IN INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER I.T.A. No.140/M/2015 (Assessment Year: 1992-1993) Smt. Rina S. Mehta, DCIT, Central Circle -23, 32, Madhuli, Dr. A.B. Road, 4 t h Floor, Aayakar Bhavan, Vs. Worli, Mumbai 400 018. M.K. Road, Mumbai 400 020. PAN : ABNPM8222C (Appellant) (Respondent) I.T.A. No.333/M/2015 (Assessment Year: 2008-2009) th Shri Sudhir S. Mehta, ACIT, Central Circle -23, 4 32, Madhuli, Dr. A.B. Road, Floor, Aayakar Bhavan, Vs. Worli, Mumbai 400 018. M.K. Road, Mumbai -20. PAN : ABAPM4496R (Appellant) .. ( Respondent) Appellant by : Shri Dharmesh Shah Respondent by : Shri P. Daniel, Sr. Counsel Date of Hearing : 27.07.2016 Date of Pronouncement : 23 .09.2016 O R D E R PER D. KARUNAKARA RAO, AM: There are two appeals under consideration. Both appeals are filed by assessees involving assessment years 1992-93 and 2008-2009. Since, issues involved in these appeals are identical, therefore, for sake of convenience, they are clubbed, heard combinedly and disposed off in this consolidated order. Appeal wise adjudication is given in following paras of this order. ITA No.140/M/2015 (AY 1992-93) (In case of Smt. Rina S. Mehta) 2. This appeal filed by assessee on 8.1.2015 is against order of CIT (A)-40, Mumbai dated 24.12.2007. In this appeal, assessee raised following grounds which read as under:- 2 following grounds of appeal are without prejudice to each other: 1. Ld CIT (A) has erred in law and in facts in dismissing appeal of appellant without admitting same. 2. Ld CIT (A) erred in law and in facts in not appreciating that there was no delay in filing appeal and that appeal ought to have been decided on merits. 3. Ld CIT (A) has erred in law and in facts in not condoning delay in filing appeal. 4. Ld CIT (A) ought to have deleted penalty of Rs. 17,04,16,201/- levied u/s 271(1)(c) of Act levied by AO. 3. main issue raised in this appeal relates to levy of penalty u/s 271(1)(c) of Act. AO levied penalty on 26.9.2003 amounting to Rs. 17 Crs (rounded off) @ 150% of tax sought to be evaded. In assessment, AO determined assessed income at Rs. 20.29 Crs against returned income of Rs. NIL. AO made additions on account of unexplained investment; unexplained receipts and interest income. In quantum appeals, additions are reduced by CIT (A) partly and quantum appeals are pending before Tribunal for final adjudication. On penalties levied by AO, assessee filed appeal before CIT (A) with delay of 1517 days (around 4 years). Before CIT (A), assessee submitted that penalty order of AO was never served on assessee and therefore, assessee sought certified copy from office of AO. letters dated 7.12.2007; 13.12.2007; and 20.12.2007 are relevant. Letter dated 13.12.2007 relates to asking of certified copies, which is mandatory for filing of appeal before CIT (A). Letter dated 20.12.2007 relates to acknowledgement of assessee receiving copies from office of Assessing Officer. From Revenue s side, they have taken stand that penalty order dated 26.9.2003 was duly served on assessee. In support of same, Revenue relied on copy of acknowledgement evidencing service of said penalty order on person named Shri Chandrakant Jadhav. However, it does not reflect relationship of assessee that said person Mr. Jadhav. Further, assessee narrating various developments ie 132 action, notification issued under Special Courts Act, appointing of custodian etc, submitted that these events contributed to delay in filing appeal before CIT (A). CIT (A) considered main reason as well as additional reasons and eventually dismissed appeal of assessee saying that there is no formal application with 3 request for condonation of delay. Thus, appeal of assessee was dismissed and delay was not condoned. 