1979 (9) TMI 102 - AT - Income Tax

Appellate Tribunal cancels penalty under IT Act due to no concealment found

The Appellate Tribunal ITAT Jabalpur allowed the appeal by the assessee, who contested a penalty under section 271(1)(c) of the IT Act. The Tribunal ... - Issues:- Appeal against penalty under section 271(1)(c) of the IT Act.- Assessment of income based on estimate under 'small income scheme.'- Raid on business premises leading to addition in income.- Tribunal's modification of assessment order.- Question of limitation for filing appeal.- Condonation of delay for filing appeal.- Bonafide mistake in filing appeal before the wrong forum.- Tribunal's authority to admit appeal after prescribed period.- Jurisdiction of IAC to levy penalty.- Application before Commissioner challenging jurisdiction of IAC.- Sufficient cause for not presenting appeal within prescribed period.- Analogy to Section 14 of the Limitation Act.- Condonation of delay and cancellation of penalty.Analysis:The judgment by the Appellate Tribunal ITAT Jabalpur involved an appeal by the assessee against a penalty imposed under section 271(1)(c) of the IT Act. The assessee, an individual dealing in silver, bullion, and ornaments, had been assessed to tax based on estimates under the 'small income scheme.' A raid on the business premises resulted in the discovery of silver ornaments and bullion, leading to an addition in the assessed income. The Tribunal modified the assessment order, reducing the assessed income significantly, indicating no concealment and no basis for levying a penalty on the assessee.The crucial issue addressed in the judgment was the question of limitation for filing the appeal. The penalty order was received by the assessee after the appeal was fixed before the Tribunal, leading to a delay in filing. The assessee sought condonation of the delay, citing a bonafide mistake in filing the appeal before the wrong forum initially. The Tribunal considered the provisions of section 253(5) of the IT Act, which allows for admission of appeals after the prescribed period if sufficient cause is shown. The Tribunal accepted the explanation provided by the assessee for the delay and condoned it, treating the appeal as filed within the stipulated time.The Tribunal also considered the jurisdictional aspect regarding the authority of the IAC to levy the penalty. The assessee's legal advisor had raised grounds challenging the jurisdiction of the IAC to impose the penalty, indicating a genuine misconception about the procedural law. The Tribunal found that there was sufficient cause for the delay in filing the appeal, as the assessee was under a bonafide misconception. Drawing an analogy to Section 14 of the Limitation Act, which allows for the exclusion of time spent pursuing proceedings before the wrong forum, the Tribunal condoned the delay and ultimately canceled the penalty, as it had already determined that no penalty could be sustained on merits.In conclusion, the Tribunal allowed the appeal, highlighting the importance of a bonafide mistake and sufficient cause for condonation of delay in filing the appeal, ultimately leading to the cancellation of the penalty imposed under section 271(1)(c) of the IT Act.