Assessee can’t be Penalized for Income Tax Practitioner’s Failure: ITAT condones Delay of 678 Days [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT), while condoning a delay of 678 days in filing the appeal, has held that the assessee cannot be penalized for the income tax practitioner’s failure to follow the amendments in law.

The assessee, an individual filed an appeal against the original assessment. The appeal which was disposed of ex parte was not in accordance with Rule 24 since it did not deal with the merits of the case. The assessee contended that the ITAT order was dated 27.03.2017 and the amendment had come into effect just nine months back on 01.06.2016 and being a small time practitioner, he was unaware of the same and harboring the belief that there was four years’ time to move an application, accordingly, the application got delayed by almost two years, i.e 678 days.

The assessee further contended that the penalty had been levied on the same and the assessee was in appeal against the penalty order. That grave prejudice and injustice would be caused to a small assessee like this if he was not given an opportunity of hearing, that too on account of the fault of his counsel.

The Tribunal bench comprising Ms. Annapurna Gupta, Accountant Member and Ms. Madhumita Roy, Judicial Member has observed that “firstly there is no delay in terms of Rule 24 and 25 of the Income Tax (Appellate Tribunal) Rules,1963 in seeking to recall the exparte order passed in the impugned appeal and even if so held the assessee has adduced sufficient cause for the same, being the mistake of his counsel who failed to take note of the amendment in law, brought about a few months prior to the passing of the order by the Ld.CIT(A) ,restricting the time period for filing of rectification applications before us from four years to six months..And keeping in mind the small background of the assessee and the huge additions made to his income, punishing him in the shape of tax liability by not recalling the earlier order dismissing his appeal is highly disproportionate to the negligence of the assessee in the delay in filing the present application. And therefore taking a sympathetic view we deem it appropriate to even otherwise condone the delay.”

Shri Hitendra Sheth appeared for the assessee.

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