4. During proceedings before us, Ld Counsel for assessee explained that assessee never received copy of penalty order. Explaining identity of Shri Jadhav, Ld Counsel for assessee submitted that said person is never connected to assessee in any form and is not even related to assessee. It is not known as to why Department served such important order like penalty order, which is having impact of around Rs. 17.04 Crs. Assessee would have immediately filed appeals had she been served same. She has no reason to not to file appeal if she is really in possession of said penalty order. He also submitted that assessee duly made all efforts to procure certified copy of penalty order and got copy only on 18.12.2007. Immediately, on 24.12.2007, appeals were duly filed before CIT (A). This reflects diligence and willing to pursue appeals from assessee s side. Further, explaining other reasons, raised without prejudice, Ld Counsel for assessee submitted that on similar grounds, Tribunal directed CIT (A) to condone delay. In this regard, he brought our attention to decision of Tribunal in case of Jyoti Mehta & Ors vs. ACIT in ITA No. 7973/M/1995, dated 13.12.2007 (delay in case is 1319 days) as well as decision in case of Growmore Research and Assets Management Ltd & Ors vs. ACIT in ITA No. 3576/M/2007, dated 17.12.2007 are relied. Further, he brought our attention to contents of para 9 of Tribunal s order in case of Growmore Research and Assets Management Ltd (supra) (page 45 of paper book is relevant) and mentioned that delay in these cases is also in magnitude varying from 300 to 500 days. Further, he submitted that by not condoning delay in present case, CIT (A) / ITAT may give rise to situation where penalty is levied while relatable quantum addition is deleted vide order of CIT (A) on merits dated 13.3.2003. 5. On other hand, Ld DR for Revenue argued vehemently stating that service of notice is valid and other Reasons given by assessee are after thoughts. 6. We have heard both parties on this preliminary issue of CIT (A) s decision in not condoning delay. CIT (A) did not appreciate assessee s 4 argument that delay is attributable to availability of penalty order with assessee. He has considered fact that service is complete in al respect and therefore, assessee will not get relief on that account of service of notice on Shri Chandrakant Jadhav. Regarding other reasons ie complete breakdown of assessee s structure relating to tax matter and on ground of non- availability of formal application for condoning delay was said to be reason for rejection of assessee s request. We find, there is formal application for condonation of delay and letter dated 11.1.2008 is on record (page 65 of paper book is relevant in this regard). We have also noticed that there are formal requests from assessee for want of certified copy of order of penalty and details of letters are already cited in above paras of this order. Regarding communication of Shri Chandrakant Jadhav, we find, Revenue could not establish fact that Mr. Jadhav is right person or authorised person qua receiving important documents like order of penalty which is impact of Rs. 17.04 Crs. Further, considering other factors narrated by Ld Counsel for assessee, we find, all these facts are relevant and cannot be brushed aside. 7. Further, we have also gone through precedents cited by assessee ie decision of Tribunal in case of Jyoti Mehta & Ors (supra) and Growmore Research and Assets Management Ltd & Ors (supra) and find said companies are also pertained to Harsh Mehta Group of companies. Considering above narrated facts specifically to this case, we find, no reason why assessee could not have filed appeal against order of penalty which has huge tax implications. Right of appeal is precious one framed by legislators on tax payers. Assessee would not have deprived with that rights without any substantial reasons. Therefore, in our considered view, service of order of penalty on assessee is not proper and same constitutes reasonable and sufficient cause. Further, we have also examined relevant paras from cited orders of Tribunal (supra) and for sake of completeness of this order, para 9 from said Tribunal s order in case of Growmore Research and Assets Management Ltd & Ors (supra) is extracted as under:- 9. Keeping in mind above authoritative pronouncements of Hon ble Supreme Court, if we advert to facts of present appeals then it would reveal that explanation of assessee do not smack mala fide or do not put forth as dilatory 5 strategy. It must be remembers that in every case of delay there can be some laps on part of litigant also but that alone is not enough to turn down plea and shut door against him. As observed by Hon ble Supreme Court in case of N. Balakrishnan (supra) length of delay is immaterial. It is acceptability of explanation that is only criteria for condoning delay. Ld Counsel for assessees has demonstrated circumstances that business premises has to be vacated, bank accounts have been attached, business premises as well as residential premises were put on sale. There were no funds with assessee; employees have left job; professionals in absence of fees refund to render services. All these circumstances in their setting as whole do no indicate that situation was out of assessee s control. They have not delayed appeals intentionally. Therefore, we condone delay and proceed to decide appeals on merit. 