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March 17, 2023

Revision order u/s 263 was duly passed even if AO failed to inspect the currency deposited during demonetization

Revision order u/s 263 was duly passed even if AO failed to inspect the currency deposited during demonetization

Fact and Issue of the case

This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 18-06-2022, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2013-14 wherein the assessee has raised the following ground of appeal. ‘’Levy of Penalty u/s 271(1)© of Rs.1,01,469/- is bad in law.”

Apropos solitary ground of the assessee, the facts as emerges from the order of the ld. CIT(A), NFAC, Delhi are as under:-

The appellant has failed in explaining the delay in filing the appeal and the fact that the said order was passed and available with the appellant as it was visible on online Portal since long shows that there was lack of due care and attention on the part of appellant to file appeal in time. In the instant case, the reasons put forward by the appellant to justify the delay is general, routine and nonchalant as the entire blame for delay has been put on CA who has not even accepted any such responsibility as no such affidavit is on record. I am of the considered opinion that the assessee has failed to prove his bona fides to establish with evidence that he was prevented by unavoidable circumstances from filing the appeal or there was ‘’sufficient cause” for not filing the appeal in time.

Even otherwise on the merits of it, I also do not see any infirmity in the order of AO as no compliance to the notices issued were made before the AO and that by claiming excess deduction under section 80P of the Act. Appellant had in fact concealed the particulars of its income. In view of the foregoing, in the facts and circumstances of this case, it is held that appellant did not have sufficient cause for the delay or nearly eleven months in filing of appeal. Hence, the delay in filing present appeal is not condoned u/s 249(3) within the meaning of Section 249(3) of the Income Tax Act. The appeal is not admitted for adjudication and is dismissed in limine.”

As per the facts of the present case, the assessee claimed deduction under various sub-section of 80P of the Act. However, the AO after verification of the records restricted the allowance of deduction u/s 80P of the Act and he was of the view that the business activities carried out by the assessee are not falling under the category of eligible activities and thus as per his view the assessee had concealed particulars of income and consequently the AO levied penalty. The Bench noticed that the ld. CIT(A) dismissed the appeal of the assessee primarily on two counts.

(a) That the appeal filed late and reason put forward to justify the delay in appeal is general, routine and nonchalant as the entire blame for delay has been on C.A. and no affidavit was filed by him.

(b) Even on merits: since no compliance made at the level of assessing officer also; hence claim of excess deduction u/s 80P is concealment of facts/income.

In this regard, the ld. AR of the assessee submitted that since notices were being sent on e-mail/ Id of C.A. whose services were terminated and bank people were not aware of ‘’E-Assessment Proceedings”. The ld. CIT(A), NFAC has further stated that no affidavit of said C.A was filed whereas it is not feasible for the bank to get an affidavit of C.A. whose services were terminated and who has not even informed bank subsequently to make compliances. The income tax e-site does not change the Id/ e-mail automatically. Thus getting an affidavit of C.A. (terminated) is not an easy task. The ld. CIT(A), NFAC was submitted detailed reasons in writing and it is once again requested to condone the delay and consider the facts in merit. The delay in filing appeal was beyond the control of the assessee.

Observation of the court

On the other hand, the ld. DR supported the order of the ld. CIT(A)

After hearing both the parties and perusing the materials available on record, the Bench finds that the assessee could not file the reply to the notice issued u/s 271(1)© of the Act in time to the AO because the e-notices were served to earlier CA Shri Prince Tak. Subsequently, the said CA was removed from service and all the e-notices were kept on serving on his e-mail/id and the bank staff was not aware of proceedings and ex-parte order of levy of penalty on account of concealment of income. From the available records, it appears that the assessee was prevented by sufficient cause and thus the delay so made is condoned. Be that as it may, it is a settled proposition of law in the case of CIT vs Reliance Petroproducts (P) Ltd. (Civil Appeal No. 2463 of 2010 dated 27-03-2010-SC) that disallowance of expenses will not per se amount to furnishing inaccurate particulars of income, merely because the assessee had claimed expenditure which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(1)© of the Act. In the case of CIT vs Ajaib Singh & Co. (2002) 253 ITR 630 (P & H), it is held that merely because certain expenses claimed by the assessee are disallowed by an authority it cannot mean that the particulars furnished by the assessee are wrong. Disallowance of expenses per se cannot mean that the assessee has furnished incorrect particulars of income. Concealment involves penal action. It has to be proved as a conscious act. Although it is true that direct evidence may not be available in every case yet it must be proved as a necessary corollary from the fact and circumstances established on record. In view of the above deliberation, the appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 08/02/2023.


In the result, appeal of the assessee is allowed and ruled in favour of the assessee

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