RTV INTERNATIONAL,SOLAN V. PR.CIT, SHIMLA

ITA 131/CHANDI/2021

AI Insights

The case involves RT Vision Technologies Pvt. Ltd., successor to RTV International, appealing against an order passed by the Principal Commissioner of Income Tax (PCIT), Shimla under section 263 of the Income Tax Act, 1961. The appeal was filed challenging the legality, validity, and propriety of the impugned order. However, the tribunal focused on the application for condonation of delay in filing the appeal, which was significantly delayed due to various reasons including the dissolution of the original partnership firm and the impact of the COVID-19 pandemic. The tribunal found the reasons for the delay insufficient and rejected the condonation application, leading to the dismissal of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107752 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: Herdillia Chemicals Ud Vs CIT [1997] 90 Taxman 314 (Bom), Procter & Gamble Hygiene and Healthcare Ltd. vs. CIT -8 [Income tax Appeal No. 1210 of 2017]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: SAMEER KAPOOR; C.A
• Keywords: Condonation of delay; Bonafide belief; Period of limitation; Ignorance of law; Time period of passing order; Revision of order
• Section: 143(3); 263

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: VIRTUAL MODE ŵी िवŢम िसंह यादव, लेखा सद˟ एवं ŵी परेश म. जोशी, Ɋाियक सद˟ BEFORE: SHRI. VIKRAM SINGH YADAV, AM & SHRI. PARESH M. JOSHI, JM आयकर अपील सं./ ITA NO. 131/Chd/2021 िनधाŊरण वषŊ / Assessment Year : 2014-15 RT Vision Technologies Pvt. Ltd. Successor of RTV International Plot No. G-97, Site-5, UPSIDC, Kasna Industrial Area, Greater Noida- 201308, Uttar Pradesh बनाम The Pr. CIT Shimla ˕ायी लेखा सं./PAN NO: PTLR13579G अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sameer Kapoor, C.A राजˢ की ओर से/ Revenue by : Smt. Kusum Bansal, CIT DR सुनवाई की तारीख/Date of Hearing : 09/01/2025 उदघोषणा की तारीख/Date of Pronouncement : 10/01/2025 ORDER PER PARESH M. JOSHI, J.M. : This is an appeal filed by the Assessee RT Vision Tech P. Ltd. successor to RTV International under section 253 of the Income Tax Act, 1961 before this Tribunal. The relevant A.Y is 2014-15. The corresponding previous year is from 01/04/2013 to 31/03/2014. The appeal is filed challenging legality validity and proprietary of the order passed by PCIT Shimla passed under section 263 of the Act which is hereinafter referred to as “impugned order”. The appeal in Form No. 36 was presented to this Hon’ble Tribunal on 31/05/2021. The order under section 263 is dt. 22/03/2019 which was received by the assessee on28/03/2019. Before we deal with the main appeal we are mandated by law to decide the application for condonation of delay in filing the present appeal. 2. Upon taking up the condonation of delay application in presenting the present appeal before this Tribunal we had heard on 03/09/2024 finally the submissions of both the parties and by an interim order dt. 29/11/2024 we have not condoned the delay in 2 preferring the present appeal before this Hon’ble Tribunal, contents of which read as under : This is an appeal filed by the Assessee RT Vision Tech P. Ltd. successor to RTV International under section 253 of the Income Tax Act, 1961 before this Tribunal. The relevant A.Y is 2014- 15. The corresponding previous year is from 01/04/2013 to 31/03/2014. The appeal is filed challenging legality validity and proprietary of the order passed by PCIT Shimla passed under section 263 of the Act which is hereinafter referred to as “impugned order”. The appeal in Form No. 36 was presented to this Hon’ble Tribunal on 31/05/2021. The order under section 263 is dt. 22/03/2019 which was received by the assessee on28/03/2019. Before we deal with the main appeal we are mandated by law to decide the application for condonation of delay in filing the present appeal. Hence we take up the said application for condonation of delay for our considered decision at the outset and at the threshold before we consider deciding appeal on merits. 