ITAT condones delay in filing appeal as assessee was imprisoned

Facts and Issue of the Case

‘’1. That on the facts and in the circumstances of the case, the order of the ld. CIT(A) is against the law and facts of the case.

2. That the ld. CIT(A) has grossly erred in dismissing the appeal of the assessee due to delay in filing of appeal without providing any opportunity of hearing which is against the principles of natural justice.

3. That the Hon’ble CIT(A) has also grossly erred in not deciding the grounds of appeal on facts of the case thereby confirming the alleged penalty levied by the AO u/s 271(1)(b) without appreciating the fact that the appellant had a reasonable cause. Apropos Ground No. 1 to 3 of the assessee, it is noted from the available records that the assessee had filed an appeal with the grievance that the penalty amounting to Rs.10,000/- was wrongly levied by the AO u/s 271(1)(b) of the Act vide impugned penalty order dated 27-12-2011. However, the ld. CIT(A) observed in his order dated 14-09-2021 that there is inordinate delay of 9 years in filing the appeal by the assessee on the issue of demand raised as well as the penalty amount. The ld. CIT(A) in his order elaborately discussed the issue taking the recourse of various decisions of Hon’ble Supreme Court and other High Courts holding that there is no sufficient cause which justifiably prevent the assessee in late filing the after an inordinate delay of 9 years.

During the course of hearing, the ld. AR of the assesee filed a brief synopsis of the events praying that the ld. CIT(A) should have decided the issue on merit instead of dismissing the appeal of the assessee on account of inordinate delay of about 9 years as the assessee was imprisoned to Jail under serious criminal offence which was beyond his control to file the appeal in time for adjudication of the case before the ld. CIT(A). Conclusively, the ld. AR of the assessee prayed that the delay of approximate of 9 years be condoned in view of the gravity and situation of the assessee’s case and the appeal of the assessee should be adjudicated upon afresh by the ld. CIT(A) on merit.

Observation by the Court

The court had heard both the parties and perused the materials available on record. The Bench noted from the record that the assessment order passed by the AO, The first appeal order is passed by ld. CIT(A), NFAC, Delhi against the Penalty order of the ACIT, From the brief synopsis of the event that the assessee was under judicial custody in serious offences mentioned hereinabove and the assessee was released on bail in connection with FIR by the Hon’ble Supreme Court in Criminal Appeal. It can be well imagine that it becomes a herculean task for a person to approach from Lower Court to Hon’ble Supreme Court in getting bail. Further, it is also noted from the Speed Post letter issued to Shri Mahendra Kumar Goyal wherein the postal authority has explicitly given his remark d that ‘’ REFUSED TO ACCEPT which indicate that the postal authority has not contacted the concerned person but mentioned his remarks in normal course as the Shri Mahendera Kumar Goyal, assessee was in Judicial Custody which does not show appropriate reasoning or observation by the revenue authority. It is worthwhile to mention that when the assessment order was passed by the AO then the assessee could not get the service of the assessment order and he was not aware about the passing of the assessment order.

Further the penalty order u/s 271(1)(b) was passed by the ACIT, and the service of the penalty order u/s 271(1)(b) could not take place to the assessee because he was in judicial custody after getting bail from Hon’ble Supreme Court which also indicate that the assessee was deprived off to comply with the orders of the above authorities. This entire story indicates that the because of involvement in criminal offences mentioned above and judicial custody, the assesseee was not aware of Incomes taxes hovering upon him. Taking into consideration and facts of the case, we rely on the decision of Hon’ble Supreme Court in the case of N Balakrishnan vs. M. Krishnamurthy.

In view of the above facts, circumstances of the case and the decision of Hon’ble Supreme Court (supra), the delay made in the case of the assessee is condoned and the appeal of the assessee is restored to the file of the ld. CIT(A) for afresh decision on merit as to the issue penalty u/s 271(1)(b) of the Act but by providing adequate opportunity of being heard to the assessee.