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Income Tax Appellate Tribunal (ITAT) Delhi in a recent judgment has held that wrong or non advice by chartered accountant counsel was a reasonable ground for condonation of the delay in filing the cross objections.

Case Details:
ITA No. 2765/Del /2011, ITA No. 3703/Del /2011 ; Assessment Year:2007-08
CO No. 17/Del/2015; CO No. 18/Del/2015
Income-tax Officer (Appellant) vs M/s Vishu Impex Pvt. Ltd (Respondent)
Date of Order: 31-12-2015

Brief facts of the Case:
Revenue had filed appeals against the order of the CIT(A) deleting penalty levied by the Assessing Officer  u/s 271D & 271E of the Income Tax Act, 1961. The assessee also filed cross objections challenging the validity of penalty orders alleging that the same were hit by limitation as prescribed u/s 275(1)(c). However, the cross objections of the assessee were delayed by 1297 and 1244 number of days. The assessee also filed application for condonation of delay and affidavits of the Director of the assessee company stating that the chartered accountant that was handing the earlier appeal never advised the assessee for filing cross objection. But on the change of the counsel the newly appointed chartered accountant, on going through the relevant case records advised that since the impugned penalty order was barred by limitation, the company alongwith request for admission of additional ground should have been filed immediately alongwith the petition for condonation of delay in filing the cross objections.

Contentions of the assessee:
The assessee contended that the delay in filing the cross objection was caused on account of no such advice or incorrect advice by the earlier CA counsel which was a reasonable and bonafide cause for delay in filing the cross objection. The issue raised in cross objection was legal issue which go to the root of the matter and also touched upon the issue of validity of jurisdiction of the AO for levying penalty u/s 271D and 271E. Therefore, the bonafide delay in filing the cross objection be condoned and the cross objection be accepted for adjudication.

Contentions of the Revenue:
Revenue opposed the application for condonation of delay in both the appeals and submitted that the delay could not be condoned on account of change of advice.

Important Excerpt from ITAT Judgment:
On a careful consideration of the above submissions of the rival parties, we note that in the case of Perfect Scale Company [supra], the ITAT, Mumbai Bench ah held as under:

“After considering the submission and perusing the material on record, I found that the assessee was bonafide in not filing the appeals in time. Copy of the affidavit of the Director of the company is placed on record. It has been explained that the company received the order ITA Nos.3228 to 3234/2013 of CIT(A) dated 1-10-2011 and the appeal should have been filed before the Tribunal within 60 days. It is further explained that the appeal matters of the assessee were looking after by Mr. P.K.Tandon, Chartered Accountant and on his advice the appeals were not filed. However, when the assessee transferred the case to Mr. S.S. Gajja, Chartered Account, who advised that appeals are to be filed before the Tribunal as the order of the CIT(A) is not as per the provisions of law. I noted that due to wrong advice of the Chartered Accountant, appeals could not be filed in time, therefore, I am of the view that there is a reasonable cause in not filing the appeals in the time. The decision in the case of The Phoenix Mills Ltd (supra), on which reliance has been placed, is in favour of the assessee. In this case the ratio of the decision of the Hon'ble Apex Court in the case of Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi and others, reported in (1979) 118 ITR 507(SC), has been considered, wherein it has been held that the mistake of the counsel may in certain circumstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. Accordingly, the Hon'ble Apex Court has held that there is a mistake of the counsel and, therefore, the delay in filing the appeal has been condoned. I further noted that similar finding has been expressed by the Hon'ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy, reported in AIR 1998 SC 3222. The Tribunal has also considered the decision in the case of Mela Ram and sons Vs. ITA Nos.3228 to 3234/2013 CIT, reported in 29 ITR 607 (SC) and accordingly, the delay in filing appeal was condoned. The facts in the present case are also similar as in this case also due to mistake of Chartered Accountant the assessee could not file the appeals in time. In view of the above facts and circumstances of the case and in view of the various decisions mentioned above, which was considered by the Tribunal in the case of The Phoenix Mills Ltd (supra), I condone the delay in filing the present appeals before the Tribunal for all the years. Also heard on merit of the case”.

In view of the above, it was held by the Coordinate Bench of the Tribunal that where it was due to wrong advice of the Chartered Accountant that the appeal was not filed on time, then it was to be held that there was reasonable cause in not filing appeals in time and the same was to be condoned. In the present case also, the assessee company has clearly stated in the application for condonation of delay and affidavit of the Director that earlier the case was handled by Shri Satish Agarwal, Chartered Accountant and he did not advice to raise legal objection and when Shri R.K. Gupta, CA appointed on 22.1.2015 then advised for filing cross objection. Since the delay was caused in this situation, we are inclined to hold that there was a bonafide reason and cause due to which cross objections could not be filed on time and delay was caused which cannot be attributed as wilful omission or negligence on the part of the assessee.

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Wrong/non advice by chartered accountant counsel was reasonable ground for condonation of the delay in filing the cross objections/appeals-ITAT | 03-01-2016 |

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