The issue under consideration is whether rejection of application of condonation of delay by the ITAT is justified in law?
High Court states that, it held that there is no presumption that delay in approaching the Court is always deliberate and the words ‘sufficient cause’ under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice. It held that in every case of delay there can be some lapse on the part of the litigant concerned, but that alone is not enough to turn down his plea and to shut the door against him; and 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. It also observed that if the delay is deliberate, then the Court should not accept the explanation. It held that while condoning the delay, the Court should compensate the opposite party with costs. Applying the principles laid down in the above case to the instant case, HC are of the opinion that, in the facts and circumstances of the case, the explanation for the delay offered by the appellant cannot be said to smack of mala fides or that it was put forth as a part of a dilatory strategy, and therefore, the Tribunal ought to have condoned the delay of said period of 154 days in filing the I.T.A. and taken up the matter on merits. Accordingly, the appeal is allowed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
This appeal is filed under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) challenging the order dt.25-10-2019 in I.T.A.No.98/Hyd/2016 passed by the Income Tax Appellate Tribunal, Hyderabad Branch ‘A’, Hyderabad (for short ‘the Tribunal’).
2. The appellant is an individual assessee under the Act.
3. A search and seizure was conducted in the case of the appellant on 16-09-2010, and a notice under Section 143(2) of the Act was issued to the appellant for the Assessment Year 2011-12, as the date of search fell within the said Assessment Year.
4. The assessee filed its return of Income on 01-03-2010, declaring the total income of Rs.67,86,340/-.
5. During the course of scrutiny proceedings, the assessee/assessee’s authorized representative appeared from time to time and a detailed reply was also filed on 05-01-2013.
6. The Deputy Commissioner of Income Tax, Central Circle-3, Hyderabad, the then Assessing Officer, vide his order dt.30-03-2013, completed the assessment. The income returned was the income assessed. No separate additions were made.
7. Later, the Principal Commissioner of Income Tax (Central), Hyderabad issued a show cause notice proposing to revise the assessment in terms of Section 163 of the Act.
8. The Revisional Authority, vide his show cause notice, proposed to make an addition of Rs.1,04,66,134/-, being the total value of gold and silver jewellery, found during the course of search and seizure proceedings, as unexplained investment in the hands of the Assessee. The Revisional Authority opined that the assessee could not produce any documentary evidence during the time of the original assessment and that he was not filing returns under the Wealth Tax Act, 1957.
9. In response to the said notice, the assessee filed a detailed reply on 12-01-2015. In its reply, the assessee submitted that returns under the Wealth Tax Act, 1957 were filed in his individual capacity, and also in the name of T.Jagan Mohan Rao (HUF),Annapurna, T.Nanda kishore & T.Saritha (i.e. his HUF & family members) for the Assessment Year 2011-12. Further, personal affidavits of his family members were also enclosed to the reply. Apart from that, detailed statements of the purchases made by his family members, both within and outside India, were furnished.
10. It is contended by the appellant that brushing aside the submissions of the assessee, the Revisional Authority completed the revision and passed an order under Section 263 of the Act on 10-03-2015 setting aside the well considered order of the Assessing Officer. The Revisional Authority directed the Assessing Officer to redo the assessment after “making detailed enquiries and investigation”. He was of the opinion that the Assessing Officer ought to have made ‘further enquiries’, before accepting the statements made by the assessee at the time of assessment. The Revisional Authority did not consider the separate returns under the Wealth Tax Act, 1957 and the affidavits and other material filed by the family members of the assessee.
11. The Assessing Officer, vide his order dt.31-12-2015, completed the assessment once again, under Section 143(3) r/w 263 of the Act, in tune with the order of the Revisional Authority.
12. Questioning the order of the Revisional Authority 10-03-2015, an appeal was filed before the Tribunal by the assessee/appellant on 29-01-2016.
13. The assessee contends that he approached his counsel only after the receipt of the consequential order passed by the Assessing Officer on 31-12-2015; that he was under a bona fide but erroneous view that an appeal to be filed challenging only the consequential order and not to the Revisional Order; and that only after he approached his counsel, it was realized that an appeal ought to have been filed challenging the Revision Authority’s order dt.10-3-2015 also.
