Case Law Details
Monitor Vincom Pvt. Ltd. Vs ITO (ITAT Kolkata)
In Monitor Vincom Pvt. Ltd. v. Income Tax Officer, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) dealt with two important issues: condonation of an extraordinary delay of 1,639 days in filing an appeal and the validity of an ex parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] without providing an effective opportunity of hearing. The Tribunal adopted a justice-oriented approach, condoned the delay, and restored the matter to the Assessing Officer (AO) for fresh adjudication after granting the assessee a reasonable opportunity to present its case.
The appeal related to Assessment Year 2008-09 and challenged the order of the CIT(A) dated 9 March 2017. At the outset, the Tribunal noted that the appeal had been filed with a delay of 1,639 days. The assessee sought condonation of the delay by explaining that the appellate order, though dated 9 March 2017, was actually served only on 18 December 2019, after the department initiated recovery proceedings. The delay was further attributed to the fact that the company had shifted its registered office from P-41, Princep Street, Kolkata to 132/1, M.G. Road, Kolkata in 2016, and the new address had already been updated in the company’s records. However, notices continued to be sent to the old address, resulting in non-service.
The assessee also explained that while filing Form No. 36, its tax consultant inadvertently mentioned 9 March 2017 as the date of communication instead of the actual date of service, 18 December 2019. It was further submitted that a substantial portion of the delay coincided with the COVID-19 pandemic, during which judicial and quasi-judicial proceedings were affected. Relying on the Supreme Court’s suo motu orders extending limitation during the pandemic, the assessee argued that the appeal filed on 2 November 2021 was within the extended limitation period. It was also emphasized that the delay was neither deliberate nor intended to gain any unfair advantage.
The Revenue opposed the condonation request, arguing that even after excluding the COVID-19 period in accordance with the Supreme Court’s directions, there remained a substantial delay that had not been satisfactorily explained. According to the Department, the appeal deserved to be dismissed as time-barred.
The Tribunal examined the Supreme Court’s orders extending limitation due to the COVID-19 pandemic, particularly the order dated 10 January 2022, which excluded the period from 15 March 2020 to 28 February 2022 for computing limitation in all judicial and quasi-judicial proceedings. It observed that no delay could be attributed to the assessee during this excluded period. The Tribunal further held that any delay arising from the mistake of the assessee’s counsel should not deprive the assessee of its statutory right to have the appeal decided on merits, particularly when the mistake was bona fide.
While considering the expression “sufficient cause” under Section 253(5) of the Income-tax Act, the Tribunal relied on the Supreme Court’s landmark decisions in Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy. It reiterated that the expression should receive a liberal interpretation to advance substantial justice. The Tribunal emphasized that procedural rules relating to limitation are intended to ensure timely litigation and not to defeat genuine claims. It noted that ordinarily a litigant derives no benefit from filing an appeal belatedly and that technical considerations should not override substantial justice where there is no evidence of mala fide intention or deliberate delay.
Applying these principles to the facts of the case, the Tribunal observed that although the appeal had been filed after a considerable delay, a significant portion of the period stood excluded under the Supreme Court’s COVID-19 orders. The remaining delay was satisfactorily explained by the incorrect recording of the communication date, change of address, and counsel’s inadvertent mistake. Importantly, the Tribunal found no indication that the assessee had adopted delay as a strategy to avoid tax litigation or derive any benefit. Consequently, it held that sufficient cause existed for condoning the delay and admitted the appeal for adjudication on merits.
On the merits, the assessee contended that the CIT(A) had dismissed the appeal ex parte without examining the issues involved. The assessee submitted that notices of hearing were never effectively served because they were issued to the old address despite the change having been duly recorded. It was also pointed out that the assessment order under Sections 147/143(3) read with Section 263 had itself been passed pursuant to revisionary directions issued by the Principal Commissioner under Section 263. According to the assessee, even those directions had not been properly implemented by the AO, and certain documents could not be produced due to lack of adequate opportunity. The assessee therefore requested that the matter be restored for fresh consideration after granting it a reasonable opportunity of being heard.
After considering the rival submissions, the Tribunal found merit in the assessee’s grievance. It observed that the CIT(A) had decided the appeal ex parte because notices had not been effectively served owing to the change in address. Since the assessee had not been afforded an effective opportunity to present its case, the principles of natural justice required that another opportunity be granted. Accordingly, instead of deciding the issues on merits, the Tribunal restored the matter to the file of the Assessing Officer with directions to decide the case afresh after providing the assessee a reasonable opportunity of hearing and considering all relevant evidence.
Accordingly, the ITAT condoned the delay of 1,639 days, set aside the ex parte appellate order, restored the matter to the Assessing Officer for fresh adjudication, and allowed the appeal for statistical purposes. The decision reinforces the principle that genuine litigants should not be denied substantive justice merely because of procedural lapses, particularly where delay is satisfactorily explained and an effective opportunity of hearing has not been provided.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal of the assessee for the assessment year 2008-09 is directed against the order dated 09.03.2017 passed by the ld. Commissioner of Income-tax (Appeals)-17, Kolkata [hereinafter referred to as ‘the ld. CIT(A)’].
