2021 (4) TMI 956 - AT - Income Tax

Condonation of delay - assessee submitted that the appeal filed by Shri Sanjiv Bhutra is barred by limitation by 998 days and the appeal filed by Shri Rajiv Kumar Bhutra is barred by limitation by 1013 days. - HELD THAT - There was certain mis-communication between the assessees and their authorized representative. It is further stated that the assessees were under bonafide belief that their earlier Chartered Accountant would have filed appeal in time. But it came to their notice later that the appeals have not been filed and by that time the due date for filing appeals has elapsed. It is stated that the earlier Chartered Accountant has expired and hence they could not get any letter from him in support of their averments. Since the assessees had believed that the earlier Chartered Accountant would have filed appeals as per their request, they did not follow up the matter. Once they realized that the appeals have not been filed, the present appeals have been filed with delay. Under these set of facts and circumstances of the case, I am of the view that there is sufficient cause for not filing the appeals in time. However, as contended by Ld D.R, it is also the duty of the assessees to follow up their earlier CA with regard to filing of appeal in time. No prudent businessman would remain so inactive or idle, when it comes to the compliance of legal provisions, that too having financial stakes. Since the earlier CA has expired, their averments could not be cross verified. Accordingly, I am of the view that both the assessees should be imposed cost for being lethargic. Bogus Long-term capital gain arising on sale of shares - main contention of Ld. A.R. was that the A.O. has assessed the capital gain declared by the assessees as their taxable income without confronting the materials relied upon by the A.O. with the assessees - HELD THAT - Assessee should be provided with an opportunity to rebut the evidences/statements relied upon by the A.O. for treating the longterm capital gain declared by the assessees as bogus in nature. As notice that the A.O. has not discussed about the opportunity, if any, given to the assessee to rebut the evidences. Accordingly, I set aside the orders passed by Ld. CIT(A) in the hands of both the assessees and restore all issues to the file of the A.O. for examining them afresh. After affording adequate opportunity of being heard to the assessees, the A.O. may take appropriate decision in accordance with law. Appeals are allowed for statistical purposes.

Summary

Issues:
1. Delay in filing appeals by the assessees.
2. Assessment of long-term capital gains on sale of shares.

Issue 1: Delay in filing appeals by the assessees

The assessees, in this case, filed appeals against orders passed by Ld. CIT(A)-5, Bengaluru, relating to the assessment year 2014-15. The appeals were barred by 998 days and 1013 days, respectively. The assessees attributed the delay to their former Chartered Accountant, who failed to file the appeals as requested. The assessees, upon realizing the lapse, sought condonation of delay. The Ld. A.R. argued that the assessees were under a bonafide belief that the appeals were filed in time. The Ld. D.R. opposed the condonation, stating that the assessees did not provide sufficient evidence to support their claims. The Tribunal, after considering the submissions, held that there was a reasonable cause for the delay. However, the assessees were directed to pay a cost of &8377; 10,000 each to the Income Tax Department for their inactivity in following up with the former Chartered Accountant.

Issue 2: Assessment of long-term capital gains on sale of shares

The appeals contested the assessment of long-term capital gains arising from the sale of shares. The assessees claimed exemption on the gains realized from the sale of shares in two different companies. The Assessing Officer (A.O.) categorized the companies as penny stocks and alleged that the assessees used a colorable device to declare long-term capital gains. The A.O. rejected the claim of long-term capital gains and assessed the profits as taxable income. The Ld. CIT(A) upheld the A.O.'s decision. The assessees argued that they were not given the opportunity to rebut the evidence relied upon by the A.O. and cross-examine relevant individuals. The Tribunal found merit in the assessees' contentions and set aside the orders passed by Ld. CIT(A), directing the issues to be reconsidered by the A.O. after affording the assessees a fair opportunity to present their case and cross-examine witnesses.

In conclusion, the Tribunal allowed both appeals for statistical purposes, emphasizing the importance of providing assessees with a fair opportunity to contest assessments and present their case effectively.