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May 12, 2022

Wrong professional advice resulted in a 1037-day delay in filing an appeal condoned.

by CA Shivam Jaiswal in Income Tax

Wrong professional advice resulted in a 1037-day delay in filing an appeal condoned.

Facts and issue of the case

It was submitted that assessee is a corporation under the special purpose vehicle to implement metro rail projects. It is submitted that the assessee took requisite permission and approvals to invest the surplus funds. The funds were invested in fixed deposits of bank that earned interest until, they were required for implementation of the project.  The assessee is said to be a wholly owned company of Govt. of Karnataka, wherein the Govt. of India contributed in the form of equity and subordinate debt to the extent of 25% of the project cost. The design and technology for the project was as per the assessee’s project report approved by the Govt. of Karnataka.   

The Ld.AR submitted that the assessee approached a professional who advised that, no relief may be expected in the appellate forum, and therefore, the assessee did not file any appeal before the Ld.CIT(A). Subsequently, in  assessee’s  own case for A.Ys. 2007-08 and 2008-09, that was pending before this Tribunal in ITA Nos. 1070 & 1071/Bang/2011, was decided on 31.10.2014, wherein the issue under consideration in respect of income earned on investment made out of surplus funds, whether taxable in the hands of the assessee or not was decided. This Tribunal held in favour of the assessee on the issue and the Ld.Counsel who represented the assessee before this Tribunal advised the assessee to challenge the orders that were not challenged. Accordingly, assessee preferred appeal before the Ld.CIT(A).The Ld.AR submitted that, though several grounds were raised before the Ld.CIT(A) on merits, the Ld.CIT(A) dismissed the appeal for not condoning the  delay in filing of appeal of 1037 days before him. The Ld.CIT(A) observed Aggrieved by the order of Ld.CIT(A), assessee is in appeal before this Tribunal.

The Ld.AR submitted that, it is only after the order passed by this Tribunal dated 31.10.2014 that assessee preferred appeal, with the correct advice of  the  professional  before  the  Ld.CIT(A). On identical facts during the relevant period for A.Y. 2009-10, there was a delay in filing the appeal before this Tribunal to the extent  of  1240  days  which  was  condoned  by  this  Tribunal.The Ld.DR opposed the prayer of the assessee for condoning the delay in filing the appeal.On the contrary, the Ld.CIT.DR submitted that there is no decision on the issue, on the additions by Ld.CIT(A), in the even the delay is condoned.   Revenue may be granted an opportunity to pass an order on merits. Court had perused the submissions advanced by both sides in the light of records placed before us.

Observation of the Court

The court had noticed that Ld.CIT(A) dismissed the appeal in limine due to the delay caused in filing the appeal before him. The affidavit that was filed by the assessee before the Ld.CIT(A) reveals that, assessee was subjected to wrong professional advice on  the issues that, no relief could be expected, and therefore, no appeal was preferred. On identical circumstances, this Tribunal considered a delay of 1240 days in assessee’s own case for A.Y. 2009-10.Court had noticed that the period during which the appeals for year under consideration before the Ld.CIT(A) and appeal for immediately preceding Assessment Year (2009-10) before this Tribunal was same and the reasons mentioned in the affidavit for not filing the appeal before the respective authorities within the period of limitations are identical.  it is clear that the period of time that assessee followed the wrong professional advice in preferring the respective appeals are the same. It is also true that the advice of the professional would be the point of time at  which  the  assessee would begin to explore the option of exhausting all legal remedies

Therefore respectfully following the view adopted by this Tribunal in assessee’s own case for A.Y. 2009-10, we accept the reasons given for the delay and thereby condone the same for not able  to file  an appeal before  the  Ld.CIT(A). As the Ld.CIT(A) has not decided the issues on merits, we remand this appeal back to Ld.CIT(A) to pass a detailed order on the merits of the case by granting proper opportunity of being heard to assessee in accordance with law.


 The court allowed the plea of the assessee.


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