8. Further, Para 3 of order of Tribunal in case of Smt. Jyoti H. Mehta (supra) was also relied by assessee in condoning similar delay of 1517 days in instant case. On perusal of above cited decisions of Tribunal (supra) and respectfully following same, we direct CIT (A) to condone delay and admit appeal and adjudicate issues on merits. CIT (A) is directed to decide quantum appeal in case of assessee while deciding penalty quantitatively. Further, CIT (A) is also directed to adjudicate merit related grounds of appeal afresh after affording reasonable opportunity of being heard to assessee. Accordingly, merit related issues raised by assessee are also allowed for statistical purposes and issue of condonation of delay is allowed in favour of assessee. 9. In result, appeal of assessee is allowed for statistical purposes. ITA NO.333/M/2015 (AY 2008-2009) (In case of Sudhir S. Mehta) 10. This appeal filed by assessee on 13.1.2015 is against order of CIT (A)-40, Mumbai dated 31.10.2014 for assessment year 2008-2009. In this appeal, assessee raised following grounds which read as under:- 1. Ld CIT (A) has erred in law and in facts in dismissing appeal of assessee without admitting same. 2. Ld CIT (A) has erred in law and in facts in not appreciating that there was no delay in filing appeal and that appeal ought to have been decided on merits. 3. Ld CIT (A) has erred in law and in facts in not condoning delay in filing appeal. 4. Ld CIT (A) ought to have deleted penalty of Rs. 4,45,83,080/- levied u/s 271(1)(c) of Act levied by Assessing Officer. 11. This is case where Assessing Officer levied penalty amounting to Rs. 4,45,83,080/-. This penalty is relatable to scrutiny addition of Rs. 6 13,11,65,287/- on account of claim interest expenses. penalty against quantum additions is subject matter of appeal pending before Tribunal. Meanwhile, assessee wanted to file appeal against penalty order and assessee got copy of said order of Tribunal on 20.4.2012 only on request made by assessee to AO on 17.3.2012 and 22.3.2012. CIT (A), dismissed appeal of assessee on penalty vide his order dated 31.10.2014 stating that delay cannot be condoned as delay is above 10 months. However, he did not appreciate fact that on similar reasons, Tribunal granted relief to assessee in various cases of same group of Harsh Mehta (supra) like ones already decided by us in above paragraphs of this order. 12. On other hand, Ld DR for Revenue relied on orders of Revenue Authorities. 13. On hearing both parties and on perusal of orders of Revenue Authorities as well as decisions of Tribunal already cited above (supra) and also relevant material placed before us, we are of opinion that in tune with existing decision taken by ITAT in case of Smt. Rina S. Mehta (supra), delay in instant case should also be condoned. We order accordingly and direct CIT (A) to condone delay and admit appeal and adjudicate appeal on merits. Further, CIT (A) is also directed to adjudicate merit related grounds of appeal afresh after affording reasonable opportunity of being heard to assessee. Accordingly, merit related issues raised by assessee are allowed for statistical purposes and issue of condonation of delay is allowed in favour of assessee. 14. In result, appeal of assessee is allowed for statistical purposes. 15. Conclusively, both appeals are allowed for statistical purposes. Order pronounced in open court on 23rd September, 2016. Sd/- Sd/- (SANJAY GARG) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; 23.09.2016 OKK , Sr. PS 7 Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Rina S. Mehta v. DCIT, Central Circle-23, Mumbai