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2023 (7) TMI 82 - AT - Income TaxCondonation of delay - delay of 6901 days - assessment proceeding finalized u/s 158BC - During the pendency of the assessment proceeding consequent to search, the appellant filed a settlement application before the Hon ble Income Tax Settlement Commission - HELD THAT - As documents are sufficient enough to suggest poor health condition of the appellant s wife having multiple surgery, suffering from various illness, old age ailments too including thyroid disorder and were under constant medical treatment. DR has not been able to controvert such factual aspect of the matter. These documents are sufficient enough to establish the fact of the appellants and his spouse being senior citizens, having multiple health issues, visiting India for health checkup and surgery, remained under constant medical supervision. The other explanation that as the appellant is 76 years old, presently residing at New Jersey, USA, left for USA in 2003 not been able to take proper steps in the matter pending since 15 to 20 years and the business is being handled by his employee to whom power of attorney was given in the absence of appellant s son Shri Kuldeep Jamnadas who also left for USA in 2008 also requires proper consideration. According to the appellant, such attorney is neither conversant with such old matters, nor been able to take proper steps in the proceeding pending before the different judicial forums. Thus we find sufficient cause has been shown by the appellant in being unable to prefer the appeals before us within time Sufficient cause as it appears in the Act is to be interpreted and understood in its proper spirit as these terms are flexible enough to be applied liberally in the interest of justice even in the case of long delay. We, therefore, with the aforesaid observations, condone the delay. As the impugned orders passed by the Ld. CIT(A) is only on the ground that the Hon ble Income Tax Settlement Commission has exclusive jurisdiction on every aspect of this case in terms of Section 245F(2) of the Act and in terms of provision of Chapter XI-A. It is an admitted position that the Settlement Commission has already rejected the application filed by the assessee on the ground of shortfall in the payment of interest and stated that proceeding before the said Commission had abated under Section 245HA. The order passed by the Ld. CIT(A) is, therefore, found to have no consequence. Hence, appeals are dismissed as infructuous. Penalty u/s 271D 271E - default u/s 269SS and 269T - finding of the Ld.AO to the effect that the peak of receipts recorded in the name of third parties is nothing but appellant's own undisclosed income - HELD THAT - As considered the judgment relied of CIT vs. Shyam Corporation 2013 (7) TMI 772 - GUJARAT HIGH COURT wherein receipt for which revenue intends to invoke the provision of Section 269SS or 269T of the Act as the case may be for imposing penalty under Section 271D or 271E of the Act as the case may be during the assessment proceeding treated as booking advance and consequently assessed as undisclosed income of the assessee invoking Section 68 of the Act, it has been held that in that event the same would, thereafter, not bear the character of loan or advances and thus decided against the Revenue. Respectfully relying upon the said ratio laid down by the Hon ble Court, the initiation of penalty proceeding under Section 271D r.w. s. 269SS of the Act culminating into levy of penalty holding it as loan or deposit is, thus, found to be contradictory in the case in hand. Therefore, the same is bad, void ab initio and liable to be quashed. The identical ratio is also applied for initiation of penalty under Section 271E of the Act culminating into imposition of penalty for alleged violation of provision of Section 269T of the Act. The same is, therefore, held to be bad and void ab initio and, thus, quashed.
Issues Involved:
1. Time-barred appeals. 2. Jurisdiction and maintainability of appeals. 3. Settlement Commission's exclusive jurisdiction. 4. Condonation of delay. 5. Validity of penalties under Sections 271D and 271E of the Income Tax Act. Summary of Judgment: Time-barred Appeals: The appeals ITA Nos. 215 & 216/Rjt/2022 are time-barred by 6901 days. The appellant, a non-resident Indian, filed these appeals challenging the orders dated 16.07.2003 passed by the CIT(A)-4, Rajkot. The delay was attributed to the appellant's relocation to the USA, health issues, and ineffective communication with the attorney handling the case in India. Jurisdiction and Maintainability: The CIT(A)-4, Rajkot dismissed the appeals on 16.07.2003, stating that the Settlement Commission had exclusive jurisdiction under Section 245F(2) of the Income Tax Act. This dismissal was based on the maintainability ground due to the Settlement Commission's seisin of the matter. Settlement Commission's Exclusive Jurisdiction: The Settlement Commission rejected the appellant's application on 28.05.2013 due to shortfall in payment of interest, leading to the abatement of the proceedings under Section 245HA of the Act. The appellant then filed a Special Civil Application before the Gujarat High Court, which granted partial relief and allowed the appellant to file appeals before the CIT(A) by 31.08.2016. Condonation of Delay: The Tribunal acknowledged the appellant's reasons for the delay, including health issues and relocation to the USA. The Tribunal emphasized a liberal and justice-oriented approach, recognizing "sufficient cause" for the delay. The appeals were thus condoned. Validity of Penalties under Sections 271D and 271E: The penalties under Sections 271D and 271E were imposed for alleged violations of Sections 269SS and 269T, respectively. The Tribunal noted that the peak credits were already taxed as undisclosed income, making the penalties contradictory. Citing the jurisdictional High Court's judgment in CIT vs. Shyam Corporation, the Tribunal held that once the amounts were treated as undisclosed income, they could not be considered loans or deposits for penalty purposes. The penalties were thus quashed as void ab initio. Conclusion: - Appeals ITA Nos. 215 & 216/Rjt/2022 were dismissed as infructuous. - Appeals ITA Nos. 72 & 73/Rjt/2023 were allowed, quashing the penalties under Sections 271D and 271E.
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