2021 (6) TMI 931 - AT - Income Tax

Condonation of delay - sufficient cause or reason of delay - HELD THAT - The assessee has been vigilant in his approach and has not neglected the Income Tax proceedings. The Hon ble Apex Court in the case of N. Balakrishnan 1998 (9) TMI 602 - SUPREME COURT has observed that the length of delay is immaterial. The acceptability of the explanation is the only criteria for condoning the delay. In a given case, delay of the shortest period of time may be un-condonable due to unacceptable explanation, whereas in certain other cases, delay of a long period can be condoned if the explanation is satisfactory. In every case of delay, there might be some omissions or negligence on the part of the assessee but to our mind such omission/negligence has to be weighed in light of facts and circumstances of each case. If the negligence or omission is a by-product of a deliberate attempt with mala fide intention for delaying the process of litigation which could give some benefit to the litigant, then probably the delay would not deserve to be condoned. However, if no mala fide can be attributed to the delay, the delay will be condonable. Therefore, on the facts of the present case, we are of the considered opinion that the assessee has been able to demonstrate sufficient reasons, in the shape of approaching wrong remedy, for filing an appeal before the Tribunal. Levy of penalty u/s 271(1) (c) - defective notice u/s 274 - HELD THAT - A bare perusal of the notice issued to the assessee u/s 274 read with section 271(1)(c) of the Act goes to prove that assessee has not been called upon to explain if he has concealed the particulars of income or furnished inaccurate particulars of such income. we are of the considered view that when the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s 271(1)(c) of the Act is not sustainable - See M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. 2019 (8) TMI 409 - DELHI HIGH COURT . Appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Condonation of Delay:
The assessee filed an appeal against the penalty order with a delay of three years. The reasons for the delay included property disputes, police complaints, mental and financial stress, and the assessee’s temporary relocation. The court noted that the judiciary is empowered to condone delays if the litigant provides sufficient reasons. Citing precedents, the court emphasized that "sufficient cause" should be liberally construed to advance substantial justice. The court found the assessee's reasons satisfactory, noting that the delay was not due to negligence or mala fide intent. Consequently, the delay was condoned, and the appeal was admitted.

2. Validity of Penalty Proceedings:
The assessee challenged the penalty on the grounds that the notice issued under Section 274 of the Act did not specify whether the penalty was for "concealment of income" or "furnishing inaccurate particulars of income." The court observed that it is a settled principle that the assessee must be made aware of the specific charge against them. The court referred to the Karnataka High Court's decision in CIT vs. Manjunatha Cotton and Ginning Factory, which held that a penalty notice must clearly state the grounds for the penalty. The court also cited the Delhi High Court's approval of this principle in the case of Sahara India Insurance Company Ltd. The court concluded that the penalty proceedings were vitiated due to the defective notice and directed the Assessing Officer to delete the penalty.

Conclusion:
The appeal filed by the assessee was allowed. The delay in filing the appeal was condoned, and the penalty imposed under Section 271(1)(c) was deemed unsustainable due to the defective notice, leading to the deletion of the penalty.