2014 (12) TMI 142 - HC - Income Tax

Refusal on condination of delay of 550 days in filing appeal Penalty order served upon assessee - Held that - The Tribunal has referred to the contents of the affidavit of the assessee assessee is a senior citizen and aged 87 years - the matter is technical and involving legal issues and the assessee himself not being aware of the intricacies and niceties of law, acted upon legal advice - his conduct is not termed as malafide nor it is termed as negligence and callousness - the Tribunal was not justified in proceeding on these lines - The Tribunal was aware that the provisions of section 5 of the Limitation Act, 1963 and the term sufficient cause have to be liberally construed - that provision is elastic and to assist especially such litigants whose conduct is not vitiated by lack of care or utter negligence or malafides - assessee have paid the tax, therefore, shows that throughout he was acted on legal advice thus, he should get opportunity to substantiate his case on merits the order of the Tribunal is set aside and delay condoned in filing the appeal u/s 254 and the matter is restored back to the Tribunal Decided in favour of assessee.

Summary

Issues:
1) Delay in filing an Appeal before the Tribunal
2) Refusal to condone the delay
3) Consideration of merits of the Appellant's case

Analysis:
1) The Assessee, a senior citizen aged 87 years, filed an Appeal challenging the Tribunal's order refusing to condone the delay of 550 days in filing the Appeal. The Assessee initially decided not to challenge the order of the Commissioner of Income Tax (Appeals) in 2010 but later sought legal advice in 2012 to challenge the penalty and quantum proceedings. The Assessee claimed to have acted in good faith based on legal advice throughout. The Tribunal declined to condone the delay, prompting the Assessee to appeal based on substantial questions of law arising from the order.

2) The High Court observed that the Assessee's age, lack of legal knowledge, and reliance on legal advice were not disputed. The Tribunal, while considering the delay, questioned the specifics of the legal advice received by the Assessee, which the High Court deemed unnecessary. The Court emphasized that the provisions of the Limitation Act, 1963, require a liberal construction of "sufficient cause," especially for litigants acting in good faith without negligence or malice. The Assessee's payment of tax and reliance on legal advice indicated good faith, warranting an opportunity to present the case on its merits.

3) Consequently, the High Court quashed the impugned order, condoned the delay of 550 days in filing the Appeal, and restored the case to the Tribunal for a decision on merits in accordance with the law. The Court emphasized keeping all contentions on merits open and made no ruling on costs. The judgment highlighted the importance of considering the circumstances of the Assessee, especially in cases where legal advice guided the actions, to ensure a fair opportunity for presenting the case on its merits.