2. The condonation of delay application is dt. 24/05/2021 which was presented to this Tribunal alongwith Form 36 i.e; form of appeal to the ITAT on 31/05/2021 (by post). The content of aforesaid condonation of delay application and justification given in support of the same can be summed up as under: (i) For delay from 27/05/2019 the last date for filling the appeal to this Tribunal till 25/03/2020 (before lockdown) which is about 303 days appropriately, it is contended in support of the delay that the original assessee firm i.e; RTV International which was a Partnership Firm was dissolved on 31/12/2024 (copy of dissolution deed on record). The said firm was a contract manufacturer for the Indian Railways. That after dissolution, the business of the firm was taken over by one of the partner as a separate unit. Till May 2019 the said unit was operational and thereafter on 31/05/2019 that Partner who had taken over the firm too had to close down the said unit pursuant to the directions of Ministry of Railways for closure of the unit (copy of directions are enclosed). It is averred therein that the said sole partner who had taken over the reins of the partnership firm was some how trying to coordinate for various compliances relating to erstwhile partnership firm despite the fact that it was joint responsibility of all the partners jointly and severally. However, after closure of the said unit on 31/05/2019, the complete set up was dismantled and all the activities were halted. It is also averred that counsel handling the proceedings u/s 263 never advised to file an appeal against the impugned order at that point of date and time. (ii) Post 25/03/2020 till the date of filling of the present appeal on 31/05/2021 Covid 19 Pandemic is taken as a ground for delay. (Hon’ble Supreme Court of India orders relied upon). 3. The assessee by an application filed on 18/04/2022 further contends as under amongst others grounds that for the periods from 27/05/2019 till 25/03/2020 (supra):- 1. The assessee firm dissolved on 31s' Dec, 2014 (copy of dissolution deed already provided). 2. The assessee firm was a contract manufacturer for Indian Railway. On dissolution, as per the terms oi dissolution deed, the business of the firm as situated in Solan was taken over by one of the partner i.e. RT Vision Technologies P Ltd out of the firm. 3. The said partner was some how managing the above business uptill the end of the year 2018 including all the statutory compliances of the erstwhile partnership firm. Thereafter the said business unit became unviable and the contract with Indian Railways was terminated (vide letter dated: 14.03.2U19, copy already provided and available on record). 3 4. The said unit in Solan was later, by 31.05.2019 (that is the time when the filing of appeal was due to be filed before hon'ble I I AT), was completely closed. To substantiate the same copies of proceedings/communication with/before labour authorities comprising labour Inspector- cum conciliation officer, Solan are enclosed. After 31s1 May, 2019 there was no establishment nor wherewithal available in Solan for any statutory compliances for the partner looking after the legal compliances in its individual capacity or as a partner of the erstwhile partnership firm. b) In addition to the reasons for delay as explained above, counsel handling the proceedings u/s 263 before the Id. CCIT never advised to file any appeal against the impugned order. c) The assessee firm has been dissolved, business has been closed therefore the said assessee will not be able to cope up with the consequences by way of exorbitant tax liability caused by the said order. d) There is blatant error in the impugned order. Said order has been passed by the CCIT instead of CIT or Pr CIT as envisaged in sec 263 of Income tax Act. 4. The assessee by yet another application filed on 21/06/2022 (PB page 112 to 115) further contends as under amongst other grounds that for the period from 28/05/2019 to 15/03/2020 (Delay of 292 days):- “For the reasons for delay for this period, it is stated that the assessee was not advised that an appeal could be preferred against order u/s 263. Accordingly, he was under an impression no appeal can be filed against the order u/s 263. It was for the first time, when the assessee consulted the present counsel to handle appeal against assessment u/s 143(3) consequent to order u/s 263, he advised to prefer an appeal against order u/s 263 also based on the reliance of the counsel on the following decided cases: a) Herdillia Chemicals Ud Vs CIT [1997] 90 Taxman 314 (Bom); and b) Procter & Gamble Hygiene and Healthcare Ltd. vs. CIT -8 [Income tax Appeal No. 1210 of 2017], a Mumbai high court decision.” 5. The DR vide letter No. CIT(DR)-1/ITAT/BenchB/2022-23/363 dt. 27/02/2022 (page 111 of paper book) has contended as below: (i) out of total delay of 734 days, the assessee has divided delay of 734 days into two periods. (ii) First period is from 28/05/2019 to 15/03/2020 of 292 days which is a period before Covid Pandemic the assessee has explained / contended that this delay is due to the ignorance of law whether order u/s 263 is appellable or not. (Basis earlier Counsel advise). Ignorance of law cannot be an excuse for not filling the appeal within the stipulated time of 60 days from date of receipt of order u/s 263. The thrust in condonation of delay application dt. 24/05/2021 filed with Form 36 on 31/05/2021 was on account of closure of business of the assessee for the delay (Non Covid Period) therefore the asessee has no valid reasons for applying for condonation of delay. If delay is condoned it would be a non genuine case which will lead to erosion of sanctity of limitation dates mentioned in the Income Tax Act & Rules. Hence application be rejected. 