The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) dismissed the delay condonation in the interest of the public and held that the appeal was filed in a delay of 324 days having lost the case in consequential proceedings.
The assessee is a limited company and was deriving income from the business of medical services. The assessee filed the return of income declaring income of Rs. 20,89,51,930/-.
The Principal Commissioner of Income Tax (PCIT) found that the assessee executed a business transfer agreement with Mr. Ravindranath GE Medical Associates Pvt. Ltd., and received consideration of Rs. 20 crores, but the Assessing Officer failed to verify the genuineness of the business transfer agreement, details of assets sold, details of the consideration received, genuineness of payments made to the creditors, etc.
Therefore, he found that the assessment order was erroneous insofar as it was prejudicial to the interest of Revenue, and accordingly set aside the assessment order and directed the Assessing Officer to verify the same. The assessee preferred an appeal with a delay of 324 days, stating that the PCIT failed to appreciate that there was no error, and the Assessing Officer took a conscious view after considering all the material.
The Authorized Representative submitted that an inadequate enquiry by the Assessing Officer can’t be a ground for exercising jurisdiction under Section 263 of the Income Tax Act and the proceedings under Section 263 of the Income Tax Act are not meant to substitute the views of the PCIT for the views of the Assessing Officer. It was further submitted that since the assessee has a good case on merits, the delay may be condoned.
The Departmental Representative submitted that there are no grounds to condone the delay because the cause attributed by the assessee to the delay is not genuine and is against public policy. The impugned order was passed for more than one year, and the assessee kept quiet, but contesting the consequential proceedings before the Assessing Officer and having lost the same, came back to contest the jurisdiction of the PCIT to pass the impugned order.
It was further submitted that if such a conduct of the assessee is permitted by condoning the delay, there will not be any end to litigation because, without any bona fide, the people will go on litigating against the State, taking one cause after the other till they eventually exhaust themselves.
In the case of SRK Infracon (India) Pvt. Ltd. and CSK Realtors Limited the Co-ordinate Benches of the Tribunal considered this aspect of the assessee filing the appeal with considerable delay, having lost the case in consequential proceedings and held that in such an event, it would not be in the public interest to condone the delay.
The Two-member bench comprising of Rama Kanta Panda (Vice-President) and K. Narasimha Chary (Judicial member) held that the assessee wanted to have the best of both worlds and having tested its luck before the Assessing Officer in the consequential proceedings and having lost the same, it came back to agitate the legality of the impugned order. The assessee is not an individual, but it is a commercial entity with a battery of legally trained people available for assistance.
The pleas available to the individual cannot be taken by commercial entities with all the legal paraphernalia at their disposal. If a party like the assessee was permitted to conduct litigation in this way, then there would be no end to litigation and it would be against the public policy.
Therefore, the bench did not find it proper to condone the delay and the reason stated by the assessee does not constitute sufficient cause for such purpose. Thus, the appeal of the assessee was dismissed.
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