Tushar Hemani, Parimalsinh B. Parmar, Vijay Govani, AR and Khyati Chugh, AR for the Assessee. S.S. Shukla for the Revenue.

Present three appeals are directed at the instance of the assessee against the orders of the ld.CIT(A)-3, Ahmedabad of even dated i.e. 27.2.2019. The ld.AO imposed penalty under section 271(1)(c) of the Income Tax Act, 1961 respectively for the above three assessment years. These orders were confirmed by the ld.CIT(A), which are impugned in these appeals. Thus, the sole issue raised is common in all these appeals, therefore for the convenience of adjudication of the same, we dispose of all these appeals by this common order.

2. Registry has pointed out that the appeals filed by the assessee are time barred by 282 days. In order to explain the delay the assessee has filed application for condonation of delay in the form of affidavit. In the affidavit,the assessee has explained the reasons for the delay. The relevant part of the affidavit reads as under:

a) The impugned order passed by the Ld. CIT(A) was received by me on23.03.2019. I was to hand over the same to the concerned Tax Practitioner for filing an appeal against the same before Hon’ble ITAT. However, inadvertently, I forgot to pass on such order to the said Tax Practitioner.

b) I say and submit that since I am not well read and I was unable to comprehend the contents of the order, for which it took a reasonable time. Thereafter, due to my advanced age, it took some time for me to gather records and consult practitioners of Charted Accountancy and law.

c) However, upon inquiry by the concerned Tax Practitioner eventually, I realized that the impugned order was not forwarded for filing an appeal before Your Honors. As soon as I, came across such facts, immediately forwarded the impugned order to the concerned Tax Practitioner who, in turn, forwarded the same to the concerned Advocate with due diligence for filing of Appeal before Your Honors. Thereafter, concerned advocate prepared Form No.36 and forwarded the same for signature. Shortly thereafter, the present appeal came to be filed. In the mean-time, there occurred some delay in filing appeal.

1. I say and submit that I have entrusted the matter for filing of appeals against this order to my the-then Chartered Accountant, who was handling the accounts of my business since last many years. I was under the impression that he will handle the same with due care and diligence. However, when I inquired with him regarding the status of my accounts and appeals, I was shocked and surprised to know that the appeal has not been filed yet due to his negligence towards the same. I say and submit that due to such careless attitude shown by him, I was left with no other option but to remove him from the said responsibility of managing accounts and filing of appeal. More so, due to the negligence on the part of my Chartered Accountant, some relevant documents were misplaced. Therefore, it took us time to gather all the relevant documents and hand it over to our subsequent Chartered Accountant.

2. I say and submit that under such circumstances there is a delay in filing the Appeal before Your Honors. However, I respectfully submit that there is prime facie good case my favour. Hence, it is respectfully prayed to Your Honors that looking the reasons as stated, I request Your Honour to kindly condone the delay caused in filing Appeal before Your Honour, in the interest of Justice and the appeal may be heard and decided on merits to protect the rights and interest of the deponent.”

The ld.counsel for the assessee reiterating contents of the affidavit-cum-delay condonation application duly sworn by the assessee, and submitted that reasons stated by the assessee are genuine and reasonable, which justify the delay occurred in filing appeals before the Tribunal, therefore, the same deserves to be condoned, and the appeals be decided on merit.

3. The ld.DR, on the other hand, contended that there is no material possessed by the assessee to substantiate this assertion of the facts. He has not deposed the name of the tax consultant, while leveling allegations against the said tax consultant, and therefore, submissions of the assessee for the condonation of delay in filing appeals before the Tribunal merit no consideration.

4. We have duly considered rival contentions and gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:

“1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.

3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.

4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.

5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.

6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”

5. Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under:

“Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.

A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation.

While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss.”

6. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon’ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach.

7. In the light of the above, if we examine the explanation given by the assessee, then it would reveal that the appeals could not be filed in time on account of lapses on the part of Chartered Accountant of the assessee in filing the appeal before the Tribunal on time. Though, we do not have any material to verify this pleadings, but considering the facts that the assessee would not gain anything by not filing the appeals in time, therefore, in the interest of substantial justice, we condone the delay and proceed to decided the appeals on merit.

8. As aforesaid, grounds raised in the appeals are identical except variation in quantum. Sum and substance of the facts, as emerging from the relevant orders of lower authorities, required for adjudication of common issue on hand are that, assessee is an individual having income from business,and other sources like interest income. A search under section 132 of the Income Tax Act, 1961 was carried out in the group cases of Thakore group, which was engaged in sale and purchase of land. Search action was also conducted at the residential premises of the assessee on 21.9.2010. A notice under section 153A(a) of the Act was issued on 8.10.2011, and in response to which, the assessee filed return of income on 14.12.2012.

Thereafter the assessment under section 153A r.w.s. 144 of the Act was finalised on 30.3.2013. The ld.AO in the assessment orders made the following additions:

Asstt.Year 2004-05

i) Total Income as per return Rs.69,510/-

ii) Add: Unexplained Investment in land 77 Rs.5,13,833/-

Total Assessed Income Rs.5,83,393/-

Asstt.Year 2006-07

iii) Total Income as per return Rs.1,28,380/-

iv) Add: Undisclosed capital gain on sale of Block No.77 Rs.86,60,942/-

v) Add: Unexplained deposits in bank Rs.4,48,378/-

Total Assessed Income Rs.92,37,700/-

Asstt.Year 2009-10

vi) Total Income as per return Rs.61,70,770/-

vii) Add: Unexplained deposits in bank Rs.3,72,625/-

viii) Add: Undisclosed amount of short term capital gain Rs.2,61,93,070/-

Total Assessed Income Rs.3,27,36,465/-

9. Against these orders of the ld.AO, the assessee went in appeal before the ld.first appellate authority, but could not succeed. Assessee further went in appeals before the Tribunal in IT(SS)A.No.112 to 116/Ahd/2015 for the Asstt.Years 2005-06 to 2009-10. The Tribunal set aside orders of the Revenue authorities and remitted the issues to the file of the CIT(A) for de novo appellate proceedings which, as of now are pending for final adjudication.

