1981 (9) TMI 194 - AT - Income Tax

Summary

Issues:
1. Condonation of delay in filing an appeal against the order imposing penalty under section 271(1)(c)(iii) of the IT Act, 1961.
2. Validity of service of demand notice on the assessee.

Detailed Analysis:
1. The appeal before the Appellate Tribunal ITAT Jaipur was regarding the delay in filing an appeal against the order imposing a penalty under section 271(1)(c)(iii) of the IT Act, 1961 for the assessment year 1973-74. The Assessing Officer imposed the penalty on 13th March 1978, and the appeal was filed by the assessee on 25th January 1980. The assessee claimed that she only became aware of the penalty through a notice from the Tax Recovery Officer (TRO) and requested condonation of the delay. The Assistant Commissioner of Income Tax (AAC) rejected the condonation, stating that the demand notice was served on an accountant associated with the assessee. The AAC held that the accountant had implicit authority to accept notices on behalf of the assessee, thus dismissing the appeal as time-barred.

2. The assessee, aggrieved by the AAC's decision, appealed to the Tribunal. The Tribunal noted that there was no explicit authority proven to have been given by the assessee to the accountant to receive notices on her behalf. The counsel for the assessee argued that no authority, explicit or implicit, was granted to the accountant. The Tribunal observed that the accountant did not categorically state that he received and passed on the impugned notice to the assessee. The Tribunal referenced decisions of the Allahabad High Court and the Madras High Court, emphasizing that valid service can only be effected on a recognized agent. Since there was no proof of authorization for the accountant to receive notices on behalf of the assessee, the Tribunal held that no valid service was made on the assessee. Consequently, the Tribunal allowed the appeal, condoned the delay, and remanded the case back to the AAC for further proceedings on merits after providing an opportunity to both parties.

In conclusion, the Appellate Tribunal ITAT Jaipur allowed the appeal, emphasizing the importance of valid service of notices and the necessity for explicit authorization for receiving notices on behalf of a party. The Tribunal's decision highlights the significance of procedural compliance and the requirement for proper authorization in matters related to the condonation of delay and service of legal notices in tax penalty cases.