2011 (4) TMI 36 - HC - Income Tax

Condonation of delay - Though the delay ranges from 1000 to 1543 days - It is pertinent to note that at that time, no notices of motion was taken out by the Department for condonation of delay in filing the appeals - It is by now trite that in cases of condonation of delay, there cannot be any straight jacket formula and the cases have to be decided on their own merits - Department has taken remedial measures after a Committee headed by the Chief Commissioner of Income Tax-II, Mumbai was appointed by the Finance Minister looked into the the aspect of the delays in filing the appeals by the Department in this Court - It is also noticed that sometime in November, 2007 the entire panel of Counsel of Income Tax Department were proposed to be changed and the process of selection of Counsel was initiated by way of Notification on the Income Tax website and accordingly, new panel of Counsel was formed in July, 2008 - Perusal of the Action Taken Reports, show that as per the latest statistics, during the A.Y. 2009-10 about 91% of the Appeals were filed in time - Delay is condoned, subject to costs of Rs. 10,000 - Notices of Motion are allowed

Issues Involved:
1. Condonation of delay in filing Income Tax Appeals.
2. Explanation and justification for the delay.
3. Opposition by the respondents to the condonation of delay.
4. Judicial consideration and decision on whether to condone the delay.

Detailed Analysis:

1. Condonation of Delay in Filing Income Tax Appeals:
The primary issue is whether the delay in filing the Income Tax Appeals, which ranges from 1000 to 1543 days, should be condoned. The Department filed Notices of Motion seeking condonation of this delay. Initially, the appeals were dismissed as barred by limitation due to the absence of any notices of motion for condonation of delay and lack of sufficient cause for the delay. The Supreme Court, however, remitted the matter back to the High Court to reconsider the question of condonation of delay in light of the amended law.

2. Explanation and Justification for the Delay:
The Department provided several reasons for the delay:
- Decentralization of work related to filing appeals from the Ministry of Law to the Department, effective from December 1, 2005, which caused delays in receiving back dockets from the concerned Advocates.
- Approval processes involving multiple authorities, including CIT and CCIT.
- Issues with the old Panel Counsel, leading to a proposal to change the entire panel in November 2007, and the formation of a new panel in July 2008.
- Lack of documentary evidence showing the exact movement of judicial folders/records post-decentralization.
- Non-satisfactory representation by the old Panel Counsel and transfer of assessing officers contributed to the delay.

The Department also submitted Action Taken Reports to the Supreme Court detailing the reasons for the delay, fixing responsibility, and outlining remedial actions taken.

3. Opposition by the Respondents to the Condonation of Delay:
The respondents opposed the motions, arguing that the Department had not provided any cogent or plausible reasons for the delay. They pointed out delays at various stages, including the preparation of the scrutiny report and the handing over of files to the Central Government Advocate. The respondents contended that a right had accrued in their favor upon the expiry of the limitation period and that they would suffer prejudice if the delay was condoned. They also cited several judgments supporting their contention that the delay should not be condoned.

4. Judicial Consideration and Decision:
The Court considered the rival contentions, the amended Finance Act No. 14 of 2010, and the fact that the delay was substantial. The Court noted that the explanation given by the Department was not entirely satisfactory and would not strictly constitute sufficient cause for condoning the delay. However, in the interest of justice, the Court decided to condone the delay subject to payment of costs. The Court emphasized that the steps taken due to the intervention of the Supreme Court should ensure timely filing of appeals in the future.

The Court condoned the delay subject to costs of Rs. 10,000/- in each appeal, to be paid by the Department to the respective respondent-assessees within four weeks. The costs were to be initially paid by the Department, with the option to recover the same from the concerned Officers/Counsel responsible for the delay.

Conclusion:
The High Court condoned the substantial delay in filing the Income Tax Appeals, recognizing the procedural and administrative challenges faced by the Department but emphasizing the need for timely filing in the future. The decision was made in the interest of justice, with the imposition of costs to be borne by the Department.

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