2. At the outset, we observe that the appeal of the assessee is barred by limitation by 1639 days. The assessee has also filed condonation petition seeking condonation of delay in filing the appeal. The registry had calculated the limitation period from March 2017, which was stated in Form 36 as 9th March,2017 which was shown as date of communication while the date of order is also the same. The ld. AR in the condonation petition submitted that the appellate order was passed by ld. CIT(A)-17, Kolkata on 09.03.2017 and served on 18.12.2019 which the assesse came to know when the department pressed for demand. The ld. AR stated that address as per Form 36 was as P-41, Princep Street, 6th Floor, Kolkata-700072 was the old address which had changed to 132/1, M.G. Road, Kolkata-700007 in the year 2016 and was also changed in company master data. The ld. AR submitted while filing Form 36 the tax Advocate, Mr. Govind Ojha filled the column of communication on 09.03.2017 whereas the order was communicated on 18.12.2019. The ld. AR stated that Mr. Govind Ojha is an aged person and the appeal was filed on 02.11.2021 whereas the due date was 16.02.2020. The ld. AR submitted the substantial part of the delay is attributable to Covid -19 when the department was closed and appeal could not filed. The ld AR further stated that the in view of the Covid 19 outbreak, the Hon,ble Apex Court has extended the limitation in respect of all the judicial and quashi judicial proceedings. The ld AR stated that the Honble Apex Court has ruled that where the limitation would have expired during the period commencing from 15.03.2020 till 28.02.2022, notwithstanding the actual period of limitation, all the persons shall have a limitation period of 90 days from 01.03.2022. The ld. AR submitted the delay in filing the appeal is not attributable to the assessee nor assesse is benefitted in any manner from late filing of appeal and therefore, prayed that delay in filing deserved to be condoned by admitting the appeal for adjudication.
3. The ld. DR strongly opposed by submitting that even if Covid- 19 period is excluded from the period of limitation in terms of the order of Apex Court as reported even then there is a huge delay. Therefore, the appeal may kindly be dismissed.
4. We note that the COVID 19 pandemic was spread all over the country and the entire country rather the entire globe were completely brought to standstill. So considering all these practical difficulties for making compliances, Hon’ble Apex Court has extended the period of limitation with respect to judicial or quasi-judicial proceedings. The Hon’ble Apex Court vide its order dated 10.01.2022 held as under:-
“The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings.
Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022”.
5. In our opinion, considering the said decision of the Hon’ble Supreme Court, there is no delay in filing from 15.3.2020 till 2.11.2021. so far as the delay is due to the reason mistake on the part of the assessee’s counsel is concerned , in our considered view the assesse can not be denied the right to be heard by the appellate authorities for the counsel failure as the substantial justice has to prevail over technicalities. We have duly considered the rival contentions and gone through the record carefully. We are mindful of the provisions of sub-section 5 of Section 253 which contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression “sufficient cause” employed in this Section has also been used identically in sub-Section 3 of Section 249 of the Act, which provides power to the Id. Commissioner to condone the delay in filing of the appeal before the Commissioner. Similarly, it has been used in Section 5 of the Indian Limitation Act, 1963. Whenever interpretation and consideration of this expression has fallen for consideration before the Hon’ble High Courts as well as before the Hon’ble Supreme Court then, the Hon’ble Courts were unanimous in their conclusion that this expression has to be construed liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:
“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 mala 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.”
6. Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under:
“Rule of limitation are not meant to destroy the right 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. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the 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 life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. 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 putt to litigation). Rules of limitation are not meant to destroy the right 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.
A court knows that refusal to condone delay would result 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 lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered tliat 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 Could 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 ITA No.201, 202 and 203/Ahd/2020 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.”
7. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon’ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach.
8. In the light of above, if we examine the facts of the present case, then it would reveal that basically the appeal has been filed after 1639 days of the ld. CIT’s order but almost one and a half year is attributable to COVID period, i.e. 15.3.2020 till 2.11.2021. This appeal has been presented before the Tribunal on 2.11.2021. If credit of number of days allowed by the Hon’ble Supreme Court in its order dated September 23, 2021 in Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of 2020 regarding cognizance for extension of limitation, even then there is substantial delay at the part of the assessee but we are of the view that the delay is for sufficient and reasonable cause. Moreover, making the appeal time-barred has not been used by the assessee as a tactics to avoid the litigation with the Revenue because such strategy would not give any benefit to the assessee in this type of litigation. Therefore, we condone the delay and proceed to decide the appeal on merit.
9. At the outset, the ld. counsel for the assessee submitted that the ld. CIT(A) passed the order ex-parte without considering the merits of the case as the assessee could not attend the hearing before the ld. CIT(A) on the dates fixed for hearings. The reasons stated for non appearance was non-service of notices to the assessee because of change in the address. The ld. AR stated that the assessee has challenged before the ld. CIT(A), the order passed u/s 147/143(3)/263 of the Act passed in the set aside proceeding by PCIT by exercising revisionary jurisdiction u/s 263 of the Act. The ld. AR stated even the AO has not followed the direction of the PCIT and the assessee also could not furnished certain documents before the AO. The ld. AR therefore, prayed that the appeal may be restored to the file of the AO so that the same could be decided after giving reasonable opportunity to the assessee. The ld. DR on the other hand prayed for the bench that the appeal may kindly be dismissed as the assessee has failed to appear several opportunities granted to assessee.
10. After hearing rival submission of the parties and perused the material on record, we find that the ld. CIT(A) has decided the appeal ex-parte as the assessee could not be served the notices of fixing dates for hearing due to change of address. Under these circumstances, we are of the considered view that the assessee should be given one more opportunity to present his case on merit. Accordingly, we restored to the appeal back to the file of the AO to decide the same after affording reasonable opportunity of hearing to the assessee.
11. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12.06.2023
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