Condonation of Delay in filing Appeal before the CIT(A) - [Section 249(3) of the Income Tax Act, 1961]

Appeal has to be filed within time prescribed under the relevant provisions. An appeal filed beyond time prescribed under the law is liable to be dismissed. However, the CIT(A) may admit an appeal after the expiration of the limitation period on sufficient cause for not filing it within that period being shown. Application for condonation of delay in filing the appeal, giving the reasons for the delay, along with necessary evidences should be filed with Form No. 35 (i.e., form of appeal). The CIT(A) can condone the delay in filing the appeal if he is satisfied that the appellant had sufficient cause for not presenting it within that period.

Text of section 249(3)

(3) The Commissioner (Appeals) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.

 

The powers conferred upon the CIT(A) under section 249(3), for condoning the delay in filing of appeal if he is satisfied that the appellant had sufficient cause for not presenting it within that period, are statutory power to alleviate genuine suffering of taxpayers, so far as their grievance redressal by way of appeals are concerned, within framework of law. When a public authority has the powers to do something, he has a corresponding duty to exercise these powers when circumstances so warrant or justify. The question then arises as to what should be the circumstances which ordinarily warrant or justify the relaxation of the rigour of limitation provisions.

As we deal with this aspect of the matter, it is useful to take note of Section 14 of the Limitation Act which is titled “Exclusion of time of proceeding bona fide in court without jurisdiction” Section 14(1) of the Limitations Act provides that, “In computing the period of limitation …………. the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it”.

It is also only elementary that while interpreting a statutory provision one has to go from red to the black (a rubro ad nigrum) which essentially lays down the principle that the heading must hold key to the text. Translated literally, the latin maxim a rubro ad nigrum implies that one has to read from the red to the black; from the rubric or title of a statute, (which, in ancients times used to be written in red letters) to its body, which was in the ordinary black. The provisions of this exclusion clause are required to be interpreted in a liberal manner in consonance with the object indicated by the heading of the section. Essentially, therefore, when the delay in filing of an appeal is on account of the fact that the person filing the appeal was pursuing his case before the wrong forum, the scheme of law requires such a delay to be condoned. When we thus interpret the provisions of Section 14(1), there is no ambiguity about the scheme of things envisaged by this statutory provision. What essentially follows from this provision is that when someone is pursuing the matter in a forum, whether original or appellate, which, on account of “defect of jurisdiction or other cause of a like nature” is unable to entertain the grievance of the applicant, the time so spent by that person is to be excluded.

The Hon’ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy 2008 (228) ELT 162, while condoning the delay of 883 days in filing an application for setting aside the ex parte decree held

“That the purpose of Limitation Act was not to destroy the rights. It is founded on public  policy fixing a life span for the legal remedy for the general welfare. The primary function of a Court is to adjudicate disputes between the parties and to advance substantial justice. The time limit fixed for approaching the Court in different situations is not because on the expiry of such time a bad cause would transform into a good cause. The object of providing legal remedy is to repair the damage caused by reason of legal injury. If the explanation given does not smack mala fides or is not shown to have been put forth  as a part of a dilatory strategy, the Court must show utmost  consideration to the suitor.”

The Apex Court in Nand Kishore v. State of Punjab (1995) 6 SCC 614, under the peculiar circumstances of the case condoned the delay of about 31 years, in approaching the apex Court and held that it must be remembered that in every case of delay there can be some lapse of the litigant concerned. That alone is not enough to turn down the pleas and to shut the doors against him. If explanation does not smack mala fide or does not put forth as a dilatory strategy, the Court must show utmost consideration of such litigant.

Delay of over 3800 days in challenging CIT(A) order, not condonable; Holds ignorance of law no excuse

Delhi ITAT dismisses Assessee's application for condonation of 3853 days in filing the appeal against CIT(A) order; Observes that application for condonation of delay was not supported by an affidavit and the Assessee took a contrary stand in the application and written submission filed during the course of hearing and the reason shown for the condonation of delay does not establish sufficient cause in terms of Section 253(5); Also holds that filing of appeal against the CIT(A) order is only an afterthought and not a case of lack of awareness of provisions of filing of the appeal and once the issue got settled due to efflux of time, it cannot be permitted to be revived merely because the Assessee suddenly wakes up and files an appeal without providing any valid or genuine ground for condonation of delay; Assessee was subject to reassessment proceedings on the basis of information received from customs authorities and the Revenue proceeded with best judgement assessment under Section 144; CIT(A) upheld the order of Revenue; Subsequently, after four years, Assessee moved rectification application under Section 154 on the ground that the complaint filed by the Custom Authrorities before Magistrate got quashed and the sole reason for the reopening did not exist and the order under Section 144 requires rectification; Revenue dismissed the rectification application on the ground of limitation and held that the quashing of complaint filed by Customs Authority will not have any impact on income-tax; Before ITAT, Assesee assails both orders passed by CIT(A) and by Revenue under Section 154 and contends that limitation prescribed in Section 154 does not apply in a case where effect has to be given to an order of the court; ITAT observes that Assessee in appeal memo stated that the delay is simply due to the fact that the Assessee did not knew the correct course of action to be taken and based on the advice of the counsel the appeal is filed, however, the written submission depicts that the delay is attributable to the closure of collateral proceedings before the magistrate and such a vague reason does not establish sufficient cause under Section 253(5); Also observes that the reason of huge gap between the appeal filed against the CIT(A) order and the order of magistrate quashing the complaint filed by custom authorities against the Assessee remains unexplained; On the issue of rectification under Section 154, ITAT observes that subsequently to the dismissal of appeal by CIT(A), Assessee instead of filing an appeal before Tribunal against CIT(A) order, attempted to test his luck by filing rectification application before the Revenue; Remarks that "When Assessee abandons its statutory right of filing the appeals within limitation and has cautiously taken such decision, he cannot be permitted to purse the right again"; Rejects the contention of Assessee that limitation under Section 154 does not apply to the present case and observes that the order passed by magistrate on the compliant filed by Customs Authority against the Assessee is in respect of a completely seperate proceeding and has no impact, whatsoever, in the income tax proceedings and the reason stated in rectification application filed before the Revenue does not fall in the category of mistake apparent on record as envisaged in Section 154; Accordingly, dismisses Assessee's appeal. [In favour of revenue] (Related Assessment year : 1993-94 & 1994-95) – [Brijesh Charitable Trust v. ACIT, Panipat [TS-628-ITAT-2022(DEL)] – Date of Judgement : 27.07.2022 (ITAT Delhi)]

CIT(A) has not approached the matter judiciously and has dismissed the appeal of the assessee, by rejecting the application for condonation of delay, without assigning any specific reasons why the delay in filing appeal should not be condoned - Application for condonation of delay cannot be rejected without assigning any specific reasons