10. During the pendency of de novo appellate proceedings, the ld.AO initiated penalty proceedings under section 271(1)(c) of the Act and after hearing the assessee imposed penalty of Rs.1,49,038/- for the Asstt.Year 2005-06 , Rs.30,49,383 for the Asstt.Year 2006-07, and Rs.90,29,680/- for the Asstt.Year 2009-10, which were confirmed by the ld.CIT(A) in appeal. The same are now under challenge before the Tribunal.

11. The ld.counsel for the assessee at the very outset submitted that the assessee had filed appeals against orders of the ld.CIT(A) in quantum matters.

The Tribunal has set aside orders of the CIT(A) vide IT(SS)A.No.112 to 116/Ahd/2015 for the Asstt.Years 2005-06 to 2009-10. He has placed on record copy of order of the Tribunal dated 27.12.2017. The Tribunal has disposed of seven appeals pertaining to three assessees by common order. The ld.counsel for the assessee further contended that since the quantum in dispute is still pending before the ld.first appellate authority, therefore, the penalty issue be remitted back to the file of the ld.CIT(A).

12. On the other hand, the ld.DR was unable to controvert the contentions of the ld.counsel for the assessee.

13. We have considered rival submissions and gone through the record carefully. We find that the additions leading to these penalties were disputed by the assessee before the Tribunal in IT(SS)A.No.112 to 116/Ahd/2015 cited (supra). The relevant part of the order of the Tribunal reads as under:

“Per Bench :

1. By way of these seven appeals, the assessee-appellant(s) has challenged the correctness of the ex-parte orders, all dated 09.01.2015, passed by the learned Commissioner of Income-tax (Appeals)-12, Ahmedabad in the matter of assessment under section 153A r.w.s 144 / 143(3) of the Income-tax Act. 1961, for the assessment years 2005-06 to 2009-10 & 2011-12.

2. When these appeals were called out for hearing, it was noticed that the learned CIT(A) has passed the impugned orders ex-parte, inter alia, on the ground that the assessee did not respond to the notices of hearing issued by the learned CIT(A) and the assessee did not even file the statement of facts along with the appeal memo. On perusal of the material on record, it is noticed that the last date of hearing fixed by the learned CIT(A) was on 05.12.2014 and the hearing was scheduled on 17.12.2014.

Clearly, therefore, the notice for hearing was given less than even 10 days before the scheduled date of hearing. As for the CIT(A)'s observations about statement of facts, we have noticed that the assessee was not specifically put to notice in this regard and thus, the assessee did not have any effective opportunity for making up this deficiency.

In any case, when it was put to the Departmental Representative whether he has any objection to the matter being remitted to the file of the CIT(A) for adjudication on merits, he did not have much to say, but left the matter to the bench. Shri Aseem Thakkar, learned counsel for the assessee has assured us that, on the matter being remitted to the file of the learned CIT(A) for adjudication de novo, he will ensure strict compliance with the notice of hearing and that the remanded proceedings are expeditiously completed.

3. In view of these discussions and bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the learned CIT(A) for adjudication denovo,after reasonable opportunity of hearing to the assessee, by way of speaking order and in accordance with the law. The assessee is also directed to ensure proper compliance with the notice of hearing by the learned CIT(A), failing which the C1T(A) will be at liberty to dispose of the matter on the basis of the material on record.”

7. The Tribunal has set aside ex parte orders of the ld.CIT(A) on quantum appeals, and remitted these issues for re-adjudication to the file of the CIT(A) afresh. Thus, the determination of income for the purpose of taxation is yet to be finalized. In other words, additions on account of assessment under section 153A is required to be made in the hands of the assessee or not, is sub judiced before the CIT(A). In this background, it is pertinent to note that sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It reads as under:

(iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any,payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits.”

9. This sub-clause contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable by him, which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the addition made to the income of the assessee. In the present case, the assessee has filed appeals before the Tribunal against these quantum additions in all these three years under consideration. The Tribunal vide order dated 27.12.2017 (supra) has remitted the issue of additions to the file of the ld.CIT(A) for de novo proceedings, therefore, no penalty at this stage is quantifiable or imposable. Therefore, since the issue of quantum addition has been remitted to the file of the CIT(A), we remit the issue regarding levy of penalty in these years as well to the file of CIT(A). The ld.CIT(A) after adjudication of the quantum additions, shall take a call as to whether penalty is to be imposed upon the assessee or not.

In other words, the ld.CIT(A) shall decide the issue regarding levy of penalty after determination of the income in pursuance of Tribunal’s order in the above three years.

5. In the result, appeals of the assessee are allowed for statistical purpose.

Order pronounced in the Court on 29th June, 2021 at Ahmedabad.

Sd/- Sd/-

(WASEEM AHMED)

ACCOUNTANT MEMBER

(RAJPAL YADAV)

VICE-PRESIDENT

Ahmedabad; Dated 29/06/2021