2016 (5) TMI 359 - AT - Income Tax

Appeal Dismissed for Delay; Ignorance of Law Not Grounds for Condonation

The Tribunal dismissed the appeal due to the failure to condone the delay in filing the appeal, emphasizing that ignorance of law and ill-advice are not ... Condonation of delay - Held that:- Ratio laid down by the Hon’ble Supreme Court in the case of Swadeshi Cotton Mills Co. Ltd. vs. Government of UP (1972 (11) TMI 78 - SUPREME COURT OF INDIA) that ignorance of law is not an excuse and therefore, delay in filing of appeal cannot be condoned on account of ignorance of law. The ratio laid down by the Hon'ble jurisdictional High Court in the case of Spporthi Sadan Convent vs. CIT (2016 (5) TMI 191 - KARNATAKA HIGH COURT) is squarely applicable to the present case. In the present case also, the assessee not revealed the ill-advice nor produce any material in support of the averments made in affidavit. Therefore, we hold that it is not a fit case to condone the delay in filing the present appeal and the petition for condonation of delay is dismissed. Issues Involved:1. Inclusion of excise duty in the valuation of closing stock.2. Disallowance of foreign travel expenditure.3. Condonation of delay in filing the appeal.Detailed Analysis:1. Inclusion of Excise Duty in the Valuation of Closing Stock:The appellant contested the addition of Rs. 45,96,066/- made by the Assessing Officer (AO) for including the excise duty component in the valuation of closing stock of raw materials. The appellant argued that the change in the method of valuing the stock to exclude excise duty was to comply with the applicable Accounting Standard as prescribed by the Institute of Chartered Accountants of India. The appellant claimed a deduction of Rs. 28,22,607/- which was included in the valuation of closing stock in the previous year. Additionally, the appellant contended that the differential value of Rs. 17,73,459/- should not be added as it results in a tax-neutral effect. However, the Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, citing Section 145A of the Income Tax Act, 1961, which mandates the inclusion of excise duty in the valuation of closing stock. The CIT(A) relied on the decision of the Hon’ble Delhi High Court in CIT vs. Lakshmi Sugar Mills (215 Taxman 126) and emphasized that Section 145A starts with a non-obstante clause, making its provisions mandatory.2. Disallowance of Foreign Travel Expenditure:The AO disallowed the foreign travel expenditure of Rs. 5,10,367/- incurred by the assessee-company, treating it as capital expenditure since the travel was for the procurement of machinery. The appellant accepted this disallowance but claimed the benefit of depreciation on the capitalized amount. The CIT(A) denied the benefit of depreciation, stating that the assessee did not furnish details of the plant and machinery for which the expenditure was incurred.3. Condonation of Delay in Filing the Appeal:The appellant filed the appeal with a delay of 226 days, attributing the delay to wrong advice from their previous counsel. The appellant argued that the earlier counsel advised them that the addition of excise duty in the closing stock would result in a tax-neutral effect over the years. Upon receiving new advice from the present counsel, the appellant realized the material impact on their tax liability and promptly filed the appeal. However, the Tribunal held that the appellant neither revealed the source of the ill-advice nor explained the delay for each day. Citing the jurisdictional High Court’s decision in Spoorthi Sadan Convent vs. CIT (68 taxmann.co. 245)(Kar) and the Hon’ble Supreme Court’s judgment in Swadeshi Cotton Mills Co. Ltd. vs. Government of UP (1975) 4 SCC 378, the Tribunal ruled that ignorance of law is not an excuse for delay. Consequently, the petition for condonation of delay was dismissed.Conclusion:The Tribunal dismissed the appeal in limine due to the failure to condone the delay in filing the appeal, emphasizing that ignorance of law and ill-advice are not acceptable grounds for condonation. The order was pronounced in the open court on April 29, 2016.