2014 (9) TMI 314 - AT - Income Tax

Condonation of delay delay of 2984 days Whether the explanations furnished by the assessee can be considered as sufficient cause for condoning the delay or not - Held that - The assessee has claimed that he was following the advices given by his C.A firm - it is imperative to examine the claim on the basis of facts available on record - the assessee has also filed separate appeals before CIT(A) against the assessment orders passed for AY 1994-95 and 1996-97 - it is inconceivable that a CA would have advised the assessee to wait for outcome of a past appeal to decide about the course of action to be taken for the years under consideration - under the principle of 'Doctrine of Merger', an assessment order would merge with the order of CIT(A) in respect of the issues decided by the first appellate authority and hence the question of rectification of assessment orders of both the years under consideration on the impugned issues, after receipt of first appellate orders, would not arise at all. The C.A. firm would have given the letter as well as the affidavit only to accommodate the assessee herein - the conduct of the C.A. firm not only denigrates its name/reputation, but also badly affects the high standards, confidence, quality, prestige, reputation etc. enjoyed by the C.A. profession - the assessee is having connection with many tax professionals and, in all probabilities, the assessee might have had consultation with any one or more of them on the problem the C.A firm might have given the affidavit only to accommodate the assessee, which conduct is also not expected from a Professional - If it is considered that the C.A firm has colluded with the assessee for giving such kind of affidavit, then it only warrants disciplinary action against them - Even, if it is considered that the said C.A. firm has really given such advices, then also it may require disciplinary action against them for giving such kind of advices, without proper verification of facts and without proper consideration of law - strict actions and fast disposal of disciplinary proceedings would not only instill discipline among the C.A fraternity, but also help curtail these kind of undesired practices adopted by some of the Chartered Accountants. The assessee has failed to show that there was sufficient cause for the substantial delay occurred in filing these appeals. we have particularly noticed that an experienced C.A firm could not have given such kind of wrong/ absurd advice on the facts prevailing in the instant case - even if it is considered that his C.A firm has given such an advice, it is not believable that a prudent man would not have cross verified the same or applied his mind over it - the conduct of the assessee is beyond the comprehension of human conduct and probabilities - the assessee has failed to show the reasons for entire period of delay, i.e., no reason has been for the delay that occurred in between periods thus, no credence could be given to the letter and affidavit furnished by the Chartered Accountant and hence they will not come to the help of the assessee - the affidavit given by the assessee is also liable to be rejected Decided against assessee.

Summary

Issues Involved:
1. Condonation of delay in filing appeals.
2. Rejection of deduction claimed under section 80-O of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Appeals:

The primary issue addressed is whether the delay of 2984 days in filing the appeals should be condoned. The assessee argued that the delay was due to following incorrect advice from his Chartered Accountant (CA). The assessee emphasized that "sufficient cause" should be interpreted liberally to advance substantial justice. The CA firm M/s Rajesh Rajeev & Associates advised the assessee not to file further appeals for AY 1994-95 and 1996-97, as the issue was identical to AY 1993-94, which was pending before the Tribunal. The assessee was advised to file rectification applications after the Tribunal's decision for AY 1993-94.

The Tribunal examined the reasons for the delay and found them insufficient. Despite having connections with multiple tax professionals, the assessee claimed to follow the advice of one CA firm. The Tribunal noted that the assessee, with a high salary and significant resources, should have sought multiple opinions. The Tribunal also highlighted that the CA firm's advice to wait for the Tribunal's decision and then file rectification petitions was not prudent, given the uncertainty of the appeal's outcome.

The Tribunal referred to various judicial pronouncements emphasizing that "sufficient cause" must be beyond the control of the party and that negligence or inaction does not constitute sufficient cause. The Tribunal found gaps in the timeline provided by the assessee, such as delays in filing rectification petitions and consulting other professionals.

The Tribunal also criticized the revenue for not verifying the assessee's claim of receiving the appellate orders three years late. The Tribunal concluded that the explanations provided by the assessee did not constitute sufficient cause for the delay and rejected the request for condonation.

2. Rejection of Deduction Claimed Under Section 80-O:

The second issue involved the rejection of the deduction claimed under section 80-O of the Income Tax Act for AY 1994-95 and 1996-97. The assessee claimed that his salary from a foreign employer qualified for the deduction. The AO disallowed the claim, and the CIT(A) upheld the disallowance. The assessee's appeals for these years were delayed due to the reasons discussed above.

The Tribunal noted that the AO had initially allowed the deduction for AY 1994-95, but the CIT(A) disallowed it. For AY 1996-97, the AO disallowed the deduction, and the CIT(A) confirmed the disallowance. The Tribunal found that the assessee's reliance on the CA firm's advice to file rectification petitions instead of appeals was not justified. The Tribunal emphasized that each assessment year is independent, and appeals should be filed separately for each year.

The Tribunal also highlighted that the rectification petitions were filed beyond the statutory time limit and that the CA firm's advice was flawed. The Tribunal concluded that the assessee's failure to file timely appeals was not due to sufficient cause and dismissed the appeals in limine.

Conclusion:

The Tribunal dismissed both appeals filed by the assessee due to the substantial delay in filing and the lack of sufficient cause for the delay. The Tribunal found the explanations provided by the assessee and the CA firm inadequate and criticized the revenue for not verifying the assessee's claims. The rejection of the deduction under section 80-O was upheld due to the procedural lapses by the assessee.