2019 (8) TMI 1920 - AT - Income Tax

Delay in filing the appeal before the CIT (A) - HELD THAT - As 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 2018 (11) TMI 1975 - ITAT CHANDIGARH for the A.Y. 2005-06 to 2007-08 wherein a similar delay has been condoned. 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.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the delay in filing the appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] should be condoned.
• Whether the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, was justified given the circumstances of the case, particularly concerning the alleged failure to specify the limb of the section violated.
• Whether the penalty proceedings were validly initiated and concluded without specifying whether the assessee concealed particulars of income or furnished inaccurate particulars.
• Whether the application of Explanation 5A to Section 271(1)(c) was appropriate in initiating penalty proceedings.
• Whether the quantum of penalty levied was justified.

ISSUE-WISE DETAILED ANALYSIS

Condonation of Delay in Filing Appeal

• Relevant Legal Framework and Precedents: The Tribunal considered the legal principles related to the condonation of delay, including the necessity for the appellant to demonstrate reasonable diligence and the discretionary nature of condonation as per judicial precedents, such as the Supreme Court's decision in Rankak & Ors vs Rewa Coalfields Ltd.
• Court's Interpretation and Reasoning: The Tribunal noted that the CIT(A) rejected the condonation request, emphasizing the appellant's reliance on legal counsel and the lack of diligence in filing the appeal within the prescribed period.
• Key Evidence and Findings: The Tribunal acknowledged that a similar delay had been condoned in related appeals before the ITAT Chandigarh Bench, which was not considered by the CIT(A) due to the timing of the orders.
• Application of Law to Facts: The Tribunal found that the circumstances leading to the delay were similar to those in previously condoned cases, warranting reconsideration by the CIT(A).
• Treatment of Competing Arguments: The Tribunal balanced the appellant's claim of reliance on counsel against the CIT(A)'s emphasis on the appellant's responsibility for timely action.
• Conclusions: The Tribunal set aside the CIT(A)'s decision, directing a fresh consideration of the delay condonation request, taking into account the ITAT's prior order.

Validity of Penalty Proceedings under Section 271(1)(c)

• Relevant Legal Framework and Precedents: The Tribunal examined the requirements under Section 271(1)(c) for initiating penalty proceedings, including the necessity to specify the exact nature of the violation, i.e., concealment of income or furnishing inaccurate particulars.
• Court's Interpretation and Reasoning: The Tribunal highlighted the ambiguity in the penalty notice and order, which failed to clearly articulate the specific charge against the assessee.
• Key Evidence and Findings: The Tribunal noted the lack of clarity in the penalty notice and the absence of specific findings on concealment or inaccuracy of income particulars.
• Application of Law to Facts: The Tribunal found that the penalty proceedings were flawed due to the failure to specify the exact nature of the alleged violation, rendering the penalty order legally unsustainable.
• Treatment of Competing Arguments: The Tribunal considered the Revenue's justification for the penalty against the appellant's argument of procedural deficiency.
• Conclusions: The Tribunal implied that the penalty proceedings were not validly initiated due to procedural lapses, necessitating a reevaluation by the CIT(A).

Application of Explanation 5A to Section 271(1)(c)

• Relevant Legal Framework and Precedents: Explanation 5A pertains to the conditions under which penalty proceedings can be initiated in cases involving undisclosed income detected during a search.
• Court's Interpretation and Reasoning: The Tribunal did not provide a detailed analysis on this point, as it was primarily concerned with procedural aspects of the penalty notice and order.
• Key Evidence and Findings: The Tribunal focused on the procedural deficiencies rather than the substantive application of Explanation 5A.
• Application of Law to Facts: The Tribunal's decision to remand the case suggests that the application of Explanation 5A should be reconsidered in light of procedural compliance.
• Treatment of Competing Arguments: The Tribunal did not extensively address arguments specific to Explanation 5A, focusing instead on procedural issues.
• Conclusions: The Tribunal's remand for reconsideration implies that the application of Explanation 5A should be revisited by the CIT(A) after addressing procedural lapses.

Quantum of Penalty

• Relevant Legal Framework and Precedents: The quantum of penalty is typically assessed based on the degree of non-compliance and the specifics of the case.
• Court's Interpretation and Reasoning: The Tribunal did not make a specific determination on the quantum of penalty, as the procedural validity of the penalty itself was in question.
• Key Evidence and Findings: The Tribunal acknowledged the appellant's challenge to the quantum but deferred substantive evaluation pending procedural review.
• Application of Law to Facts: The Tribunal's decision to remand the case indicates that the quantum of penalty should be reassessed following a valid determination of procedural compliance.
• Treatment of Competing Arguments: The Tribunal did not engage in a detailed analysis of arguments regarding the quantum, focusing on the procedural aspects.
• Conclusions: The Tribunal's remand implies that the quantum of penalty should be reevaluated by the CIT(A) after addressing procedural deficiencies.

SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "Condonation is not a matter of right and court has to exercise the discretionary jurisdiction."
• Core Principles Established: The necessity for clear articulation of the specific charge in penalty proceedings under Section 271(1)(c) and the discretionary nature of delay condonation.
• Final Determinations on Each Issue: The Tribunal remanded the case to the CIT(A) for fresh consideration of the delay condonation and the substantive issues related to the penalty proceedings, emphasizing procedural compliance and the need for a clear articulation of charges.