4 6. The DR vide letter no. CIT(DR)-1/ITAT/2022-23/59 dated 19/04/2023 has distinguished case law relied upon by the assessee (page 6 to 8 of paper book). 7. The Assessee by a rejoinder filed on 05/08/2022 (to DR letter dt. 27/02/2022 para 5 above) for Non Covid Period of 292 days have averred as “ for remaining delay of 292 days in context to Ld. DR’s response and objection it is stated that the delay under consideration is not for ignorance of law. Having a belief that order u/s 263 is a final order and that no appeal can be filed against the said order and an appeal can be filed only against the assessment to be framed u/s 143(3) consequent to a direction of Ld. CIT u/s 263 is a complicated misconception”. Case laws too were relied upon (PB 9-110). 8. The Affidavit in support of condonation of delay dt. 15/06/2022 is not dated by Notary Public (PB 116 to 117). Be that as it may it is stated at Para 6 “That for the delay of 292 days from 28/05/2019 to 15/03/2020, it is stated that the assessee was not advised that an appeal could be preferred against order u/s 263. Accordingly, we were under an impression no appeal can be filed against the order u/s 263”. In this Affidavit contents of condonation of delay application are repeated and reiterated. We notice yet another Affidavit dt. 20/07/2021 (PB 127 to 128) wherein contents are more or less similar and plea of closure of unit w.e.f 31/05/2019 etc. are all incorporated therein. 9. In the premises, we have to decide first whether delay of 292 days from 28/05/2019 to 15/03/2020 deserves to be condoned out of 735 days i.e; the first period of delay- pre Covid and second period of delay – post Covid from 15/03/2020 to 31/05/2021. We are of the opinion first period of delay (supra) is not liable to condoned at all as the assessee firm was dissolved on 31/12/2014 as per dissolution deed on record. Basis dissolution deed the continuing partner is made liable to pay all taxes and penalties payments receivable or any other contractual obligations approvals, applications etc. w.e.f 01/01/2015. Hence continuing partner R T Vision Technologies Pvt. Ltd. is and was responsible w.e.f 01/01/2015 for each and everything about assessee firm including its day to day affairs. The impugned order u/s 263 is dated 22/03/2019 one year prior to Covid. Statutory time limit is 60 days from date of receipt of order which is 28/03/2019 therefore appeal ought to have been filed before expiry of limitation period of 60 days. Appeal is filed on 31/05/2021 much beyond time limit. The excuse of closure of business, wrong advise of counsel, etc are excuses in our considered view and we find application for condonation of delay, Affidavit in support and documents accompanying the PB on issue of condonation as totally irrelevant as basis dissolution deed the continuing partner of RT Vision Technologies Pvt. Ltd. was made not only the continuing partner but all responsibilities with regard to all taxes and penalties w.e.f 01/01/2015 fall in their domain including its day to day affairs. It was the responsibility of corporate entity, the continuing partner or serving partner to have been vigilante enough to take up the appeal within time and upon failure they cannot come up with defense of closure of business w.e.f 01/01/2015 or 31/05/2019, wrong advice of counsel, labour issues, cancellation of contract with railways, etc in order to support such abnormal delay pre covid time of 292 days in order to buttress their case for condonation of delay. 9.1 We are of the considered view that cause of delay shown in law is not sufficient. Cause shown is not at all justifiable. If reasoning of the assesssee is to be followed that business of partnership by virtue of “Deed of dissolution”, the assessee firm was dissolved on 31/12/2014 and continuing partner is /was made liable on day to day basis about the affairs of the firm w.e.f 01.01.2015 whereas the date of receipt of “impugned order” u/s 263 of the Income Tax Act, 1961 against which an appeal is filed is 28/03/2019 (date of receipt of impugned order) then each and every dissolved firm with a continuing partner / partner’s would get weapon in their hand to seek condonation of delay in a routine way which would be against public policy. Further the events (supra) unfolded in the month of March 2019 nearly 26 months later the present appeal is filed which gap is too wide to take a plea of dissolution of firm which happened on 31/12/2014 w.e.f 01/01/2015. Assessee firm thus has no basis to take up such a plea in support of condonatin of delay. 