Delay of 8 years in filing appeal against penalty order condoned by Bombay High Court

Brief Facts:

The assessee has filed its appeals before the CIT(A) against 3 penalty orders u/s 271(1)(c) on 24^th June 2013 in respect of A.Y. 1999-2000, 2001-2002 & 2002-2003 and hence there was huge delay of about 8 to 9 years in filing the appeals before the Ld. CIT(A). The ITAT rejected the application for condonation of delay in filing the appeals against which the assessee filed an appeal before the Hon’ble High Court.

Observations & Ruling:

• The assessee has received 3 penalty orders for the 3 assessment years as mentioned earlier. However, the assessee paid the penalty and never disputed the penalty order in order to buy peace and put an end to the dispute.
• However, after almost 8 years later, sometime in 2013, the assessee received a notice calling upon to show cause as to why prosecution should not be initiated against the assessee. Surprised with the turn of events, the assessee decided to challenge the penalty orders.
• The challenge was rejected by the CIT(A) saying that the appeals have been filed with much delay. The Ld. CIT(A) overlooked one factor that the prosecution itself has been launched 8 or 9 years after the penalty amount was paid by the assessee.
• The Hon’ble Bombay High Court is of the view that if the department feels that they can do prosecution proceedings after 8- or 9-years delay, the same yardstick apply for an assessee.
• Accordingly, the Hon’ble Bombay High Court quashed the order of ITAT and directed the CIT(A) to consider the appeals filed by the assessee against the penalty orders condoning a delay of 8 to 9 years.

Disclaimer: The article is based upon the ruling of the Hon’ble Bombay High Court and is meant for educational purposes only. Readers are therefore requested to act diligently and under consultation with any professional before applying the information contained in this article.