2024 (7) TMI 242 - AT - Income Tax

Condonation of delay filling against Revision order u/s 263 - appeal filled with a delay of 348 days - reasons for delay explained as company did not receive proper legal advice at the earliest point of time - addition made on the issue of ESOP reimbursement - HELD THAT - Impugned order was passed on 29/03/2022 and on the very same day, the assessee sought advice of the consultants in respect of the action to be taken about the 263 order. Advice was received on 07/04/2022. On a perusal of the mail dated 07/04/2022, we find that the consultant clearly advised that the assessee may file an appeal before the ITAT against the order passed by learned PCIT under section 263 of the Act to quash the same and thereby no revision proceedings will be initiated by the learned Assessing Officer in case the order is quashed. The consultant further said that the assessee may accept the order under section 263 of the Act and comply with the revision proceedings initiated by the learned Assessing Officer by responding to all the notices issued in future and the assessee has an option to submit detailed facts before the learned Assessing Officer for his verification and may object for any addition to be made on the issue of ESOP reimbursement. It is, therefore, clear that the advice rendered by the consultant on 29/03/2022 is by no means an ambiguous one or misguiding one, but on the other hand, it made the options clear to the assessee. First option is to challenge the order under section 263 and to avoid the revision proceedings before the learned Assessing Officer and the second option is to accept the order under section 263 and to proceed with the revision proceedings before the AO. Assessee had chosen the first option to proceed with the revision proceedings before the learned Assessing Officer by furnishing the requisite information. There is nothing on record to show that it is not a conscious decision taken by the assessee. It is only on realising that there is very limited option to challenge the consequential proceedings before the AO the assessee obtained the advice to challenge the order under section 263 of the Act. Even after obtaining the second advice, the assessee did not promptly proceed with the challenge of the 263 order, before the learned Assessing Officer concludes the consequential proceedings. The assessee adopted wait and see method to have the best of both the worlds. Thus, we do not find it proper to condone the delay and the reason stated by the assessee does not constitute sufficient cause for such purpose - Decided against assessee.

Summary

Issues:
1. Jurisdiction under section 263 of the Income Tax Act, 1961.
2. Delay in filing the appeal and condonation of delay.

Jurisdiction under section 263 of the Income Tax Act, 1961:
The case involved an appeal against an order passed by the Principal Commissioner of Income Tax under section 263 of the Act. The issue revolved around the reimbursement of ESOP received by the assessee from its subsidiary company, which was considered as income under section 58 of the Act. The Principal Commissioner found the assessment order erroneous and prejudicial to the revenue's interest due to the non-offering of this income. The Tribunal analyzed the arguments presented by the assessee, emphasizing that the jurisdiction under section 263 is not meant to substitute the views of the Assessing Officer. The Tribunal reviewed the timeline of events, including consultations with advisors and the subsequent filing of the appeal, ultimately upholding the Principal Commissioner's decision to set aside the assessment order and direct the Assessing Officer to verify the ESOP issue.

Delay in filing the appeal and condonation of delay:
The Tribunal deliberated on the delay of 348 days in filing the appeal and the request for condonation. The assessee cited reasons such as seeking advice from consultants and waiting for the right time to challenge the order under section 263. The Revenue contended that condoning the delay would encourage frivolous litigation. The Tribunal examined the advice received by the assessee from consultants, highlighting the options provided regarding challenging the order under section 263 or accepting it. The Tribunal concluded that the delay was not justified, as the assessee's conduct indicated a strategic approach to litigation, waiting to challenge the order based on the outcome of the consequential proceedings. Relying on precedents, the Tribunal declined to condone the delay, leading to the dismissal of the appeal without delving into its merits.

In conclusion, the Tribunal's judgment addressed the jurisdictional aspect under section 263 of the Income Tax Act, 1961, and the issue of delay in filing the appeal, ultimately dismissing the appeal due to the uncondonable delay. The decision emphasized the importance of genuine reasons for seeking condonation of delay and discouraged strategic litigation tactics.