ITAT held that Ld. CIT(A) has not approached the matter judiciously and has dismissed the appeal of the assessee, by rejecting the application for condonation of delay, without assigning any specific reasons why the delay in filing appeal should not be condoned. There is no allegation to the effect that the assessee acted in a mala-fide manner and further, Ld. CIT(A) has not brought anything on record as to how the assessee would stand to gain by not filing the appeal in time. There is a minor delay of 67 days, for which, in our view, the assessee has given a plausible explanation. In the assessment framed on the assessee, Ld. Assessing Officer has made an addition of 17 lakhs approximately income in the hands of the assessee as undisclosed income, which according to the assessee does not belong to him since he acted as a mere Power of Attorney, on behalf of the Seller, who received the entire payment. The assessee, in our view, should not be precluded an opportunity of hearing on account of a delay of mere 67 days in filing appeal. Even otherwise, as held by ITAT in the case of Kashmir Road Lines v. DCIT (2021) 123 taxmann.com 5 (ITAT Amritsar), even when the assessee is not interest in pursuing the appeal, even then the Ld. CIT(A) should dispose of the appeal on merits. Therefore, in view of the above, the delay in filing the appeal before the Commissioner (Appeals) is being condoned and the matter restored to the first appellate authority to decide the appeal on merit after giving due opportunity of hearing to the assessee. (Related Assessment year : 2011-12) – [Rahul M. Vadodariya v. ITO-  Date of Judgement : 31.05.2022 (ITAT Ahmedabad)]

Condonation of delay granted as order passed without knowledge of Assessee

Held that condonation of delay in filing appeal granted in the interest of justice as the revenue did not refuted the contention of the assessee that he had no knowledge or order being passed. It is noted that there is a delay of 655 days in filing of appeal.

The assessee has filed an affidavit dated 29.03.2022 stating that delay in filing appeal before ITAT is caused due to the fact that neither the notice of hearing was received by the assessee from Ld. CIT(A) nor was the order passed by Ld. CIT(A) sought to be appealed against served upon the assessee, thereby causing the delay in filing appeal. The assessee came to know about the order of Ld. CIT(A) on going through the ITBA portal for status of appeal/ demand. Thereafter, he filed appeal before ITAT.

Held : In our considered view, looking into the reasons in the affidavit filed by the assessee wherein he has submitted that he had no knowledge of order being passed by Ld. CIT(A) and later came to know about the same only on going through the ITBA portal and coupled with the fact that the Revenue has neither refuted the contention of the assessee nor has brought anything to record to validate that copy of order of Ld. CIT(A) was duly served upon the assessee, in the interests of justice, we are condoning the delay in filing of appeal by the assessee and restoring the file to the Ld. CIT(A) for carrying out a detailed inspection of books of accounts of the assessee and carry out a verification of their genuineness and authenticity. In this regard, opportunity may also be given to the Ld. Assessing Officer for cross verification. The assessee is also directed to kindly co-operate in the matter and provide assistance to the Revenue. (Related Assessment year : 2015-16) -  [Pepperazzi Hospitality (P) Ltd.  v. ITO Date of Judgement : 08.04.2022 (ITAT Ahmedabad)

Condones delay of over 500 days in filing appeal before CIT(A) in non-resident’s case

Bangalore ITAT condones delay of 591 days and 775 days in filing of appeals before CIT(A) against the penalty orders under Sections 271(1)(c) and 271F and remits the matter back to CIT(A) to decide the issue afresh on merits; Revenue, for Assessment year 2016-17, passed the assessment order and thereafter passed the penalty orders under Section 271(1)(C) and under Section 271F, levying penalty of Rs. 13.19 Lacs and Rs. 5000, respectively; Assessee, a non-resident Indian, filed the appeal before CIT(A) with delay and explained that the delay was caused since he was a non-resident and advice of the tax consultant to represent before the Revenue; CIT(A) rejected the condonation petition holding that there was no reasonable cause for filing these appeals belatedly and affirmed the penalty orders; ITAT relies on the Supreme Court ruling in Collector, Land Acquisition v. Mst. Katiji and

Ors. 167 ITR 471 (SC), which laid down principles to be considered in condoning the delay and it was observed that if the application of the Assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground; ITAT observes that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay; Thus, opines that substantial justice have to be preferred rather than technicality in deciding the issue; Relies on Madras High Court ruling Sreenivas Charitable Trust wherein it was held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction; Observes that there is no question of any excessive or inordinate delay when the reason stated by the Assessee was a reasonable cause for not filing the appeals. [In favour of assessee] (Related Assessment year : 2016-17) – [Suhas Suresh Shet v. ITO (International Taxation), Bengaluru [TS-300-ITAT-2022(Bang)] – Date of Judgement : 05.04.2022 (ITAT Bangalore)]

 

Condones delay of over 500 days in filing appeal before CIT(A) in non-resident’s case

Bangalore ITAT condones delay of 591 days and 775 days in filing of appeals before CIT(A) against the penalty orders under Sections 271(1)(c) and 271F and remits the matter back to CIT(A) to decide the issue afresh on merits; Revenue, for Assessment year 2016-17, passed the assessment order and thereafter passed the penalty orders under Section 271(1)(c) and under Section 271F, levying penalty of Rs.13.19 Lacs and Rs. 5000, respectively; Assessee, a non-resident Indian, filed the appeal before CIT(A) with delay and explained that the delay was caused since he was a non-resident and advice of the tax consultant to represent before the Revenue; CIT(A) rejected the condonation petition holding that there was no reasonable cause for filing these appeals belatcdly and affirmed the penalty orders; ITAT relies on the Supreme Court ruling in Collector, Land Acquisition v. Mst. Katiji and Ors. (1987) 167 ITR 471 : 62 CTR 23 : 1987 AIR 1353 (SC), which laid down principles to be considered in condoning the delay and it was observed that if the application of the Assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground; ITAT observes that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay; Thus, opines that substantial justice have to be preferred rather than technicality in deciding the issue; Relies on Madras High Court ruling Sreenivas Charitable Trust v. DCIT (2006) 280 ITR 357 : 154 TAXMAN 377 (Mad.) wherein it was held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression “sufficient cause” should receive a liberal construction; Observes that there is no question of any excessive or inordinate delay when the reason stated by the Assessee was a reasonable cause for not filing the appeals. [In favour of assessee] (Related Assessment year : 2016-17) – [Suhas Suresh Shet v. ITO, International Taxation – Date of Judgement : 05.04.2022 (ITAT Bangalore)]

Expounds principles on condonation of delay, remands appeal to CIT(A) in interest of justice

Delhi ITAT allows Assessee’s appeal, relies on the Supreme Court ruling in N. Balakrishnan v. M. Krishnamurthy to observe that the length of the delay is not relevant as long as the explanation for delay is acceptable and remands the case to the CIT(A) to decide the application for condonation of delay afresh alongwith the appeal; Assessee-Individual was subjected to assessment for Assessment year 2014-15 whereby Revenue made additions under Sections 68 and 69 and the assessment order passed under Section 144; CIT(A) dismissed Assessee’s application for condonation of delay in filing appeal on failure to provide day to day explanation for the delay, and to substantiate it factually and held, “Assessee’s appeal fails in limine” against which Assessee preferred the instant appeal; ITAT observes that while dealing with application for condonation of delay, the conduct of the parties and plausible reasoning for not filing the appeal within the statutory time is required to be seen; ITAT refers to the Supreme Court ruling in Collector, Land Acquisition, Anantnag v. Mst. Katiji (1987) ILLJ 500 SC wherein it was held that “the expression 'sufficient cause' employed by the legislature in the Limitation Act is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub-serves the ends of justice-that being the life purpose for the existence of the institution of Courts” and also that a liberal approach was required to be adopted on principle; Remarks that “If explanation does not smack mala fide or does not put forth as a dilatory strategy, the Court must show utmost consideration of such litigant”; ITAT observes that in condoning delay what has to be seen is whether the party seeking condonation has made out a sufficient cause or not and that in the instant case, the CIT(A)’s order did not mention the length of delay or the reasonable cause shown for seeking the condonation, hence in the interest of justice and for just decision in the case, deems it appropriate to remand the case. [In favour of assessee] (Related Assessment year : 2014-15) – [Surendra Singh v. DCIT, Haridwar  [TS-162-ITAT-2022(DEL)] – Date of Judgement : 23.02.2022 (ITAT Delhi)]

