The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the penalty under Section 271(1)(c) of the Income Tax Act, considering the unfair representation of the assessee during liquidation process.
The assessee Freeplay Energy India Pvt. Ltd., was a company under the process of liquidation by virtue of an order passed by the High Court. Since, during the continuation of liquidation proceedings the Official Liquidator was in-charge of the assessee did not had any access to the Income Tax Department Portal. Hence, there was no information about the culmination of proceedings before the first appellate authority and the orders passed against assessee.
It is submitted that only after the assessee received show-cause notice for the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961, could it come to know that the appeals filed before the first appellate authority had been disposed of.
Thereafter, the assessee took steps to get copy of orders passed by the first appellate authority and due to intervention of Covid-19 was able to file the appeal with a delay of 407 days.
Thus, it was submitted that the delay is completely bona fide and not due to any negligence of the assessee.
The tribunal Bench of Judicial Member Saktijit Dey and Accountant Member M.Balaganesh observed that the company was under the process of liquidation, hence, the Official Liquidator was in-charge of the company during the liquidation proceeding, which disabled the assessee from accessing the online portal of the Income Tax Department.
Therefore the Bench condoned the delay in filing the appeal.
The Tribunal further noted that the disposal of the appeal by the first appellate tribunal was ex-parte order.
Subsequently the liquidation process had ended and the status of the company had been restored and, as on date, the company’s status was active in the portal of the Ministry of Corporate Affairs.
The bench held that the assessee did not get fair opportunity of representing its case before the first appellate authority, for circumstances beyond its control.
The case set aside for re-adjudication and appeal filed by the assessee was allowed in result.
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