Case Law Details
Navodit Samaj Sevi Sanstha Vs ITO (Chhattisgarh High Court)
Alowing the appeal filed by the assessee society against the Order of ITAT Raipur Bench which dismissed the appeal filed before the ITAT after a delay of 55 days owing to incorrect legal advise tendered by its counsel. Allowing the appeal filed by the assessee while condoning the delay of 55 days, the Hon’ble High Court elucidates, relies upon & explains the law laid down by the Hon’ble Supreme Court in various cases in the matters governing ‘Condonation of Delay’ including that in the case of Collector, Land Acquisition, Anantnag v. Mst.Katiji & Ors. (1987) 2 SCC 107, Balwant Singh v. Jagdish Singh (2010) 8 SCC 685, Sankaran Pillai v. V.P. Venuguduswami (1999) 6 SCC 396, N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy and others (2013) 12 SCC 649 etc. Further, the Hon’ble High Court explicates that a liberal approach in considering the application for condonation of delay construing sufficient cause has to be adopted and appeal has to be decided on merits unless the case is hopelessly without merit and also that ‘sufficient cause’ within the meaning of section 253(5) of the Income Tax Act has to be construed liberally so as to advance substantial justice especially when the delay is not deliberate and outcome of mala fide. The Hon’ble High Court stresses upon the need for filing counter affidavit by the Revenue opposing the application for condonation of delay filed by the assessee. The Hon’ble High Court expounds that wrong or incorrect advise of the counsel can constitute ‘sufficient cause’ for condonation of delay in filing of appeal under section 253. The matter was remitted to ITAT to consider & decide the Appeal on merits within a period of three months.
For Appellant : Mr. Nikhilesh Begani and Mr. Apurv Goyal, Advocates.
FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT
1. This tax appeal preferred under Section 260A of the Income Tax Act, 1961 was admitted for hearing on 26-11-2024 by formulating the following substantial question of law: –
“Whether the Income Tax Appellate Tribunal is justified in holding that the appellant has failed to show sufficient cause for delay of 55 days in preferring the appeal by recording the finding which is perverse to the record.”
2. The aforesaid question arises for consideration in the following factual backdrop: –
3. The appellant Society having been registered with the Registrar of Societies, Raipur Division on 23-8-2004, submitted application in Form No.10A for provisional registration under Section 12A of the Income Tax Act, 1961 (for short, ‘the IT Act’) on 2-12-2022 and the Commissioner of Income Tax (Exemption), Bhopal on 9-12-2022, issued order in favour of the appellant in Form No.10AC granting provisional registration under Section 12A of the IT Act. After getting provisional registration, on 25-9-2023, the appellant Society submitted application in Form No.10AB for permanent registration under Section 12A of the IT Act. After due opportunity of hearing having been afforded to the parties including the appellant Society, on 19-2-2024, finally, the CIT(E) rejected the application for registration under Section 12A of the IT Act which was communicated to the appellant on 2-3-2024. The order dated 2-32024 was appealable before the Income Tax Appellate Tribunal under Section 253 of the IT Act within 60 days from the date of receipt of copy of the order, but it is the case of the appellant that on the wrong advise of his counsel, he has reapplied for registration under Section 12A of the IT Act, however, on account of long pendency of the same, the appellant decided to file statutory appeal under Section 253 of the IT Act and by that time, the appeal has become barred by 55 days of its limitation. By virtue of the provision contained in sub-section (5) of Section 253 of the IT Act, the Income Tax Appellate Tribunal has power to admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or subsection (4), if it is satisfied that sufficient cause for not presenting the appeal within the period of limitation is shown. The appellant though filed application for condonation of delay along with the affidavit showing sufficient cause as on account of wrong advise of the counsel, he firstly filed fresh application for registration under Section 12A of the IT Act, but ultimately, realising the mistake, he filed appeal under Section 253(1) of the IT Act, which was barred by limitation. Though it is admitted position on record that the Revenue did not file any reply to the application for condonation of delay controverting the facts alleged and cause shown for delay in filing appeal in the application, yet by the impugned order, the learned Income Tax Appellate Tribunal (ITAT) has rejected the application holding that sufficient cause has not been shown for delay in filing the appeal and consequently also dismissed the appeal, which is sought to be challenged by the appellant Society by way of this tax appeal, which has been admitted by formulating the substantial question of law as mentioned in the opening paragraph of this order.