Non communication of intimation by Tax Professional is sufficient cause for condonation of delay in appeal filing

In the instant case, the assessee had submitted that the orders passed under section 200A of the Act were never served on the assessee physically or otherwise. It was stated that intimation under section 200A downloaded from the office of the Assessing Officer by the Tax Professional, was not communicated to the assessee and since the Tax Professional had left the service of the assessee, the assessee has not able to correctly state when the intimation under section 200A of the Act was downloaded. It is stated that only when demand were sought to be collected by the Revenue, the assessee came to know of the order passed under section 200A of the Income Tax Act. We are of the view that the submissions of the assessee cannot be brushed aside as false. In the instant case, prima facie, the issue on merits is seen covered in favour of the assessee by the judgment of the Hon’ble jurisdictional High Court Sri Fatheraj Singhvi v. Union of India & Ors. reported in (2016) 289 CTR 602 (Kar.). Taking note of judicial pronouncement where expression “sufficient cause” has received a liberal construction, we condone the delay of filing these appeals before the CIT(A). We deem it appropriate to remit the issue of levy of fee under section 234E of the Act through intimation under section 200A of the Act to the file of the CIT(A) (since the CIT(A) has not decided the issue on merits). The CIT(A) shall afford a reasonable opportunity of being heard to the assessee before a decision is taken in this matter. It is ordered accordingly. (Related Assessment year : 2013-14) – [Sameer Granites (P) Ltd. v. ACIT - Date of Judgement : 30.12.2021 (ITAT Bangalore)]

Assessee not liable for malfunctioning in e-appeal facility; Holds physically filed appeal before CIT(A) valid

Mumbai ITAT allows Assessee’s appeal, holds that the Revenue cannot take the benefit of non-functioning/ malfunctioning of its portal and deny the statutory right of the Assessee to appeal against the assessment order over technical failure in e-filing facility; Assessee filed an appeal before CIT(A) in physical mode on 23.01.2019 which was revised on 27.01.2020 on account of change of address as against Rule 45 of IT Rules that requires compulsory filing of the e-appeals before CIT(A) with effect from 01.03.2016; However, CIT(A) dismissed the appeal, treating the appeal as invalid; Assessee submitted that an e-appeal was filed on 12.03.2021 along with an application for condonation of delay and sought to justify the physical filling of appeal on the basis that notice under section 153A was issued on PAN of the deceased (Shri Ramniklal R. Mehta); The legal heir of the deceased filed the returns for the Assessee using PAN of the deceased before applying for new PAN for the Assessee; The legal heir could not login to the Revenue’s website through the newly allotted PAN and was unable to pay the taxes and file an appeal against the assessment order; On legal heir's grievance, ITBP website informed that since he was a minor, he was not authorized and a legal guardian could represent him for performing the required functions; ITAT observes that the Assessee had been filing the return of income electronically, therefore, the appeal against the assessment order was required to be filled electronically as per bare reading of the Rule 45 and Section 249; ITAT observes, “In our view, the assessee made sufficient and sincere efforts to file the appeal in electronic forms, albeit the assessee failed in his efforts for the reasons recorded in the order. In our considered opinion, the non filing of the electronic appeal was on account of the inaccessibility of the Income tax portal to the estate of Shri Ramniklal R. Mehta and assessee was forced to file the appeal in physical form”; Thus, expounds that rules are meant to achieve the ends of justice and not to put impediments in the path of justice and the non-filing of the e-appeal was on account of the inaccessibility of the portal which forced the Assessee to file an appeal in the physical form; ITAT sets aside CIT(A)’s order and directs CIT(A) decide the appeals on merit, grant hearing and also permit filing of any other documents in support of the case. [In favour of assessee] (Related Assessment years : 2011-12 to 2015-16) - [Estate of Ramniklal Rajmal Mehta v. DCIT [TS-1095-ITAT-2021(Mum)] – Date of Judgement : 30.11.2021 (ITAT Mumbai)]

Remits Assessee’s appeal before CIT(A) with direction for condonation of delay application, affidavit

Visakhapatnam ITAT allows Assessee’s appeal and condones delay in filing appeal with CIT(A), by legal heir of deceased Assessee for Assessment year 2013-14; Legal heir of the Assessee claimed that subsequent to the Assessee’s demise, completion of legal formalities to obtain relevant certificates was delayed, resulting in delay in filing of appeal; ITAT notes that Assessee’s appeal was dismissed in limine as not admitted on the ground of non-filing of the necessary application with supporting affidavit, and observes that though the reason for delay was mentioned, appropriate documents including affidavit were not furnished; ITAT observes that the application for condonation of delay is supposed to be filed along with the appeal itself however, refers to Supreme Court ruling in State of M.P. and Anr. v. Pradeep Kumar and Anr wherein it was held that the same can be entertained at a later stage; ITAT notes the peculiar circumstances of the case and remarks that “…may be due to lack of knowledge or guidance or inadvertence, the appellant failed to file the appropriate application and supporting affidavit/evidence in support of reasons for delay”; ITAT remands back the case to CIT(A) for fresh adjudication while affording reasonable opportunity to the Assessee for filing an appropriate application along with affidavit/evidence in support of reasons for delay. [In favour of assessee] (Related Assessment year : 2013-14) – [Tatineni Ramesh Kumar v. ITO, Vijayawada [TS-554-ITAT-2021(VIZ)] – Date of Judgement : 24.06.2021 (ITAT Visakhapatnam)]

Condones delay of 1425 days in filing appeal before CIT(A) on ‘sufficient cause’ given by assessee

Chennai ITAT condones delay of 263 days for Assessment year 2013-14 and 1425 days for Assessment year 2014-15 and 2015-16 in filing appeal before CIT(A) and directs CIT(A) to adjudicate the issue on merits; CPC. TDS processed assessee’s TDS statement and issued intimation u/s 200A through e-mail,  which was unnoticed due to oversight of employee; Upon intimation of notice, appeals were filed before CIT(A) with a delay, which were not condoned; ITAT observes that there is no willful negligence on the part of assessee; Refers to ‘sufficient cause’ under Limitation Act, 1963 and remarks that there is no law laid down regarding condonation of delay and that Courts have taken a liberal approach; Opines that resorting to delay benefits no litigant, and refusal to condone such delay results in justice being defeated; Holds, “When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay”; Relies on Supreme Court ruling in N. Balakrishnan v. M. Krishnamurthy where it was held that ‘sufficient cause’ under the Limitations Act should be construed liberally to advance substantial justice; Accordingly, sets aside the common orders passed by CIT(A). [In favour of assessee] - [Inscribe Graphics Ltd. – Date of Judgement : 16.02.2021 (ITAT Chennai)]

Limitation Act to aid taxpayer filing delayed appeal chasing ‘wrong forum’ - Power conferred upon the CIT(A) to condone the delay in filing of appeal is to alleviate genuine suffering of taxpayers. He has the power and corresponding duty to exercise the power when circumstances so warrant. Under section 14 of the Limitation Act, delay caused due to proceeding in a wrong forum has to be condoned.

