HIGH COURT OF GUJARAT
Mukesh Jesangbhai Patel
TAX APPEAL NOS. 372 TO 374 OF 2011
AUGUST 16, 2012
N.V. Anjaria, J. – All the three captioned appeals arise out of a common order dated 12.01.2007 of the Income Tax Appellate Tribunal, Ahmedabad Bench ‘B’ in ITA Nos. 476 of 2006 to 479 of 2006 corresponding to the Assessment Years 1999-2000 to 2002-03. The three appeals on hand relate to the said common order in so far as it corresponds Appeals No. 476 of 2006, 477 of 2006 and 478 of 2006 respectively. As the facts are common and the issue is identical, all the three appeals are dealt with together.
2. Heard learned advocate Mr. Manish J. Shah with learned advocate Mr. Deepak R Dave for the appellants appearing in all the three appeals, and Mr. Sudhir M. Mehta for the respondent department, who appeared upon issuance of notice by this Court.
2.1 In the facts of the case, the appeals are herewith admitted and with consent of the learned advocates appearing for both the sides, they are taken up for final disposal today itself to be decided by this common order.Online GST Certification Course by TaxGuru & MSME- Click here to Join
2.2 In all the three appeals, in the facts of the case, the following common question is framed as substantial question of law for consideration and determination.
“Whether in the facts and circumstances of the case the Tribunal substantially erred in dismissing the appeal by holding that no sufficient cause was made out by the appellant for condonation of delay?”
3. The relevant facts may be noticed first. The appellant-assessee was an individual and had been running tuition classes for competitive examinations. Pursuant to survey conducted by the Income Tax department, it was noticed that the appellant had not filed income-tax returns for the years 1999-2000 to 2001-02, nor he had been maintaining the books of account. After initial non-compliance of notice under section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for sake of brevity) as well as the notice under section 142(1), the assessee ultimately filed the return of income for all the years, declaring a loss.
3.1 The assessee filed four different appeals before the Commissioner of Income-tax (Appeals) which came to be dismissed by order dated 23.02.2004. Thereafter, he preferred appeals before the Income Tax Appellate Tribunal on 24.02.2006, which were delayed by 1 year 8 months and 25 days. Since the appeals were presented after expiry of limitation period, before regular hearing, they were heard first on condonation of delay. The ground advanced by the assessee, in nutshell, was that the expert person to whom he had assigned the work for filing appeals did not file them in time as he was busy in March ending work. Not finding favour with the explanation offered by the assessee, the Tribunal dismissed the appeals by not condoning the delay.
4. Learned advocate for the appellant submitted referring to the ground advanced, that the assessee running tuition class, was layman who had no knowledge with procedure of filing the appeals and had entrusted the work to his advocate and the tax expert. It was submitted that the delay had not occasioned on account of any fault or negligence on part of the assessee. He further submitted that delay ought to have been condoned by the Tribunal for which the assessee had genuine and sufficient cause. Learned advocate relied on decision in N. Balakrishnan v. M. Krishnamuthy  7 SCC 123. He further relied on this Court’s decision in Gujarat State Fertilizers & Chemicals v. CIT  283 ITR 149 (Guj.). Next decision relied on was of Allahabad High Court in Auto Centre v. State of Uttar Pradesh  278 ITR 291. On the basis of these decisions, learned advocate submitted that the word ‘sufficient cause’ should be interpreted liberally by the Court and on technical ground of delay, the assessee should not be denied a contest on merits. He also relied on an oral order dated 28.09.2011 of a Division Bench of this Court in Chhaganbhai Mavjibhai Patel v. Dy. CIT [Tax Appeal No. 977 of 2000], to submit that almost in similar circumstances, this Court condoned the delay of 11 months and 18 days.
4.1 On the other hand learned advocate for the department would submit that the no satisfactory explanation was given by the assessee. He would further submit that it was a case where after handing over the papers to another person for filing the appeals the assessee did not remain vigilant. He would submit the delay was far more than one year and for that that the explanation was general. Therefore, according to his submission, the Tribunal rightly exercised its discretion not to condone.