4. Mr. Nikhilesh Begani, learned counsel appearing for the appellant Society, would submit that the ITAT is absolutely unjustified in not condoning the delay of 53 days in preferring the appeal, as the application for condonation of delay was supported by affidavit which has also been quoted in the impugned order and sufficient cause has not been controverted by the Revenue, yet, the learned ITAT has rejected the application as also the appeal, which is totally perverse to the record. He would rely upon the decision of the Supreme Court in the matter of Collector, Land Acquisition, Anantnag and another v. Mst Katiji and others1 and submit that application for condonation of delay ought to have been considered as there was sufficient cause shown which was uncontroverted by the Revenue. In that view of the matter, the present appeal deserves to be allowed and after condoning the delay, the ITAT be directed to decide the appeal on merits.
5. Mr. Ajay Kumrani, learned counsel appearing on behalf of Mr. Amit Chaudhari, Standing Counsel for the Income Tax Department / Revenue, would submit that since the order rejecting the application for permanent registration was appealable under Section 253(1) of the IT Act, remedy was to file appeal under the said provision which has not been availed by the appellant Society right in time, therefore, the cause shown by the appellant Society for not preferring appeal within the stipulated period cannot be said to be the sufficient cause and as such, the ITAT has rightly rejected the application for condonation of delay and consequently, the appeal has also been rightly dismissed.
6. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection.
7. Undisputedly, the appellant’s application under Section 12A of the IT Act for permanent registration was rejected after due enquiry by order dated 19-2-2024 which was communicated to the appellant on 2-3-2024 by the competent authority against which the appellant preferred appeal before the ITAT on 25-6-2024 along with an application for condonation of delay supported by an affidavit and the cause shown in the application for delay in filing the appeal is that instead of questioning the order dated 19-2-2024, the appellant Society reapplied for registration under Section 12A of the IT Act on 5-3-2024 and ultimately, realising its mistake of not filing appeal under Section 253(1) of the IT Act, the appellant Society filed appeal on 25-6-2024. Though the Revenue was noticed and appeared in the appeal, but the Revenue did not chose to file reply to the application for condonation of delay and also did not file any affidavit controverting the reasons assigned in the affidavit in which it has clearly been mentioned that on receipt of rejection order of the application under Section 12A of the IT Act, instead of filing appeal, the appellant Society chose to reapply for registration under Section 12A. In that view of the matter, since there was uncontroverted affidavit before the ITAT showing cause that the appellant was prevented from filing appeal on account of wrong advise by the counsel to reapply for registration and later-on, he filed statutory appeal under Section 253 of the IT Act.
8. In this regard, the provisions contained in Section 253(1)(a) & (c) read with sub-sections (3) & (5) of Section 253 of the IT Act may be noticed herein profitably. Clauses (a) & (c) of sub-section (1) of Section 253 of the IT Act state as under: –
“253. Appeals to the Appellate Tribunal.–(1) Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order–
(a) an order passed by a Deputy Commissioner (Appeals) before the 1st day of October, 1998, or, as the case may be, a Commissioner (Appeals) under section 154, section 250, section 270A, section 271, section 271A, section 271AAB, section 271AAC, section 271AAD, section 271 or section 272A; or
*** *** ***
(c) an order passed by,–
(i) a Principal Commissioner or Commissioner under section 12AA or section 12AB or under clause (vi) of sub-section (5) of section 80G or under section 263 or under section 270A or under section 271 or under section 272A or an order passed by him under section 154 amending any such order; or
(ii) a Principal Chief Commissioner or Chief Commissioner or a Principal Director General or Director General or a Principal Director or Director under section 263 or under section 272A or an order passed by him under section 154 amending any such order; or”
9. Similarly, sub-sections (3) and (5) of Section 253 of the IT Act state as under: –
“(3) Every appeal under sub-section (1) or sub-section (2) shall be filed within sixty days of the date on which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be:
Provided that in respect of any appeal under clause (b) of sub-section (1), this sub-section shall have effect as if for the words “sixty days”, the words “thirty days” had been substituted.
(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period.”
10. A careful perusal of sub-section (5) of Section 253 of the IT Act would show that the ITAT is empowered to admit an appeal after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within sixty days of the date on which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be.