Hyderabad ITAT condones delay in filing of appeal before CIT(A), cites assessee’s (UAE resident) 'bonafide, even if overoptimistic and erroneous' assessment about efficacy of rectification under section 154 to seek redressal of its grievance; Assessee had filed rectification application disputing levy of surcharge and cess on royalty and interest income taxable under India - UAE DTAA, which was rejected by Assessing Officer holding the issue to be a debatable one; Subsequently assessee filed an appeal before CIT(A) against the assessment order which was dismissed citing delay in filing of appeal; Holding the CIT(A) was clearly in error in not condoning the delay in filing of appeal which was, in our humble understanding, a result of a bonafide, even if overoptimistic and erroneous, assessment about efficacy of section 154 to seek redressal of his grievance in question. The assessee had followed an inappropriate course, and, with the benefit of hindsight, there is no dispute about this error. ITAT also observes that while in the instant case invokation of Section 14(1) of Limitation Act, 1963 is not warranted, however the same would also come to the rescue of the taxpayer in cases where delay in filing of an appeal is on account of pursuing one's case before the wrong forum; The delay in filing of appeal before the CIT(A), against the assessment under section 143(3), therefore, indeed deserves to be condoned. We reverse the stand of the CIT(A) on this point. The order of the CIT(A) thus stands vacated.” [In favour of assessee] – [R.A.K. Ceramics, UAE [TS-160-ITAT-2019(HYD)] – Date of Judgement : 29.03.2019 (ITAT Hyderabad)]

Form of appeal and limitation - Delay of 231 days - Affidavit was filed explaining the delay - Revenue has not disputed the correctness of the affidavit – Delay was condoned – Matter remanded to Tribunal to decide on merits

Allowing the appeal of the assessee, the Court Held that; there is no any such gross negligence on the part of the appellant especially in the light of the reasons assigned for filing the appeal belatedly, which have not been controverted by the revenue. Therefore, the matter should not be shut down on technicalities and a liberal approach should be taken bearing in mind the reasons assigned by the appellant, as the assessee is a joint venture company controlled by the Government of Tamil Nadu and its DCEO, who is invariably in the cadre of IAS Officer, is being nominated by the Government and he has to take a decision to file an appeal. The appellant has submitted that in the assessee’s own case for the assessment years 1995-96, 1996-97 and 2001-02, a Division Bench of this Court, decided the very same issue in favour of the assessee. In the result, the above tax case appeal is allowed, the substantial questions of law are answered in favour of the assessee and the order passed by the Tribunal is set aside. The matter is remanded to the Tribunal to take a decision on the merits of the case. (Related Assessment year : 1997-98) – [Elnet Technologies Ltd. v. DCIT (2018) 259 Taxman 593 (Mad.)]

175 days delay in filing appeal was condoned where assessee was waiting for outcome of penalty order

The assessee filed an appeal before the Commissioner (Appeals) along with an application for condonation of delay of 175 days. The assessee claimed that delay occurred since he was waiting outcome of penalty order. The Commissioner (Appeals) however refused to condone the delay.

Held that the reason stated by the assessee in these cases is that he was waiting for the outcome of the penalty proceedings. Therefore, one has to consider, whether reasonable prudent person would do so. The inference of such delay has to be drawn on the basis of circumstances available on record and conduct of the assessee. After considering the surrounding circumstances and applying the test of human probabilities, one has to reasonably conclude that the plea of the assessee is genuine. The explanation offered by the assessee for the delay cannot be rejected as false or devoid of merits. Therefore, this short delay of 175 days is condoned. [In favour of assessee] (Related Assessment year : 2010-11) – [S.S.M. Ahmed Hussain v. ITO, Chennai (2017) 81 taxmann.com 443 : (2016) 48 ITR(T) 417 (ITAT Chennai)]

Assessee filed an appeal before Commissioner (Appeals) against order of Assessing Officer along with a condonation petition on ground that appeal was filed in light of decision of Supreme Court in case of CIT v. Shaan Finance (P) Ltd. (1998) 97 Taxman 435 (SC) and as said decision was not available at time of due date, delay was caused - Commissioner (Appeals) refused to condonedelay holding that if delay was condoned, it would lead to proliferation of endless litigation - Even if filing of similar petitions might generate endless litigation, Tribunal has to sit in judgment on those petitions on merits and cannot refuse to sit in judgment citing consequential difficulties - Since assessee had no occasion to file appeal within time as pronouncement of Supreme Court was not available on due date and appeal was filed as soon as law had been declared, delay needed to be condoned, and, consequently, Assessing Officer should rectify assessment

The Assessing Officer had granted investment allowance claimed by the assessee under section 32A, in respect of additions made to plant and machinery of its unit. Thereafter, the assessee sold its unit to another company except certain machineries which were leased out by the assessee. Accordingly, the Assessing Officer passed an order under section 155(4A) withdrawing entire investment allowance including that of the machinery given on lease and held that leasing of assets would fall within the meaning of the term ‘otherwise transfer’. The assessee filed an appealbefore the Commissioner (Appeals) challenging that portion of the order of the Assessing Officer withdrawing investment allowance pertaining to assets leased. The assessee filed a petition for condonation of delay on the ground that the appeal was filed in the light of the decision of the Supreme Court in the case of CITv. Shaan Finance (P) Ltd. (1998) 97 Taxman 435 (SC) and as said decision was not available at the time of due date, the delay was caused. The assessee also filed a rectification petition under section 154 before the Assessing Officer to rectify his earlier order. The Commissioner (Appeals) refused to condone the delay holding that if the delay was condoned, it would lead to proliferation of endless litigation with no finality attached to any order already passed. On second appeal :

Held : It is settled that the mistake arising as a result of subsequent interpretation of law by the Supreme Court would constitute ‘a mistake apparent from record’ and, therefore, rectification proceedings could be initiated accordingly. This position confers a legal right on an assessee to pursue the matter before appropriate authorities. The chance of proliferation of endless litigation is the result of the above legal position with which the Tribunal cannot interfere. The Tribunal cannot interfere in the rights of citizens and assessees. Even if filing of similar petitions may generate endless litigation, it has to sit in judgment on those petitions on the merits of the points raised therein and it cannot refuse to sit in judgment citing certain consequential difficulties.

