ITAT Delhi Allows Delayed Appeal of Non-Resident in Section 271(1)(c) Penalty Matter
1. Background of the Dispute
The Delhi Bench of the Income Tax Appellate Tribunal in Ajay Kumar Vs ITO (ITAT Delhi) dealt with an appeal arising from an order dated 20.03.2025 passed by the CIT(A), NFAC, Delhi under Section 250 of the Income Tax Act 1961. The CIT(A) had refused to condone a 783-day delay in filing an appeal against a penalty order issued under Section 271(1)(c) for the **Assessment Year 2012-13`.
The assessee carried the matter to the Tribunal, challenging only the refusal to condone delay. The core controversy before the ITAT was not the correctness of the penalty itself, but whether the delayed first appeal deserved to be admitted and heard on merits.
2. Origin of the Penalty Proceedings
2.1 Reassessment and Cash Deposit Basis
As per the assessee’s sworn affidavit reproduced in the Tribunal’s order, an ex-parte assessment was framed under Section 147 on the footing that the assessee had made a cash deposit of ₹11,00,000.
On the basis of this reassessment:
- A tax demand of ₹1,87,460 was computed, and
- A penalty under
Section 271(1)(c)at 100% of the tax was levied, amounting to an additional ₹1,87,460.
The penalty order was dated 15.03.2022.
2.2 First Appeal Filed With Delay
The assessee sought to contest this Section 271(1)(c) penalty before the CIT(A). However, the appeal was filed with a delay of 783 days counting from the prescribed limitation period.
By the order dated 20.03.2025, the CIT(A), NFAC, Delhi:
- Declined to condone the delay,
- Treated the appeal as time-barred, and
- Dismissed it at the threshold without entering into the merits of the penalty.
Aggrieved, the assessee approached the ITAT Delhi. He appeared in person before the Tribunal and pressed for condonation and restoration of his first appeal.
3. Assessee’s Explanation for the Delay
3.1 Non-Resident Status and Absence of Professional Guidance
In support of condonation, the assessee filed an affidavit, which has been extracted verbatim in the CIT(A)’s order and again reproduced by the Tribunal. The key assertions in that affidavit were:
- The assessee had been a non-resident since 2005 and was residing in the USA.
- Due to his residence abroad, he claimed that he could not obtain professional tax advice in relation to the Indian penalty proceedings.
- He stated that he came to India in March (the exact year is not specified in the order and is therefore left open) and, while in India, consulted a tax professional.
- On taking advice, he was suggested to pursue an appeal before the CIT(A) against the penalty order.
- By that time, the statutory period for filing the appeal had already expired.
- Nevertheless, he proceeded to file the appeal accompanied by a condonation application under Section 5 of the Limitation Act, 1963, citing genuine hardship and lack of legal counsel as reasons for the delay.
- He further affirmed that there was no intention to prejudice the Revenue or to secure any undue benefit by delaying the proceedings.
3.2 Extract from the Affidavit
The Tribunal reproduces the assessee’s explanation as recorded in paragraph 4 of the CIT(A)’s order. Those averments explicitly refer to:
- Receipt of the penalty order dated 15-03-2022 for AY 2012-13 under
Section 271(1)(c), - The ex-parte
Section 147assessment based on cash deposit of ₹11,00,000, - The consequential tax demand of ₹1,87,460 and equal penalty of ₹1,87,460,
- The fact of non-residence since 2005 and stay in the USA,
- Visit to India in March, consultation with a tax consultant, and belated filing of the appeal with an application for condonation,
- An expressly stated two-year delay and invocation of
Section 5 of the Limitation Act, 1963, - Assertion of “genuine hardship of being non-resident” and “lack of legal counsel related to appeal”, and
- A denial of any intention to harm the Revenue’s interests by filing a late appeal.