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Prominent Builders and Investors Vs. Inspecting Assistant - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1985)11ITD327(Delhi)
AppellantProminent Builders and Investors
Respondentinspecting Assistant
Excerpt:
.....act, 1961 ('the act'), respectively.3. being aggrieved with the penalty order, the assessee filed appeals before the tribunal on 2-6-1981. these appeals were heard and decided by the tribunal on 6-8-1982, holding that appeals should have been filed before the commissioner (appeals). consequently, the tribunal dismissed the appeals in limine on the ground that such appeals were incompetent. the assessee was served with the tribunal's order on 13-9-1982. before the orders were served, the assessee filed appeals before the learned commissioner (appeals) on 13-8-1982.4. after hearing the parties, the commissioner (appeals) was of the view that the appeals should have been filed before him within 30 days of the service of the penalty orders. there was delay of 15 months in filing the.....
Judgment:
1. These appeals are by the assessee, pertaining to the assessment years 1977-78 to 1979-80. The point in issue in all the appeals is identical. So all the appeals are being disposed of by a common order.

2. The assessee is a private limited company. In the assessment years 1977-78, 1978-79 and 1979-80, the IAC imposed penalties of Rs. 11,050, Rs. 6,400 and Rs. 2,750 under Section 272A(2) of the Income-tax Act, 1961 ('the Act'), respectively.

3. Being aggrieved with the penalty order, the assessee filed appeals before the Tribunal on 2-6-1981. These appeals were heard and decided by the Tribunal on 6-8-1982, holding that appeals should have been filed before the Commissioner (Appeals). Consequently, the Tribunal dismissed the appeals in limine on the ground that such appeals were incompetent. The assessee was served with the Tribunal's order on 13-9-1982. Before the orders were served, the assessee filed appeals before the learned Commissioner (Appeals) on 13-8-1982.

4. After hearing the parties, the Commissioner (Appeals) was of the view that the appeals should have been filed before him within 30 days of the service of the penalty orders. There was delay of 15 months in filing the appeals before him. The learned Commissioner (Appeals) was of the view that the assessee was not justified in filing the appeals before the Tribunal against the penalty orders passed under Section 272A(2). Consequently, the learned Commissioner (Appeals) held that there were no sufficient causes, which prevented the assessee from filing the appeals within time. Thus, he dismissed all the appeals in limine on the ground that they were barred by time.

5. Before the Tribunal, the contention of the learned counsel of the appellant was that in view of the provisions of Section 253(1)(a) read with Section 272A(3) of the Act, the assessee was under the bona fide belief that appeals against the order passed under Section 272A(2) could be filed directly before the Tribunal. In any view of the matter, the learned Counsel contended that on the basis of the advice of the counsel, he was under the bona fide belief that the proper forum for filing the appeals against the order passed by the IAC under Section 272A(2) was the Tribunal. In this connection, it was submitted that the Tribunal dismissed the appeals on 6-8-1982 in limine and before the order could be served on 13-9-1982, the appeals were filed before the Commissioner (Appeals). According to the learned Counsel, where a person believing in good faith that an appeal filed before the Tribunal or before the appropriate authority and in pursuance of such belief presented the appeal before the Tribunal or appropriate authority, it could be successfully argued that there were sufficient causes for not filing the appeals before the appropriate authority. Reliance was placed on the decisions in the cases of Firm Bishan Das Brij Lai v.Firm Brij Mohan Lakshmi Narain AIR 1935 Lahore 844, Noor Beg v. Ch.

Abdul Rahman AIR 1944 Oudh 193 and the decision of the Supreme Court in the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507.

6. On behalf of the revenue, it was contended that there were no sufficient causes in the present case for not filing the appeals originally before the learned Commissioner (Appeals) against the penalty orders passed by the IAC under Section 272A(2). According to the revenue, by no stretch of imagination against the order passed under Section 272A(2), appeals could be filed before the Tribunal.

Thus, it was submitted that there were no sufficient causes, which prevented the assessee from filing the appeals before the appropriate authority within time.

7. We have considered the rival submissions and perused the entire material on record. Before discussing the contentions of the parties in detail, we would like to point out that the ITO imposed penalties under Section 272A(2) against the assessee in respect of the assessment years 1977-78 to 1979-80. The orders were served on 25-4-1981. Before the Commissioner (Appeals), appeals should have been filed within 30 days from the date of the penalty order. The assessee filed the appeals before the Tribunal against the impugned penalty orders on 2-6-1981. It means nearly about 39 days after service of the penalty order, the appeals were filed before the Tribunal. He may also point out that the appeals were heard in detail by the Tribunal and they were dismissed in limine on 6-8-1982. Before the Tribunal also, the contention of the learned Counsel for the appellant was that according to his interpretation, in view of the provisions of Section 253(1)(a), appeals could be filed directly before the Tribunal against the penalty orders passed by the IAC under Section 272A(2). The Tribunal decided the matter on 6-8-1982, holding that appeals were incompetent. The Tribunal's order was served on 13-9-1982 but the appeals before the Commissioner (Appeals) were filed on 13-8-1982.

8. From the aforesaid facts, it comes out that the assessee filed the appeals at the original stage before the Tribunal on the advice of his counsel and it is also clear that the advice of the counsel given to his client was a bona fide one. From the aforesaid facts, it is also clear that the appellant has acted all along with reasonable diligent in prosecuting the appeals before the Tribunal. Under the circumstances, it should be accepted that the assessee took up the matter before the Tribunal in good faith and as such, the time taken in prosecuting the appeals before the Tribunal should be excluded for the purpose of computing the period of limitation. Before the Tribunal's order was served upon the assessee, he filed the appeals before the competent authority. So from this point of view also, the bona fides of the assessee are proved.

9. We may point out that legal advice given by the members of legal profession may sometimes be wrong even as pronouncement on question of law by the Courts are sometimes wrong. An amount of latitude is expected in such cases, for to err is human and laymen, as litigants are, may legitimately lean on expert counsel in legal as in other departments without probing the professional competence of the advice.

The Court and the Tribunal must, of course, see whether in such cases, there is any taint of mala fides or element of recklessness or ruse. If neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause for condoning the delay for the purpose of computation of limitation. In support of this conclusion we are fortified by the ratio of the decision of the Supreme Court in the case of Concord of India Insurance Co. Ltd. (supra).

10. Looking to the aforesaid facts and the entirety of circumstances, we are of the view that there were sufficient causes which prevented the assessee from filing the appeals before the Commissioner (Appeals) within time. So delay in filing the appeals before the Commissioner (Appeals) is condoned. Let the matter should go back to the learned Commissioner (Appeals) for deciding the same on merits.


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