The assessee had exercised its legitimate right to move the petition before the Assessing Officer and also filed an appeal before the Commissioner (Appeals). The Assessing Officer had not disposed of the petition filed under section 154 which was again not justified. Apart from the observation of the Commissioner (Appeals) regarding the proliferation of litigation, he had not otherwise considered the reasonableness of condoning the delay. The delay caused in the instant case before the Commissioner (Appeals) was of 180 days. The assessee got the chance to file rectification petition or an appeal as such, because of the subsequent pronouncement of law by the Supreme Court. The pronouncement was not available on the due date. Therefore, the assessee had no occasion to file an appeal within time but the assessee had filed the appeal as soon as the law had been declared by the Supreme Court. Therefore, the delay of 180 days needed to be condoned. The Commissioner (Appeals) had erred in not condoning the delay. The appeal was allowed. (Related Assessment year : 1989-90) – [Bajaj Hindusthan Ltd. v. JCIT (2005) 92 TTJ 1064 : 92 ITD 411 (ITAT Mumbai)]

Condones 5 years appeal filing delay based on subsequent ‘correct’ professional advice

ITAT condones 1836 days delay in filing appeal, accepts contention of assessee that the appeal was not preferred initially due to advice of its GM-Finance, but was filed 5 years later on ‘correct' professional advice given by a counsel; Tribunal notes that Supreme Court judgment in Smifs Securities had allowed depreciation claim on goodwill in August 2012, which was the issue in the instant case and that the assessee had quickly thereafter filed an appeal in June 2013;

Assessee, Sartorious Mechatronics India, acquired the business of weighing division of Phillips India Ltd and a sum of over Rs 64 lakhs was paid to the assessee as goodwill. The assessee, claimed depreciation on goodwill, but the same was however disallowed by Assessing Officer. The CIT(A), vide order (for Assessment years 2001-02 to 2003-04) dated 28.03.2008 affirmed the Assessing Officer’s order. On being advised by the Company’s GM - Finance that there was no purpose in filing further appeal, the assessee decided not to pursue the case further.

Five years later, while interacting with another counsel in relation to a different issue, the said counsel observed that an appeal had not been preferred against the CIT(A) order dated 28.03.2008 pertaining to depreciation on goodwill. He advised the assessee to file an appeal against the impugned order, which the assessee did on 18.06.2013, a delay of 1836 days. 

The assessee's counsel pleaded for condonation on the following grounds: 

(i)     That Tribunal ought to take a ‘liberal’ view in matters relating to condonation of delay, especially if the explanation offered for delay did not smack of ‘malafides.’ Apex court decision in Ramnath Rao and Bangalore ITAT ruling in Raghavendra Constructions v. ITO [ITA No.425/Bang/2012] order dated 14.12.2012, were cited to buttress the argument.

(ii)    The Supreme Court, in the case of CIT v. Smifs Securities [TS-639-SC-2012] : 348 ITR 302 (SC), vide judgment dated 22.08.2012, had allowed depreciation claim on goodwill, thereby putting the issue beyond any doubt and entitling the assessee in the instant case as well, to relief based on the ration laid down by apex court. The assessee relied on Karnataka High Court judgment in ISRO on the point that where the tax liability itself is non-existent, delay in filing appeals ought to be condoned1                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

The DR meanwhile opposed the condonation plea, citing the ‘inordinate’ delay in filing appeal as also the assessee having accepted the assessment orders for Assessment years 2002-03 & 2003-04. 

The ITAT, while condoning the delay and ruling on merits in favour of assessee, noted the assessee's claim that the appeal was not filed initially due to an earlier advice and was filed once they received the ‘correct’ professional advice. The Tribunal then referred to Supreme Court judgment in Smif Securities which allowed depreciation claim on goodwill and left no room for any doubt as regards this debate.  The ITAT observed ' In such circumstances, we are of the view that the assessee should not be denied benefit which it is entitled to in law purely on technicalities. We are also satisfied that the delay in filing the appeals has occasioned on account of reasonable cause. In this regard, we find that in Raghavendra Constructions (supra), this Tribunal on identical issue held that subsequent professional advice and delay on account of earlier improper professional advice was sufficient cause to condone the delay in filing the appeal.

ITAT observes : the assessee should not be denied benefit which it is entitled to in law purely on technicalities. We are also satisfied that the delay in filing the appeals has occasioned on account of reasonable cause.' ; Relies on co-ordinate bench ruling in Raghavendra Constructions, to hold that subsequent professional advice and delay on account of earlier improper professional advice, a sufficient cause to condone delay; On DR’s contention that the assessee had accepted the assessment orders for 2 Assessment years, ITAT holds that tax liability cannot be fastened on the basis of ‘admission’ and ought to be imposed strictly in accordance with law.

Even on merits, ITAT allowed depreciation on goodwill, and dismissing DR’s contention with regard to the assessee having accepted the assessment orders for Assessment years 2002-03 and 2003-04, the ITAT held “tax liability cannot be imposed on the basis of admission and it should be strictly in accordance with law. ” ITAT, thus allowed the assessee’s appeal. [In favour of assessee] Assessment years: 2001-02 to 2003-04– [Sartorious Mechatronics India v. CIT [TS-229-ITAT-2015(Bang)] – Date of Judgement : 27.03.2015 (ITAT Bangalore)]

Rules cause of delay, not length, relevant for condoning delay; Cites Nand Kishore (SC)

The assessee, C Jegaveerapandian filed its return for Assessment year 1995-96 on August 28, 1997. Pursuant to a survey under section 133A on business premises of J.V.P. Associates, some documents evidencing individual business transactions of assessee were found. Based on such documents Assessing Officer reopened assessment under section 147 and as assessee failed to produce any books evidencing said income, Assessing Officer made certain additions by an order dated March 25, 2004.  On September 21, 2012 assessee preferred an appeal before CIT(A) challenging the said order. Assessee explained that he was living an isolated life owing to mental depression and thus received the notice of said proceedings only now. CIT(A) rejected assessee’s plea by holding that there was no reasonable cause for condonation of long delay of 8 ½ years. Aggrieved assessee preferred an appeal before Channai ITAT.

ITAT noted that it cannot be overlooked that on expiry of the period of limitation prescribed for seeking remedy, a corresponding right accrues in favour of the other party and the same should not be lightly interfered with. Thus ITAT held that assessee had to show that he was vigilant during this period and the delay was beyond his control. ITAT was of opinion that condoning an inordinate delay of 8 ½ years would frustrate the legitimate expectation of Revenue as it would have come to the conclusion that the order of Assessing Officer was accepted by assessee.

