidavit of Chartered Accountant for condone of delay in filing appeal submitted - Denial of exemption u/s 10(23C)(iiiad) to Society - Held that - The affidavit and cavalier conduct of Shri Kaushal Agarwal, C.A. raises serious questions on his professional competence and work ethics in giving such an affidavit which hides more than it explains. The burden is on the assessee to reasonably explain day to day delay and establish that there existed reasonable and sufficient cause in delaying the filing of appeals for about 1 year. If the proper dates or occasions are not mentioned with proper facts then the delay cannot be condoned. In this behalf, we rely on the decision of the Hon ble Madras High Court in the case of Madhu Dadha 2009 (6) TMI 26 - MADRAS HIGH COURT .We find merit in the contentions of ld. DR that law helps diligent and not the indolent as well as the axiomatic delay defeats equity. In our considered view that the condonation petitions filed by the assessee and material available on the record, fail to invoke any confidence, fail to explain reasonable and sufficient cause for condonation of long delay of 347 days in filing these appeals . The assessee has to come clean with all the relevant facts, which happened in the period of one year. The assessee has to explain all the events and be specific in the dates. The depositions made in the C.A. affidavit remain uncorroborated and there is no affidavit from the said Shri Malik Parvej in support of the affidavit of C.A.. Thus, the vague affidavit given by the C.A. remains uncorroborated and unreliable. In the entirety of facts and circumstances of the case, we decline to condone the delay of 347 days in filing these appeals. - Appeal dismissed.

Issues Involved:
1. Denial of exemption under Section 10(23C)(iiiad).
2. Confirmation of disallowance of salary and other expenses.
3. Condonation of delay in filing the appeals.

Detailed Analysis:

1. Denial of Exemption under Section 10(23C)(iiiad):
The learned Commissioner of Income Tax (Appeals) denied the claim of exemption under Section 10(23C)(iiiad) to the Society. The CIT(A) upheld the Assessing Officer's (A.O.) findings that the assessee society had inflated expenses and collected donations, indicating a profit motive contrary to the society's objectives. During a survey under Section 133A of the Income Tax Act, incriminating material was found suggesting the institution was profit-oriented and thus not eligible for exemption. The assessment was completed ex parte under Section 144 of the Act, determining the income for A.Y. 2005-06 and 2006-07. The CIT(A) noted that the Secretary of the society admitted to inflating expenses for construction purposes, and no evidence was provided to refute this admission.

2. Confirmation of Disallowance of Salary and Other Expenses:
The CIT(A) confirmed the disallowance of Rs. 9,09,552/- out of salary expenses and Rs. 3,40,190/- out of other expenses for A.Y. 2005-06, and Rs. 11,08,571/- out of salary expenses and Rs. 1,89,012/- out of other expenses for A.Y. 2006-07. The disallowances were based on the Secretary's admission during the survey that expenses were inflated. The CIT(A) justified rejecting the books of accounts and making the disallowances due to the lack of evidence to prove the expenses were not inflated.

3. Condonation of Delay in Filing the Appeals:
The appeals were filed late by 347 days. The assessee filed an application for condonation of delay, supported by an affidavit from their Chartered Accountant (C.A.), explaining that the delay was due to the C.A.'s oversight. The C.A. claimed he forgot to file the appeals after returning from a bank audit assignment. The learned counsel for the assessee argued that the delay should be condoned as the assessee should not suffer for the C.A.'s mistake, citing the Supreme Court's decision in Collector, Land Acquisition V. Mst. Katiji.

The learned Departmental Representative (D.R.) opposed the condonation, arguing that the reasons provided were vague and lacked credibility. The D.R. emphasized that the affidavit did not explain the delay on a day-to-day basis and lacked specific dates and events. The D.R. also questioned the professional conduct of the C.A. and the absence of corroborative evidence from the society's President.

The Tribunal found merit in the D.R.'s contentions, noting that the affidavit was vague and lacked specific details. The Tribunal emphasized that the burden was on the assessee to explain the delay reasonably and sufficiently. The Tribunal found it unbelievable that the assessee would not follow up on such significant matters for almost a year. The Tribunal cited the Madras High Court's decision in Madhu Dadha Vs. ACIT, which stressed the need for specific and credible explanations for delays.

Conclusion:
The Tribunal declined to condone the delay of 347 days in filing the appeals due to the lack of reasonable and sufficient cause. The appeals were dismissed, and the order was pronounced in the open court on 13/02/2015.

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