Alacrity Housing Limited vs Assistant Commissioner of Income Tax

F.M. Ibrahim Kalifulla, J.—By consent of parties, the appeal itself is taken up for disposal.

The question of law raised in this appeal is:

Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income Tax (Appeals) declining to condone the delay of 178 days in filing the appeal ?

The Assessing Officer levied minimum penalty of Rs. 1,84,00,000 u/s 271(1)(c) of the Income Tax Act, 1961, by on order dated April 26, 2005. The appellant filed the appeal before the Commissioner of Income Tax (Appeals) with a delay of 178 days along with an application for condoning the delay. The Commissioner of Income Tax (Appeals) without assigning any reason, dismissed the said application holding that the delay in filing the appeal was intentional with a view to get the penalty order quashed on the technical ground of improper service of notice. The appeal was consequently rejected.

The Tribunal after taking note of the recorded statement of the managing director of the appellant, which statement was recorded before the Commissioner of Income Tax (Appeals) u/s 131 of the Income Tax Act, however, held that the appellant was guilty of laches and negligence and proper action was not taken for filing the appeal within the prescribed time.

We heard Mr. Jeyakumar, learned Counsel for the appellant and Mr. K. Subramanian, learned senior standing counsel for the respondent.

u/s 249(3) of the Income Tax Act, power is vested with the Commissioner of Income Tax (Appeals) to admit the appeal after the expiration of the prescribed period if the Commissioner of Income Tax (Appeals) is satisfied that the appellant had sufficient cause for not bringing the appeal within the prescribed period.

When we peruse the statement of the managing director as recorded before the Commissioner of Income Tax (Appeals), we find that there was a strike in the company, which prevailed between March 2004 and the first week of October 2005. The order, which was the subject-matter of appeal was dated April 26, 2005. The appeal was filed before the Commissioner of Income Tax (Appeals) on November 21, 2005, i.e., about one and a half years (i.e.) after the strike situation in the appellant''s factory came to an end. Even, according to the Department, the notice was served only on an employee by name Mrs. D. Mohan. According to the deponent, who is the managing director, since the company was on strike, there was no regular working in the office and therefore, it escaped from the attention of the concerned authority to prefer the appeal in time.

The question for consideration is whether such an explanation was acceptable or not. It is not the case of the Revenue that the fact about the strike, which was prevailing in the appellant''s company between March 2004 and October 2005 was not a true statement. In which event, the explanation offered by the appellant cannot be held to be not genuine or that the explanation, trotted out for the purpose of covering the delay of 178 days in filing the appeal.

In such circumstances, we are convinced that the principles of natural justice warranted an opportunity to be extended to the appellant to challenge the order by which, a serious civil consequence followed, namely imposition of penalty to the tune of Rs. 1,84,00,000 on the appellant. Viewed in that respect, the delay of 178 days in filing the appeal ought to have been condoned. We therefore, hold that the application for condonation of delay preferred by the appellant merits acceptance and the rejection of the same by the Commissioner of Income Tax (Appeals) and the confirmation of the same by the Tribunal was not justified. We therefore set aside the orders impugned in this appeal and the delay petition of the appellant for condoning the delay of 178 days in filing the appeal before the Commissioner of Income Tax (Appeals) stands allowed and the order dismissing, the appeal is also set aside. The Commissioner of Income Tax (Appeals) is directed to restore the appeal to his file, number the same and dispose it of on the merits and in accordance with law.

With the above directions, this appeal stands allowed. Consequently, connected miscellaneous petition is closed.