11. The expression ‘sufficient cause’ employed in sub-section (5) of Section 253 of the IT Act must receive a liberal construction so as to advance substantial justice and generally delays in preferring appeals are required to be condoned in the interest of justice where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay.
12. The expression “sufficient cause” implies the presence of legal and adequate reasons. The sufficient cause should be such as it would persuade the court, in exercise of its judicial discretion, to treat the delay as an excusable one. The party should show that besides acting bona fide, it had taken all possible steps within its power and control and had approached the court without any unnecessary delay. The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention. (See Balwant Singh v. Jagdish Singh2.)
13. The expression “sufficient cause” necessarily implies an element of sincerity, bona fide and reasonableness. (See Sankaran Pillai v. P. Venuguduswami3.)
14. The Supreme Court in the matter of Basawaraj v. Land Acquisition Officer4 held that sufficient cause means a cause for which a party could not be blamed for his absence. A party should not have acted with negligence or lack of bona fides. Degree of proof is less in case of good cause whereas it is higher in case of sufficient cause.
15. In the matter of Ramlal v. Rewa Coalfields Ltd.5, their Lordships of the Supreme Court have held that if the party who has applied for extension of period shows that the delay was due to any of the facts mentioned in the explanation that would be treated as sufficient cause, and after it is treated as sufficient cause, the question may then arise whether discretion should be exercised in favour of the party or not.
16. Likewise, in the matter of Shakuntala Devi Jain v. Kuntal Kumari6, the Supreme Court has held that Section 5 of the Limitation Act gives the courts a discretion which in respect of jurisdiction is to be exercised in the way in which judicial power and discretion ought to be exercised upon principles which are well understood; the words ‘sufficient cause’ receiving a liberal construction so as to advance substantial justice when no negligence nor inaction nor want of bona fides is imputable to the appellant.
17. In Collector, Land Acquisition, Anantnag (supra)1, the Supreme Court has held that the legislature has conferred the power to condone delay by enacting Section 5 of the Indian Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on ‘merits’. In paragraph 3 of the report it has been held as under: –
“3. The legislature has conferred the power to condone delay by enacting Section 5 of the Indian Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on ‘merits‘. The expression “sufficient cause” employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice—that being the life-purpose for the existence of the institution of courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters 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 realized that:
1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.
2. 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.
3. “Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common sense pragmatic manner.
4. 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.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of maba fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. …”
18. Thereafter, in the matter of N. Balakrishnan v. M. Krishnamurthy7, their Lordships of the Supreme Court have held that there is no presumption that delay in approaching the court is always deliberate. The words “sufficient cause” under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice. Reiterating the principles of law laid down in Shakuntala Devi Jain (supra) and State of W.B. v. Administrator, Howrah Municipality8, their Lordships observed as under: –
“9. It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammelled by the conclusion of the lower court.
10. The reason for such a different stance is thus:
The primary function of a court is to adjudicate the dispute 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.
11. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (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. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
12. A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words “sufficient cause” under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain v. Kuntal Kumari (supra) and State of W.B. v. Administrator, Howrah Municipality (supra).
13. It must be remembered that 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 the delay, the Court should not forget the opposite party altogether. It must be borne in mind that he is a loser and he too would have incurred quite 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.”
19. Thereafter, in the matter of State of Haryana v. Chandra Mani and others9, their Lordships of the Supreme Court have held that the court should decide the matters on merits unless the case is hopelessly without merit. It has been observed as under: –
“11. … The expression “sufficient cause” should, therefore, be considered with pragmatism in justice-oriented approach rather than the technical detection of sufficient cause for explaining every day’s delay. The factors which are peculiar to and characteristic of the functioning of the governmental conditions would be cognizant to and requires adoption of pragmatic approach in justice-oriented process. The court should decide the matters on merits unless the case is hopelessly without merit. …”
20. In the matter of Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy and others10, their Lordships of the Supreme Court laid down the guidelines summarising the obligation of the court while dealing with application for condonation of delay and approach to be adopted while considering grounds for condonation, which are as under: –
“21. From the aforesaid authorities the principles that can broadly be culled out are:
21.1. (i) There should be a liberal, pragmatic, justice-oriented, non-pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice.
21.2. (ii) The terms “sufficient cause” should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact-situation.
21.3. (iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis.