5. It would be apposite to first consider the explanation furnished by the assessee before the Tribunal for occurrence of delay. It was in case that after the order of the Commissioner of Income-tax (Appeals) dated 23.02.2004, he had assigned the work of filing appeals to one Shri Bharatbhai N. Shah, a tax Practitioner. Said Shri Shah used to file the return of income and was known to the assessee as he had been staying near the house of his father-in-law. The assessee submitted that he had been running a coaching class and was not well versed with the procedure of filing appeal. He had filed appeals before the Commissioner of Income-tax (Appeals) through said Bharatbhai who engaged an advocate one Shri N.C. Amin. The appeals before the Tribunal were also assigned to said Shri Bharatbhai. However, on account of the fact that he remained busy during the March ending, (in completing time-barred assessment) the appeals could not be filed and in the meantime the limitation expired. The said reasons were stated on oath by filing two affidavits of the appellant dated 28.02.2006 and 31.01.2007. Affidavit dated 27.02.2006 of said Shri Bharatbhai was also submitted. These affidavits enumerating the cause for delay were before the Tribunal.
5.1 The assessee further sought to explain the passage of by submitting on oath that his mother aged 65 years, suffering from Hemiplegia was admitted to Karnavati Hospital on 04.11.2003 where she underwent Electro Cardiogram and a CT scan of the brain. Thereafter she was living with his elder brother at Bhavnagar. She was however brought to Ahmedabad in April 2004 from Bhavnagar to his residence as she was being not looked after well there. It was thus the case of the assessee that on one hand he solely relied on his tax consultant and on the other hand in the subsequent period his mother’s illness kept him engaged.
6. In N. Balakrishna (supra), it was reiterated that the word ‘sufficient cause’ should receive liberal construction and acceptability of the explanation is the criteria, and not the length of delay as such by observing as under:
“In every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Court should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss.”
6.1 In Gujarat State Fertilizers & Chemicals Ltd. case (supra) this court observed that the Revenue must bear the established legal position in mind while dealing with an application seeking condonation of delay. It is necessary that a liberal approach is adopted in such matters to ensure that substantive rights are not defeated. In Chhaganbhai Mavjibhai Patel case (supra) this court condoned the delay which was of more than eleven months in almost similar facts and circumstances. As per the Tribunal the reasons for delay given by the appellant were not acceptable as according to it the appellant could have followed up the matter with advocate N.C. Amin who had filed the appeals before CIT(A). The Tribunal observed,
“It was unlikely that the assessee did not contact Shri N.C. Amin, his counsel before the first appellate authority, after receipt of appellate orders, discussing matter with him, and whereat the issue of filing the appeals with the Tribunal, and the time limit therefor, would arise, being only incidental thereto. There is no indication that he had any strange (sic) relations with Shri Amin.”
7. The Tribunal opined that the services of Shri Bharatbhai could only be to locate a proper counsel and that he having not accepted any assignment of the assessee, his affidavit was of no relevance. Then the Tribunal observed that the reason of mother’s illness was not good to justify the delay of 1 year and 8 months. It cannot be said that the appellant had not offered a proper explanation. From the contents of his affidavit and the supporting affidavit of the Tax Expert, one thing was certain that the assessee had banked upon said Bharatbhai and had assigned him the filing of appeal. The appellant had filed the appeals before the CIT(A). Said Bharatbhai was doing taxation work of the assessee and the appellants before the CIT(A) were also filed through him only. It was therefore natural for the assessee to entrust the work of filing of appeals before the Tribunal through him.
8. In Perumon Bhagvathy Devaswom v. Bhargavi Amma  8 SCC 321 it was reiterated that sufficient cause should be understood in pragmatic and practical manner. The test is that the delay is not on account of any dilatory tactics, want of bonafides, deliberate inaction or negligence on part of the appellant. In the same case it was also observed by the apex court that “The courts view applications relating to lawyer’s lapses more leniently than applications relating to litigant’s lapses. If the appeals could not be filed in time on account of Bharatbhai’s failure to attend the case, the appellants could not faulted. The sickness of mother was also a contributing factor as the assessee was engaged in attending her as she had come to Ahmedabad to stay in his house. In the circumstances, it was not the case that the assessee was guilty of indolence on his part or responsible for whiling away the time.
9. In light of above discussion, it is held that the cause shown by the assessee was genuine and bonafide. The explanation given by him constituted a sufficient cause and the Tribunal ought to have condoned the delay, instead of adopting a pedantic approach.
10. In the result, all the three appeals are allowed, the delay of one year eight months and twenty five days in preferring respective appeals before the Tribunal is condoned. The Tribunal shall take up the hearing of the main appeals for decision on their merit.