ITAT took note of  Supreme Court ruling in Nand Kishore v. State of Punjab [(1955) 6 SCC 614] wherein a delay of 31 years was condoned owing to sufficient causes and held that “rule of limitation are not meant to destroy the right of the parties. They are meant to see that the parties do not resort to dilatory tactics, but seek their remedy for the readdress the legal injury so suffered, the law of limitation is thus founded on public policy. The length of delay is not a material to condone the delay, the cause of delay is to be considered”. However as CIT(A) did not examine the circumstances which prevented assessee from filing appeal, ITAT ruled that “we are not in a position to express any opinion about condoning of the delay”. ITAT further opined that necessary enquiry regarding averments made by assessee should have been made by CIT(A) before ruling on the issue of condonation. Thus ITAT remanded matter back to the file of CIT(A) to conduct necessary enquiry regarding averments made by assessee for condoning delay of 8.5 years. [In favour of None/NA] (Related Assessment years : 1995-96 to 2002-03) – [C Jegaveerapandian v. ITO, Tuticorin [TS-149-ITAT-2015(CHNY)] – Date of Judgement : 18.03.2015 (ITAT Chennai)]

Condones appeal filing delay, expunges CIT(A)’s observations on merits in set-aside proceedings, condones assessee’s delay in filing appeal

The assessee, Modipon Limited’s appeal against Assessing Officer’s order with respect to Assessment years 2006-07 to 2008-09 became time barred by 142 days. In appeal, CIT(A) although dismissed the appeal as time barred but even so ruled on merits and held that the issue in appeal was a pure matter of verification and rectification and thus the correct remedy was to file a rectification petition under section 154. Thus, assessee instead of filing an appeal against CIT(A)’s order filed a rectification petition before Assessing Officer. Assessing Officer however rejected the same as he was of view that as the matter was decided by CIT(A) on merits it was not open to him to adjudicate on the same. Finally after obtaining legal advice on how to come out of this cul-de-sac, aggrieved assessee preferred appeal before Delhi ITAT seeking condonation of delay in filing of appeals.

Assessee argued before ITAT that the only remedy sought by it was the removal of fetters on the powers of the Assessing Officer under section 154 which were a result of unwarranted remarks of CIT(A). To the contrary Revenue argued that assessee was a very well established business house and thus it was unbelievable that the right legal advice was not available to it.

ITAT observed that while adjudicating upon a condonation petition it was not required to consider as to what should have happened in an ideal situation but all that it was required to see was whether the reason given by assessee were “reasonable reason which holds the test of human probabilities and which could be a sound reason for a reasonable person in the given circumstances”.

ITAT relied on Supreme Court ruling in Collector, Land Acquisition v. Mst Katiji & Ors [167 ITR 671] and held that “Here is a case in which a plain look at the impugned order suggests, to a layman even with some understanding of income tax procedures, that the remedy can be found at the stage of the Assessing Officer itself, and, based on this understanding, the appeal was not filed. However, with the unfolding of subsequent developments, the assesse had to resort to an expert opinion which suggested that filing of appeal against the order of the CIT(A) is absolutely essential to safeguard his legitimate interests. In these circumstances, in our considered view, there is a reasonable cause for condonation of delay.”

ITAT with respect to assessee’s contention that CIT(A)’s observations were unwarranted, relied on Kolkata ITAT ruling in Dr Murari Mohan Kokey v. ITO [ITA Nos 1397/Kol/2014 dated 05.11.2014] wherein it was held that once CIT(A) dismissed the appeal as time barred it should not have adjudicated it on merits. Kolkata ITAT had held that in such case “The findings given by CIT(A) on merits will have no bearing on fresh adjudication by CIT(A), in the set aside appellate proceedings”.

Thus condoning assessee’s delay, ITAT expunged CIT(A)’s observations on merits and dismissed the appeal as assesse did not wish to pursue the appeal beyond vacation of CIT(A)’s observations. [In favour of None/NA] – [Modipon Ltd. v. ITO [TS-805-ITAT-2014(DEL)] – Date of Judgement : 30.12.2014 (ITAT Delhi)]

 

CIT(A) chose not to condone the delay, he has no business to adjudicate the appeal on merits

The assessee preferred appeals against these assessment orders (ex parte) on 27.11.2012. According to CIT(A), these appeals were filed after a lapse of nearly 310 days. The CIT(A) has not condoned the delay and dismissed the appeal as time barred by observing in para 3.3 of his appellate order as under:

“3.3 Therefore, the appeal has been filed after a lapse nearly 310 days. The appeal filed much beyond the time prescribed in section 249 of the Income Tax Act. The reason given for filing of late appeal [Non-receipt of order served by affixture] can not be accepted as the assessee was assisted by Authorized Representative for his proceeding. The assessment year of the current year was reopened as a result of assessment done for Assessment year 2008-09, in which the maintenance of an undisclosed bank account, as per AIR Information was obtained. The issues dealt with, were same as that in those year. However, the assessee left for his wife’s treatment, without responding to the notices, when the assessment was about to be time barred. Subsequently penalty notices under section 271(1)(c) and 271(1)(b) were fixed which were received by the assessee on 14.06.2012, in which reference to the penalty notice issued on 30.12.2011 alongwith assessment order was referred to. This again clearly indicates that the assessee was certainly aware of the completion of assessment proceeding at least as on 14.06.2012. In spite of it the appeal was filed on 27.11.2012. Subsequently, another notice by Speed Post was sent to him on 15.06.2012, for penalty. Subsequently, penalty u/s. 271 (1)(c) and 271(1)(b) were imposed on 26.06.2012. The penalty orders were served by Speed Post in assessee’s address on 12.07.2012. A11 these taken together clearly indicates that the assessee was very well aware regarding the completion of order. However the assessee choose for whatever reason, not to comply to the notices issued and avoid receipt of notice directly at his address or through authorized representative, causing the department to serve the notice through either affixation or by post. Similar conduct was also noticed during appellate proceeding, when the assessee never received the notices directly, and the notices had to be served on persons claiming to be his relatives, by Notice server or sent by Speed Post, again to be received by others. Therefore, as the appeal has been filed belated and sufficient cause for such delay is not there the appeal is dismissed as being time barred.”

The CIT(A) after dismissing the appeal as time barred also gone into merits of the case and decided the issue. Aggrieved against dismissing the appeal as time barred and not condoning the delay file appeal before the ITAT.

Held : In the present case before us the CIT(A) has not condoned the delay but he as adjudicated the issues on merits as is evident from the impugned appellate order. We are of the view that in case CIT(A) chose not to condone the delay, he has no business to adjudicate the appeal on merits. For this, we are of the view that first of all, the appeal should be admitted for making a decision on merits because the right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi judicial adjudications. The right to appeal is statutory right and it can be circumscribed by the conditions in the grant. If the statute gives a right to appeal upon certain conditions, it is upon fulfillment of those conditions that the right becomes vested in and exercisable by the appellant. Here the assessee’s appeal is delayed as alleged by CIT(A) and without admitting the appeal he has adjudicated the same on merits. Once the appeal is not admitted nothing is pending before him. A judgment of Hon’ble Bombay High Court (under the old Act of 1922) in the case of CIT v. Mysore Iron & Steel Works (1949) 17 ITR 478 (Bom.), wherein it is held that there is no appeal from the order of the Appellate Assistant Commissioner refusing to condone the delay under Section 30, subsection (2), of the Income-tax Act.”.