21.4. (iv) No presumption can be attached to deliberate causation of delay but, gross negligence on the part of the counsel or litigant is to be taken note of.
21.5. (v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact.
21.6. (vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice.
21.7. (vii) The concept of liberal approach has to encapsulate the conception of reasonableness and it cannot be allowed a totally unfettered free play.
21.8. (viii) There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation.
21.9. (ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach.
21.10. (x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such a litigation.
21.11. (xi) It is to be borne in mind that no one gets away with fraud, misrepresentation or interpolation by taking recourse to the technicalities of law of limitation.
21.12. (xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception.
21.13. (xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude.
22. To the aforesaid principles we may add some more guidelines taking note of the present day scenario. They are:
22.1. (a) An application for condonation of delay should be drafted with careful concern and not in a half hazard manner harbouring the notion that the courts are required to condone delay on the bedrock of the principle that adjudication of a lis on merits is seminal to justice dispensation system.
22.2. (b) An application for condonation of delay should not be dealt with in a routine manner on the base of individual philosophy which is basically subjective.
22.3. (c) Though no precise formula can be laid down regard being had to the concept of judicial discretion, yet a conscious effort for achieving consistency and collegiality of the adjudicatory system should be made as that is the ultimate institutional motto.
22.4. (d) The increasing tendency to perceive delay as a non-serious matter and, hence, lackadaisical propensity can be exhibited in a nonchalant manner requires to be curbed, of course, within legal parameters.”
21. Thereafter, in the matter of Manoharan v. Sivarajan and others11, the Supreme Court followed the principle of law laid down in Collector, Land Acquisition, Anantnag (supra).
22. A conspectus of the aforesaid judgments noticed herein-above (supra) would show that their Lordships of the Supreme Court have clearly indicated that a liberal approach in considering the application for condonation of delay construing sufficient cause has to be adopted and appeal has to be decided on merits unless the case is hopelessly without merit. “Sufficient cause” within the meaning of Section 253(5) of the IT Act has to be construed liberally so as to advance substantial justice especially when the delay is not deliberate and outcome of mala fide.
23. Reverting to the facts of the present case, in the present case, appeal preferred by the appellant Society was delayed by 55 days, as noticed above, for which cause much less sufficient cause has to be shown and the appellant has explained that on account of wrong advise of his counsel to reapply for registration, he had firstly preferred application afresh under Section 12A of the IT Act for registration and thereafter, due to delay in deciding the second application for registration and realising the mistake, he preferred appeal with a delay of 55 days, that is how the delay in filing the appeal has taken place. This fact remained uncontroverted, as no counter-affidavit controverting the facts stated and cause shown for not preferring the appeal right within the period of limitation was filed by the Revenue. As such, the cause shown for delay in filing the application supported by affidavit remains uncontroverted and it would constitute “sufficient cause” within the meaning of Section 253(5) of the IT Act. The rejection of application for condonation of delay has serious civil consequences upon the status of the Society, as by rejection of the application of the appellant Society, the Society would not be able to claim tax exemption under the provisions contained in Sections 11 & 12 of the IT Act, and that too in absence of counter-affidavit filed by the Revenue opposing the application for condonation of delay supported by affidavit. The ITAT ought to have condoned the delay in preferring the appeal as there is no allegation that delay in filing the appeal is mala fide or it is deliberate, rather it is bona fide based on wrong advise of his counsel to reapply for registration.
24. In that view of the matter, the order impugned dated 20-9-2024 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur in ITA No.304/RPR/2024 is set aside and delay of 55 days in preferring the appeal is hereby condoned. The appeal is restored to its original number to the file of the ITAT. The matter is remitted to the ITAT for considering and deciding the appeal afresh on merits within three months from the date of receipt of a copy of this order. It is made clear that this Court has not expressed any opinion on the merits of the matter.
25. The tax appeal stands allowed. No order as to cost(s).
Notes:-
1 (1987) 2 SCC 107
2 (2010) 8 SCC 685
3 (1999) 6 SCC 396
4 (2013) 14 SCC 81
5 AIR 1962 SC 361
6 AIR 1969 SC 575
7 (1998) 7 SCC 123
8 (1972) 1 SCC 366
9 (1996) 3 SCC 132
10 (2013) 12 SCC 649
11 (2014) 4 SCC 163
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