2015 (2) TMI 1128 - HC - Income Tax

Condonation of delay - sufficient cause for the delay - Held that - the condone delay petitions are filed nowadays as a matter of routine and things are normally taken for granted. But, in this case, the appellant had explained that the issue involved in the appeal related to an ESOP Scheme that was in force before the merger of the company. Hence, the difficulty in fetching the documents, for the non production of which, the Commissioner of Income Tax (Appeals) rejected the appeal, is definitely a sufficient cause. The Tribunal ought to have condoned the delay and the findings are certainly perverse. - Decided in favour of assessee

Summary

Issues:
Delay in filing a regular appeal before the Income Tax Appellate Tribunal - Condonation of delay - Sufficiency of cause for delay - Perversity of Tribunal's finding - Exercise of discretion by Tribunal - Question of law under Section 260A of the Income Tax Act, 1951.

Analysis:
The judgment delivered by the High Court of Madras pertains to an appeal filed under Section 260A of the Income Tax Act, 1951, challenging the dismissal of a petition for condonation of a 175-day delay in filing a regular appeal before the Income Tax Appellate Tribunal. The primary issue for consideration was whether the Tribunal's finding that there was no sufficient cause for the delay was perverse or not.

In the affidavit filed in support of the petition for condonation of the delay, the appellant, a company merged with another entity, highlighted the difficulty in obtaining necessary documents related to ESOP expenses from the period before the merger. The Commissioner of Income Tax (Appeals) had rejected the claim due to lack of supporting documents, prompting the appellant to make earnest efforts to collect the required paperwork from the transferor company.

The High Court noted that the Tribunal had taken a pedantic approach in deeming the reasons provided by the appellant for the delay insufficient. It was observed that the difficulty in obtaining pre-merger documents, which led to the rejection of the appeal by the Commissioner of Income Tax (Appeals), constituted a valid and sufficient cause for the delay. The Court held that the Tribunal's failure to condone the delay based on these circumstances was erroneous and amounted to a perverse finding.

The respondent's argument, presented by the Standing Counsel, contended that the discretion to condone the delay lay with the Tribunal and did not give rise to a question of law under Section 260A of the Act. However, the Court disagreed with this contention, emphasizing that the appellant's situation was not a routine delay scenario, given the specific circumstances related to the ESOP Scheme pre-merger.

Ultimately, the High Court ruled in favor of the appellant/assessee, allowing the tax case appeal, setting aside the Tribunal's order, and directing the Tribunal to number the appeal and proceed with its disposal on merits. No costs were awarded in the judgment.