2012 (11) TMI 173 - AT - Income Tax

Condonation of delay penalty Held that - Manager (A/c) who has deposed that he had received the penalty order well in time but he put the order in his drawer and it slipped from his mind to take further action - there was some negligence on the part of Manager(A/c) in not making the arrangements for taking further action on the penalty order, can that negligence should cost the assessee a penalty - It will not gain anything by filing the appeal against a penalty order after expiry of limitation. There is no deliberate attempt at the end of assessee to make it appeal time barred - delay in filing the appeal condoned - remit the issue relating to penalty to the file of Learned First Appellate Authority for adjudication on merit - appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against penalty under sec. 271(1)(c) for assessment year 2005-06 - Delay in filing appeal before Learned CIT(Appeals) - Condonation of delay - Justification for condonation of delay - Dismissal of appeal by Learned CIT(Appeals) based on limitation alone.

Analysis:

Issue 1: Appeal against penalty under sec. 271(1)(c) for assessment year 2005-06
The appellant contested the penalty imposed under sec. 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2005-06. The penalty amounting to Rs.11,70,000 was confirmed by the Learned CIT(Appeals) on the grounds that the appeal filed by the assessee was time-barred and hence not maintainable.

Issue 2: Delay in filing appeal before Learned CIT(Appeals)
The delay in filing the appeal arose due to the penalty order being served upon the company on 3.4.2010 but not acted upon promptly. The appeal became time-barred by 76 days. The assessee applied for condonation of delay under sec. 249(3) of the Act, citing a bona fide mistake by the Manager (A/c) in not pursuing the matter promptly. The Learned CIT(Appeals) dismissed the appeal solely on the ground of limitation.

Issue 3: Condonation of delay
The Tribunal considered the principles governing the condonation of delay, emphasizing the need for a liberal construction of the term "sufficient cause" as provided in the IT Act. Referring to legal precedents, including the case of N. Balakrishnan v. M. Krishnamurthy, the Tribunal highlighted that the acceptability of the explanation for delay is the primary criterion for condonation. The Tribunal reiterated that rules of limitation should not be used to deny parties their rights and observed that delay should be condoned to advance substantial justice.

Issue 4: Justification for condonation of delay
The Tribunal analyzed the circumstances of the case, noting that the delay was due to a lapse on the part of the Manager (A/c) in not taking further action promptly upon receiving the penalty order. The Tribunal emphasized that the penalty imposed was disproportionate to the negligence, especially considering there was no deliberate attempt to make the appeal time-barred. The Tribunal concluded that condoning the delay and allowing the appeal to be decided on merit would serve the ends of justice.

Issue 5: Dismissal of appeal by Learned CIT(Appeals) based on limitation alone
The Tribunal disagreed with the dismissal of the appeal solely on the ground of limitation by the Learned CIT(Appeals). The Tribunal found that there was no dilatory strategy on the part of the assessee and that filing the appeal after the limitation period would not benefit the assessee. Therefore, the Tribunal allowed the appeal, condoned the delay, and remitted the issue of penalty to the Learned First Appellate Authority for adjudication on merit.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of condoning delay to ensure substantial justice and fair adjudication of the matter.