2022 (8) TMI 1427 - AT - Income Tax

Condonation of delay filing appeal before ITAT - delay of 1529 days - limitation to file the appeal against the impugned order - assessee challenged the action of the Ld. CIT(A) in remanding the matter to the file of the learned Assessing Officer, for which the assessee waited for consequential orders to be passed - HELD THAT - A plain reading of the grounds and the additional grounds raised in this appeal clearly shows that the assessee s grievance relate to the reopening of the assessment with the issuance of notice under section 148 of the Act on 27/3/2012 and the orders of the Ld. CIT(A) in disallowing the interest paid subsequent to 4/12/2014. Insofar as this grievance is concerned, the assessee is clear as to the state of affairs by 14/8/2013 itself. The assessee need not wait till the consequential orders are passed. Whether or not the demand is stated to be nil in the consequential order dated 17/2/2014, it has nothing to do with the impugned order passed directing the learned Assessing Officer to disallow the interest paid subsequent to 4/12/2014. The disallowance in the impugned order is very clear and loud. Merely because a subsequent point of time the learned Assessing Officer passed an order dated 14/2/2014, it does not mean that the assessee has a good case. Even if we believe that the orders dated 14/2/2014 and 17/2/2014 received by the assessee on 14/3/2014 were capable of misleading the assessee, still the assessee cannot harp on that point because the impugned order was clear in its import that the interest for a period subsequent to 4/12/2004 was clearly directed to be disallowed by the Ld. CIT(A) on 14/8/2013 to challenge which, the appeal time was only available till 5/9/2013. Assessee cannot have the benefit of any confusion that is likely to arise subsequent to this 5/9/2013, because the cause of action for the grievance of the assessee is the order dated 14/8/2013 and, as a matter of fact, is not at all the order dated 10/3/2017 rectifying the order dated 17/2/2014 under section 154 of the Act. Assessee had forgotten one basic thing before citing the orders dated 14/2/2014, 17/2/2014 and 10/3/2017 as a reason for the mistaken impression not to prefer the appeal, that the original limitation to file the appeal against the impugned order expired long before these orders. The facts pleaded by the assessee to justify the delay in filing the appeal are wholly irrelevant and illogical. It is nothing but a drowning man trying to catch a straw. Law of limitation does not permit such unacceptable conduct on the part of the parties. There is no sufficient cause made out by the assessee to condone the delay and the reasons stated for the delay are not at all relevant insofar as this appeal challenging the order dated 14/8/2013 is concerned. We, therefore, decline to condone the delay - Decided against assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of reopening of assessment under section 147.
3. Disallowance of interest under section 40(a)(ia).

Detailed Analysis:

Condonation of Delay in Filing the Appeal:

The assessee filed an appeal with a delay of 1529 days. The primary reason for the delay was the mistaken belief that no further action was required due to a subsequent order dated 17/02/2014, which stated the tax demand as nil. The assessee only realized the need to appeal after receiving a letter dated 18/03/2017, which directed the official liquidator to pay outstanding demands. The assessee argued that the delay was due to confusion and lack of proper understanding of the tax proceedings.

The Revenue argued that the reasons for the delay were irrelevant and inconsistent. The assessee should have challenged the order dated 14/08/2013 within the prescribed time limit, regardless of the subsequent orders. The Revenue cited various judicial precedents emphasizing that the law of limitation is substantive and must be adhered to strictly.

The Tribunal, after reviewing the submissions and judicial precedents, concluded that the reasons provided by the assessee for the delay were not sufficient. The Tribunal emphasized that the assessee had ample time to file the appeal within the original limitation period and that subsequent events could not justify the delay. The Tribunal referred to several Supreme Court judgments, highlighting that the law of limitation is founded on public policy and that parties must seek their remedies promptly.

Validity of Reopening of Assessment under Section 147:

The assessee challenged the reopening of the assessment under section 147, arguing that there was no fresh material obtained by the Assessing Officer for issuing the notice under section 148. The reopening was based on the same material that was already available during the original assessment.

The Tribunal noted that the reopening of the assessment was done to question the allowability of the NPA provision and to disallow interest on deposits under section 40(a)(ia). The Tribunal observed that the reopening was based on the cancellation of the banking license by the Reserve Bank of India, which was a significant event that warranted reassessment.

Disallowance of Interest under Section 40(a)(ia):

The assessee contested the disallowance of interest paid on deposits after the cancellation of the banking license. The CIT(A) had directed the Assessing Officer to disallow interest paid post 04/12/2004, the date on which the banking license was canceled.

The Tribunal upheld the CIT(A)'s decision, noting that the disallowance was justified as the assessee was no longer a valid banking entity after the cancellation of the license. The Tribunal emphasized that the CIT(A)'s order was clear in its directive to disallow interest paid after the specified date.

Conclusion:

The Tribunal dismissed the appeal due to the inordinate delay in filing and found no sufficient cause to condone the delay. The Tribunal also upheld the reopening of the assessment and the disallowance of interest under section 40(a)(ia). The appeal was dismissed on procedural grounds, and the merits of the case were not discussed further.