5 9.2. The closure of contract by Ministry of Railways which led to closure of unit ipsofacto cannot be a ground to condone the delay. Contractors of Railway’s are far too many and if such plea is taken it will send wrong message and would be against public policy. 9.3. We are also of the considered view that a corporate entity finally emerged way back in December 2014 who took over the reins of the assessee firm as per dissolution deed dt. 31/12/2014 wherein R T Vision Technologies Pvt. Ltd. is shown as continuing partner / successor with a surviving partner of erstwhile firm who has agreed to take over the running business of RTV International the dissolved partnership firm further continuing partner shall pay all taxes and penalties payment receivable or any other contractual obligations, approvals, application etc w.e.f 01/01/2015 hence the ball was in Court of new corporate entity who should have completed all the task related to taxes etc in a time bound manner w.e.f 01/01/2015 if they have failed as is the case herein i.e. failure to file appeal in time then law cannot and should not help such continuing partner and that too a corporate entity who have all means and resources at their disposal. Any leeway would be used as a tool by surviving partners / continuing partner in corporate world to take a convenient plea of dissolution, closure, so and so forth and that they would be no end to the excuses and limitation / time bound nature of due process of law would be casualty which is not permissible and against the public policy. 9.4. We are also of the considered view that plea of wrong advise by counsel is too ill founded and convenient way to dodge the legal process on issue of time limit / period of limitation. This is also not a ipsofacto ground but it is coupled with fact of closure of unit as a firm on 31/12/2014 w.e.f 01/01/2015 and so also unit on 31/05/2019 by which time impugned order dt. 22/03/2019 was already passed and was also received too on 28/03/2019. Unit is closed on 31/05/2019 by which time, the time limit of 60 days on 27/05/2019 had already expired. We are therefore not satisfied and hold that pleas on condonation of delay is well orchestrated to ensure that delay is condoned, an approach wholly untenable in law. On legal counsel advise not to file appeal as no appeal lies against order u/s 263 is a mischievous as provisions of Act on appealable nature of order under section 263 is express and well known as appealable to ITAT. It is indeed hard to digest such plea. Further there is no express averment that which counsel advised and that there is also no averment that assessee was under a genuine, reasonable and bonafide belief that no appeal lies against the order u/s 263. Affidavit of Counsel or a bare statement of the concerned Counsel who advised not to file the appeal is surprisingly missing and is not on record. The arguments are not digestible and maintainable therefore, we reject the same. 10. Since we are rejecting condonation of delay of first part out of delay of 735 days the issue of examining second part of period w.e.f 15/03/2020 till 31/05/2021 does not arises. However suffice to say that even post Covid delay is phenomenal and unexplainable. No plausible explanation is given worth a merit. We are thus not satisfied on overall aspects of delay of 735 days. Cause shown is not sufficient. We are consciously not satisfied with explanation given by assessee in support of condonation of delay. We therefore say that no justifiable and sufficient cause is shown to justify the delay and consequently we reject condonation of delay application of assessee. 3. In view of our interim order dt. 29/11/2024 (supra) wherein we have not condoned the delay in preferring the present appeal before this Tribunal therefore we are of the considered view that the appeal cannot be heard on merit and accordingly in view of laches on part of the appellant in preferring this appeal belatedly, we reject the appeal of the assessee as time barred u/s 253(3) of the Income Tax Act, 1961 as no 6 sufficient cause is shown to us within the meaning of Section 253(5) of the Income Tax Act, 1961. Thus appeal of the assessee is rejected as time barred. 4. In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on 10/01/2025. Sd/- Sd/- िवŢम िसंह यादव परेश म. जोशी ( VIKRAM SINGH YADAV) (PARESH M. JOSHI) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ / JUDICIAL MEMBER AG आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "