2024 (7) TMI 337 - AT - Income Tax

Delay in filing the appeal before the CIT(A) by 1008 days - as submitted that there was change in administrative staff and the management roles, post covid, hence, there was a delay in following up the statutory proceedings - HELD THAT - Covid pandemic pacified in March, 2022 and the assessee preferred appeal before the CIT(A) in November 2022, which means the assessee did not prefer appeal for eight months even after covid. The assessee has not given any valid reasons for non filing of the appeal even after covid pandemic for about eight months. AR simply submitted before me that due to illness of one of the partners and other administrative problems, the assessee did not prefer appeal in time and has not given any valid reasons before me. Moreover, according to section 9 of the Limitation Act, where once time has begun to run, no subsequent disability or inability to institute a suit or make an application stops it. Therefore, the limitation in the present case on hand has started on 02.09.2019 and the delay in filing the appeal in this case before the Ld.CIT(A) is 1008 days. I find that the assessee has not established any sufficient cause to condone the delay of 1008 days to prevent him to prefer appeal before the Ld.CIT(A) belatedly. Apart from this, even after covid pandemic also, there is huge delay of 8 more months. Appeal of the assessee is dismissed.

Summary

Issues:
1. Condonation of delay in filing the appeal before the Commissioner of Income Tax (Appeals).
2. Incorrect designation of entity as an Association of Persons (AOP) instead of a partnership firm by the Income Tax Department.
3. Disallowance of deductions under section 40(b)(iv) of the Income Tax Act, 1961.
4. Rejection of condonation petition by the Commissioner of Income Tax (Appeals) leading to dismissal of the appeal.
5. Appeal before the Tribunal challenging the delay in filing the appeal and seeking rectification of the entity's designation.

Detailed Analysis:
1. The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) with a delay of 12 days, citing reasons related to the health of the managing partner's mother. The Appellate Tribunal, after reviewing the condonation petition, found that the delay was due to a reasonable cause and hence, condoned the delay to admit the appeal for hearing.

2. The main issue raised by the assessee before the Tribunal was the incorrect designation of their entity as an Association of Persons (AOP) instead of a partnership firm by the Income Tax Department. The firm had been consistently assessed as a partnership firm for three decades, and despite multiple notifications to rectify the error in PAN designation, no action was taken. The Central Processing Centre (CPC) disallowed deductions under section 40(b)(iv) of the Act, leading to the appeal.

3. The Tribunal noted the grounds raised by the assessee, emphasizing the historical assessment as a partnership firm, the lack of evidence supporting the AOP designation, and the unjust unilateral assessment by the CPC. The appeal sought justice in rectifying the error and restoring the correct classification as a partnership firm for fair treatment in future assessments.

4. The Tribunal considered the delay in filing the appeal before the Commissioner of Income Tax (Appeals) for 1008 days. The assessee attributed the delay to administrative changes, management roles post-covid, and the onset of the pandemic, which affected the timely follow-up of statutory proceedings. However, the Departmental Representative argued that the reasons provided were insufficient to justify the lengthy delay, both before and after the covid pandemic.

5. After hearing both parties and examining the facts, the Tribunal found that the delay of 1008 days in filing the appeal was not sufficiently justified by the assessee. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) to dismiss the appeal, as the assessee failed to establish a reasonable cause for the delay. The Tribunal emphasized that the limitation period had started on 02.09.2019 and the delay persisted even after the covid pandemic, leading to the dismissal of the appeal.

In conclusion, the Tribunal dismissed the appeal of the assessee, affirming the decision of the Commissioner of Income Tax (Appeals) based on the lack of sufficient cause to condone the delay in filing the appeal.