14. So the ITTA was filed with a delay of 154 days before the Tribunal on 29-01-2016, along with a petition to condone the delay in filing the same under sec.5 of the Limitation Act, 1963.
15. The Tribunal, by the impugned order dt.25-10-2019 in I.T.A.No.98/Hyd/2016 dismissed the appeal on the ground that assessee failed to establish that it was prevented by a sufficient cause for not filing the appeal in time.
16. Challenging the same, the instant appeal is filed.
17. Learned counsel for appellant contended that the Tribunal erred in not condoning the delay of 154 days in filing the appeal T.A.No.98/Hyd/2016 before the Tribunal; that the assessee was under the bona fide impression that the appeal is required to be filed challenging only the consequential order dt.31-12-2015 and not against the Revisional Order dt.10-03-2015; and only after the assessee approached the counsel, the appellant was advised that it was necessary to challenge the Revisional Authority order also, and thus the delay of 154 days in filing the appeal occurred.
18. Learned counsel for appellant also contended that the Tribunal erred in holding that the explanation offered by the assessee for the delay in filing the appeal was not bona fide.
19. Sri B.Narasimha Sarma, learned Senior Special Counsel for Central Taxes appearing for respondents, however, supported the order passed by the Tribunal, and contended that the Tribunal was justified in rejecting the application for condonation of delay.
20. We have noted the contentions of both sides.
21. The reasoning assigned by the assessee for not preferring the appeal within the period of limitation to the Tribunal was that he was under the mistaken impression that only the consequential order passed by the Assessing Officer on 31-12-2015 was required to be challenged and not the order dt.10-03-2015 of the Revisional Authority, and that only after he consulted the Advocate, he realized the mistake and then challenged the order of the Revisional Authority.
22. The Tribunal took the view that the appellant ought to have explained why after receiving the order from the Revisional Authority he did not approach the Advocate, and held that he cannot say that only after he received the order of the Assessing Officer on 31-122015, he approached the Advocate.
23. In our opinion, this view is not reasonable for the reason that the assessee is an individual and may not be well versed in law. It is not as if the appellant acted deliberately in not approaching the Advocate after he received the order of the Revisional
24. The Revisional Authority had remitted the matter back to the Assessing Officer to redo the exercise of assessment and the appellant could very well be under the impression that the consequential order of the Assessing Officer only required to be challenged and not the order of the Revisional Authority.
25. The assessee is entitled to question the order passed by the Revisional Authority also on the ground that powers of Revision under Section 263 of the Act ought not to have been invoked in the facts and circumstances of the case and contend before the Tribunal that the order of the Assessing Officer cannot be said to be prejudicial to the interest of the revenue even if it is erroneous particularly where two views are possible. The Tribunal ought to have atleast imposed some costs on the appellant in the event it was of the opinion that the said period of delay was not properly explained in view of the possible prejudice caused to the appellant if the appeal were to be dismissed.
26. The Supreme Court in N.Balakrishnan Vs. M. Krishnamurthy1 has held that the primary function of a Court is to adjudicate the dispute between the parties and to advance substantial justice; and that rules of limitation are not meant to destroy the right of parties, but they are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly.
It held that there is no presumption that delay in approaching the Court is always deliberate, and the words “sufficient cause” under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice.
It held that in every case of delay there can be some lapse on the part of the litigant concerned, but that alone is not enough to turn down his plea and to shut the door against him; and 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. It also observed that if the delay is deliberate, then the Court should not accept the explanation. It held that while condoning the delay, the Court should compensate the opposite party with costs.
27. Applying the principles laid down in the above case to the instant case, we are of the opinion that, in the facts and circumstances of the case, the explanation for the delay offered by the appellant cannot be said to smack of mala fides or that it was put forth as a part of a dilatory strategy, and therefore, the Tribunal ought to have condoned the delay of said period of 154 days in filing the I.T.A. and taken up the matter on merit.
28. Accordingly, the appeal is allowed; the order25-10-2019 passed by the Tribunal in I.T.A.No.98/Hyd/2016 for the assessment year 2011-12 is set aside; the application for condonation of delay in filing the said appeal stands allowed; and the said appeal is restored to file of the Tribunal; and the Tribunal shall hear and decide the appeal on merits in accordance with law. No costs.
29. Consequently, miscellaneous petitions, pending if any, shall stand closed.
1 (1998) 7 SCC 123