In view of the above decision of Hon’ble Bombay High Court, we are of the view that the CIT(A), once not admitted the appeal as barred by limitation, he should not have adjudicated on merits. The findings given by CIT(A) on merits will have no bearing on fresh adjudication by CIT(A), in the set aside appellate proceedings. In term of the above, we set aside the orders of the CIT(A) and remand the matter back to the file of CIT(A) for fresh adjudication on merits. (Related Assessment year : 2004-05 to 2007-08 & 2009-10) - [Dr. Murari Mohan Kokey v. ITO, Kolkata – Date of Judgement : 05.11.2014 (ITAT Kolkata)]

Liberal approach for condoning delay not licence to prefer appeals at will

The assessee, Prashant Projects Ltd., is engaged in the business of construction of storage handling Terminal of Petroleum Products. The assessee filed its return of income for Assessment year 2005-06 on 31.10.2005 declaring total income of Rs. 45.49 lacs. Assessing Officer determined the total income at Rs. 111.17 lacs, as per the assessment order under section 143(3) of the Act, on December 31, 2007, which was received by the assessee on 25.01.2008. Accordingly, appeal was to be filed by 24.02.2008, but it was filed on 09.06.2011, after a delay of more than 3 years.

According to the assessee, the appeal for the additions made in assessment order was filed in the office of the Assessing Officer by mistake. After the assessee came to know that the appeal was to be filed before the CIT(A), in May 2011, the assessee moved an application to the Assessing Officer to transfer the appeal to the office of the FAA. Dismissing the appeal, the FAA observed that the assessee had been assissted by CA’s in the past and the huge gap of more than 3 years had not been explained by the assessee. Thus, the CIT(A) held that the assessee was totally negligent, the cause of delay was avoidable by due care and attention and there was no reasonable cause for delay within the meaning of provisions of Section 249(3). Aggrieved assessee approached ITAT.

Before ITAT, the assessee submitted that the delay in filing the appeal was because of bona fide belief that appeal was filed before the right forum and therefore taking a liberal view the FAA should have condoned the delay. The assessee relied on plethora of judgements including the case of Ram Nath Sao (3 SCC 195), Mst. Katiji (167 ITR 471), N. Balkrishnan (7 SCC 123), Sankar Rao (AIR 1987 SC1726), Bharat Auto Center (282 ITR 366-All.), Cheminor Drugs Ltd. 105 ITD 613 (ITAT -Hyderabad) and case of General Williams Masonic (ITAT Delhi), wherein the courts have taken liberal view in condoning the delay.

Ruling in favour of the Revenue, ITAT first discussed the philosophy and history of law of condonation of delay. ITAT observed that the seed of condonation of delay were seen in the the provision of the Act way back from 1860 and in all its subsequent enactments, where the appelllate authority may allow a person to appeal even after the stipulated period for 'special reasons'. Thus, discretion was given to the presiding officer to accept the belated petition. On the same basis, Section 249(3) of the present Act allows CIT(A) to admit belated appeals, if the appellant can show sufficient cause for not filing appeal in time. In this regard ITAT observed that 'It is said that the law of limitation is enshrined in the maxim that it is for the general welfare that a period be put to litigation. Rules of limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time. But, said rules are meant to see that the parties seek their remedy promptly. Condonation of delay is the discretion of the Presiding Officers of judicial forums and is governed by section 5 of the Limitation Act, 1963.Courts are of the view that the words ‘sufficient cause’ of the said Act, should receive a liberal construction, so as to advance substantial justice. Once a judicial forum accepts the explanation as sufficient, it is the result of positive exercise of discretion. These provisions do not envisage that such a discretion can be exercised only if the delay is within a certain limit. The length of the delay is not the matter, acceptability of the explanation is the only criterion. Following the spirit of advancing substantial justice, Act has included discretionary powers for condoning delay in filing appeals’.

Relying on the Supreme Court rulings in Office of the Chief Post Master General v. Living Media India Ltd. [348 ITR 7], Balwant Singh (Dead.) v. Jagdish Singh [8 SCC 685], Indian Oil Corporation Ltd. v. Subrata Borah Chowlek [3 GLR 312], Ajit Singh Thakur Singh & Anr. v. State of Gujarat [1 SCC 495], ITAT observed that delay can be condoned only if there is no gross negligence or deliberate inaction or lack of bona fide. Secondly, assessee should furnish acceptable and cogent reasons sufficient to condone delay. In addition to the aforesaid basic principles of condonation of delay, based on judicial precedents, ITAT extracted the following general principles of condoning delay:

(i)       If sufficient cause for excusing delay is shown, discretion is available to the FAAs to condone the delay and admit the appeal.

(ii)     The expression ‘sufficient cause’ is not defined, but it means a cause which is beyond the control of an assessee. The test whether or not a cause is sufficient is to see whether it could have been avoided by the party by the exercise of due care and attention. What is of essence is whether it was an act of prudent or reasonable man.

(iii)    In every case of delay, there is some lapse on the part of the assessee. If there are no mala fides and it is not put forth as part of a dilatory strategy, the FAA should consider the application of the assessee. But when there is reasonable ground to think that the delay was occasioned otherwise than a bona fide conduct, then the FAA should lean against acceptance of the explanation.

(iv)    Section 249(3) is discretionary in nature and the assessee cannot seek condonation of delay under this provision as a matter of right, but has to satisfy the FAA by explaining the sufficient cause for the delay.

(v)      Just because there is merit in the appeal filed by the assessee, any amount of delay, however, negligently caused, cannot be condoned.

(vi)    Requirement of sufficient cause for delay cannot be ignored and it becomes very important and significant when the delay is inordinate and abnormal.

(vii)   Explanation of delay for the entire period is necessary. The assessee is expected to show that delay was occasioned due to some sufficient cause. The cause pleaded should not only be a probable one but it should be real and sufficiently reasonable. The cause must fit in the facts and circumstances of the given case and the explanation offered regarding the delay occasioned by such cause should appeal to reasons so as to get judicial approval. In matters of delay it is neither practicable nor desirable to explain minute-to-minute/hour-to-hour delay, but delay has to be explained.

(viii) When an application for condonation of delay is made, to consider whether a sufficient cause has been made out by the assessee; the order of the FAA should disclose that he had applied his mind to the question raised before it. Due exercise of judicial discretion is a pre-condition for allowing/ refusing an application filed for condoning delay.

(ix)    The application for condonation of delay should contain substantially all the relevant material and as far as possible it should be supported by affidavit, showing that there is sufficient cause for condonation.

(x)      If the delay is not vitiated by any error of law it should be condoned.

(xi)    Any event, cause or circumstance arising after the expiry of the limitation period cannot constitute a sufficient cause.

(xii)   Non-filing of appeal before the FAA, before the end of limitation period, creates a vested right in favour of the Revenue. In such cases Revenue gets a legitimate and undisputed right over the tax-revenue accruing to it in pursuance of the order of the Assessing Officer. This right cannot be disturbed in a light-hearted manner.

(xiii) Cases of belated appeals matters have to be essentially analysed in the facts of each case-no general formula can be or should be applied, so as to ensure that an otherwise genuine cause of justice is not defeated by adherence to technical precedence.

(xiv) Condonation of delay, though an equitable relief, cannot be accorded merely on sympathy or compassion and the grounds offered have to be evaluated to test whether the party in default had been guilty of conscious and deliberate inaction, culpable negligence and inexcusable indifference to the period of limitation mandatorily prescribed by law.

