Case Law Details
Chathamangalam Service Co-Op. Bank Ltd Vs ACIT (Kerala High Court)
The Kerala High Court considered an appeal against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, which had refused to admit a statutory appeal for the Assessment Year 2015–16 due to an unexplained delay of 542 days. The Tribunal found the explanation for the delay to be lacking credibility, as the appellant merely stated that its work had been outsourced to an external agency without providing basic details such as the agency’s identity or relevant particulars. The appellant’s counsel conceded that the affidavit filed in support of the condonation application was not properly drafted but argued that this alone should not deprive the appellant of its statutory right to appeal, especially when supported by a binding Supreme Court judgment. The respondent contended that the Tribunal was correct in limiting its consideration to the issue of delay and not the merits of the case.
The High Court upheld the Tribunal’s reasoning that the delay was substantial and inadequately explained, noting that essential details were missing. However, it also observed that the appellant was pursuing a statutory remedy and claimed support from binding precedent. Considering these factors, the Court held that the appellant should be given one more opportunity to properly explain the delay. Accordingly, the Court set aside the Tribunal’s order and remanded the matter for fresh consideration, permitting the appellant to file an additional affidavit within three weeks. The Tribunal was directed to reconsider the matter after hearing both sides. The Court also ordered that recovery proceedings be deferred until compliance with these directions and communication of the resultant order.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Through the impugned order of the learned Income Tax Appellate Tribunal, Cochin Bench (ITAT), the statutory appeal of the appellant – numbered as I.T.A.No.76/COCH/2025, relating to the Assessment Year 2015-16 – has been refused to be taken on board because, the explanation offered by them in seeking to condone the delay of 542 days in filing it, has been found to be incredulous and without credibility.
2. Smt. Preetha S. Nair – learned counsel for the appellant, conceded that the affidavit filed by her client before the learned Tribunal, in support of the application seeking condonation of delay, was not properly drafted; but argued that, this by itself could not have been a reason for the learned Tribunal to deny her client’s right to impel a Statutory Appeal before it, particularly when they are supported by binding judgments of the Honourable Supreme Court in substantiation of their plea. She showed us that the controversy arose because, even though her client had filed the Statutory First Appeal before the Commissioner of Income Tax (CIT), against the Assessment Order without any delay, their claim for deduction under Section 80P of the Income Tax Act had been disallowed. She prayed that, therefore, either this Court allow this Appeal, or give her client an opportunity of furnishing proper reasons before the learned Tribunal. She added that, since the CIT issued its order after the Honourable Supreme Court delivered judgment, that by itself ought to be a reason for the learned Tribunal to have found in favour of her client.
3. Sri. G. Keerthivas – learned Standing Counsel for the respondent, however, submitted that the sole issue considered by the learned Tribunal was whether the delay of 542 days in filing the Appeal had been properly explained or otherwise. He contended that, at this stage, the learned Tribunal could not have entered into the merits of the contentions of the appellant, or into the ambit of the precedents relied upon. He argued that, when the delay was not explained at all – which is manifest from the fact that the appellant merely stated that their work was outsourced to an outside agency without any details of the same being offered – the learned Tribunal has acted without error. He prayed that, consequently, this Appeal be dismissed.
4. We have evaluated the afore rival submissions, on the touchstone of the materials on record.
5. We must say upfront that we cannot find error in the approach of the learned Tribunal for the singular reason that the delay caused by the appellant was 542 days – which is not small by any standard – and when, as recorded in the order, no details, inter alia, as to the name of the agency or to whom the work of the appellant had been allegedly entrusted, had been offered. These were the basic requisites, or the sine qua non, for explaining the delay cogently; but when it has not been done, the learned Tribunal could have done nothing more than to have rejected the application, as it has done.
6. However, even this being so, it must be borne in mind that the appellant was invoking a Statutory remedy and assert that they are supported by a binding Supreme Court judgment in their favour. No doubt, they ought to have been more careful while filing the application for delay and ought not to have presented it in a cavalier manner, as it appears to have been done. But, the pivotal question before us is whether they should be given one more opportunity of explaining the delay in a proper manner, based on all relevant and germane facts; and we are of the certain view that this should be allowed, in the factual and legal circumstances which appear to be involved.
In such perspective, we allow this Appeal and set aside the order of the learned Tribunal; and remit the matter to it for fresh consideration. For this, we allow the appellant to file an appropriate additional affidavit in support of their application for condonation of delay, which shall be done not later than three weeks from the date of receipt of a copy of this judgment; and the learned Tribunal will, thereupon, proceed to decide the matter adverting to the same also, after affording necessary opportunities to both sides.
If, the additional affidavit as afore is filed by the appellant within the time granted, then, until such time as the afore directions are fully complied with and the resultant order communicated to them, all further recovery proceedings shall stand deferred.
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