 

Based on the aforesaid principles, ITAT concluded that the touchstone for condonation of delay is 'sufficiency/ reasonableness of the cause'. Filing of a belated appeal is an abnormal step and such extraordinary remedies need existence of extraordinary circumstances. Therefore, the assessee has to prove that abnormal circumstances really and factually existed in a particular case.

Based on facts of the present case, ITAT noted that it was clear that the assessee was well aware of procedural aspect and legal provisions of the Act. ITAT held that 'we are aware that adopting a liberal view in condoning delay is one of the guiding principles in the realm of belated appeals, but liberal approach cannot be equated with a licence to file appeals at will-disregarding the time limits fixed by the statutes. Except for the inaction and negligence of the assessee, there are no other reason for filing a belated appeal. We have avoided using adjectives before the words inaction and negligence, which are generally used by the higher forums of judiciary when they find that delay is result of total lack of prudence’.

ITAT observed that for a period of more than three years, the assessee did not bother to find out the outcome of the appeal it had filed and termed such behaviour of the assessee as personified inaction and negligence. Judicial precedents have held that act of negligence and inaction do not constitute reasonable cause.

Further by not filing appeal in time before the FAA, the assessee had allowed the State to believe that it had a vested right in its favour. ITAT held that Rights of the Sovereign are as important as that of the tax-payers. In matter of condonation of delay both have to show a sufficient cause which a prudent person can believe.

ITAT also noted that no affidavits were filed and no sufficient cause of delay was explained. Further, ITAT observed that “the assessee was aware about CBDT instruction with regard to stay of demand. Assessee, a corporate-assessee, filing returns of income of lacs of rupees and assisted by highly qualified professionals cannot take shadow of umbrella of ignorance of the provisions of law. It is also not the case of the assessee that it was guided by the wrong advice of the professional or it took time to consult professsionals. An individual of a small place and an ISO 9001-2000-company cannot be equated, while considering the condonation of delay”

Accordingly, considering the peculiar facts and circumstances of the case, ITAT upheld the CIT(A)’s order and dismissed the assessee’s appeal for condonation of delay in filing appeal. [In favour of revenue] (Related Assessment year : 2005-06) – [Prashant Projects Ltd. v. DCIT [TS-447-ITAT-2013(Mum)] – Date of Judgement : 04.09.2013 (ITAT Mumbai)]

Courts and quasi-judicial bodies are empowered to condone delay if a litigant satisfies Court that there were sufficient reasons for availing remedy after expiry of limitation - Delay in filing appeal before Commissioner (Appeals) was explained to be on account of earthquake and ill-health of his wife coupled with change of his address thrice - Where assessee’s explanation does not smack of mala fide or it is not put forth as a part of dilatory strategy, Court must show utmost consideration to such litigant - Therefore, in instant case, delay in filing appeal before Commissioner (Appeals) was to be condoned and matter restored to him for deciding said appeal

The assessee moved an application under section 154, which was disposed of by the Assessing Officer. The appeal against the said order was filed before the Commissioner (Appeals) with a delay of more than 6 months. The assessee explained that the delay was on account of earthquake and ill health of his wife coupled with change of his address due to certain family dispute. The Commissioner (Appeals), however, rejected the explanation of the assessee on the ground that the reasons were very general in nature and did not explain specifically as to why the delay had occurred. On second appeal :

Held : The Courts and the quasi-judicial bodies are empowered to condone the delay if a litigant satisfies the court that there were sufficient reasons for availing the remedy after expiry of the limitation. Such reasoning should be to the satisfaction of the Court.

In the instant case, on account of earthquake and ill health of his wife, the assessee had been facing many problems, simultaneously. According to him, order under section 154 was served upon him at the old address. That communication had also consumed time. Therefore, the assessee could not gain anything by filing the appeal late. There was no mala fide imputable to the assessee. The delay in filing the appeal was the result of ill health coupled with the change of his address thrice in a short span. In every case of delay there can be some lapse of the litigant concerned. That alone is not enough to turn down the plea and to shut the doors against him. If the explanation does not smack of mala fide or it is not put-forth as a part of dilatory strategy, the Courts must show utmost consideration to such litigant. At the most for the inaction or a little negligence, the assessee could be burdened with the cost. But his right of hearing of the appeal on merit ought not to be shut. Therefore, the delay in filing the appeal before the Commissioner (Appeals) was condoned and the matter restored to the first appellate authority to decide the appeal on merit. (Related Assessment year : 1999-2000) - [Kiran Laxmikant Joshi v. ITO (2004) 3 SOT 822 (ITAT Ahmedabad)]

It was held that the court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause”, the principle of advancing substantial justice is of prime importance. – [Vedabaialias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil and Others (2002) 253 ITR 798 (SC)]

The Supreme Court had condoned a delay of 833 days. It was observed that condonation of delay is a matter of discretion of the Court and the only criteria is the acceptability of explanation irrespective of the length of delay. – [N. Balkrishan v. M. Krishnamurthy (1998) 7 SCC 123]

What constitutes sufficient cause

What constitutes sufficient cause has been considered in Collector, Land Acquisition v. Mst. Katiji and Others and it was held that “The Legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act of 1963 in order to enable the court to do substantial justice to parties by disposing of matter on “merits”. The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the court to apply the law in a meaningful manner which sub serves the ends of justice - that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matter instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realised that—

(i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

(ii) Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.

(iii) “Every day’s delay must be explained” does not mean that pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.

(iv) When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay.

 (v) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.

(vi) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. – [Collector, Land Acquisition v. Mst. Katiji and Others (1987) 167 ITR 471 (SC)]

A subsequent decision of the Supreme Court/High Court was considered as sufficient cause for condoning delay in filing the appeal. – [State of Andhra Pradesh v. Venkataramana Chudava & Muramura Merchant (1986) 159 ITR 59 (AP)]

On knowing that the High Court had dismissed his appeal on the ground that his Advocate was not present in the Court when the matter was taken up for hearing the appellant moved an application for the recall of the order dismissing the appeal and for permission to participate in the hearing of the appeal. The High Court rejected this application stating that no satisfactory explanation had been furnished by the Advocate for his slackness in filing the affidavit for nearly 15 days after it was drafted.

It has been held that the mistake of the counsel may in certain circumstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. Accordingly, the Hon’ble Apex Court has held that there is a mistake of the counsel and, therefore, the delay in filing the appeal has been condoned. – [Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi & Sons (1979) 118 ITR 507 (SC)]

Where an application for condonation of delay in filing an appeal is preferred, it is the statutory obligation of the appellate authority to consider whether sufficient cause for not presenting the appeal in time was shown by the appellant. – [Shrimant Govindrao Narayanrao Ghorpade v. CIT (1963) 48 ITR54 (Bom.)]

It was held that for condoning the delay, the appellant may only be called upon to explain the delay covered by the period between the last day prescribed and the day on which the appeal is filed. – [Ramlal v. Rawa Coal Fields Ltd. AIR 1962 (SC) 361]

Revenue can object to delay in filing appeal

If an appeal by an assessee is admitted without the fact of delay in its presentation having been noticed, it is open to the department to raise the objection at the time of hearing of the appeal. – [Mela Ram & Sons v. CIT (1956) 29 ITR 607 (SC)]