2010 (8) TMI 1134 - HC - Income Tax

Condonation of delay in filling appeal before ITAT - delay of 310 days - due to change of Managing Director took their own time to get the papers signed and to file the appeal - Whether constitute a sufficient cause u/s 5 of the Limitation Act - HELD THAT - In the instant case it is not disputed after the order came to be passed the Managing Director was changed and thereafter the Chartered Accountant took a decision to prefer the appeal and though papers were sent for signature was not signed and appeal was not filed. What is to be seen in such matters is that the appellant was negligent and by not filing the appeal within time whether there is any valuable right of the appellant which would be taken away by not condoning the delay in the matters arising under the Income-tax Act ultimately the question is what is the tax payable under law. It is not an adversary litigation. An assessee cannot be charged without statutory authority. Under these circumstances the approach of the Tribunal cannot be accepted. In that view of the matter the reasoning given by the Tribunal for not condoning the delay is unsustainable in law. Hence we are satisfied that the appellant has made out a sufficient cause for condoning the delay in preferring the appeal. Hence we pass the following (i) The appeal is allowed. (ii) The impugned order passed by the Tribunal dismissing the appeal as barred by limitation is hereby set aside. The application filed for condonation of delay of 310 days in preferring the appeal before the Tribunal is allowed.

Summary

Issues:
Appeal dismissed by Tribunal on the ground of being barred by limitation.

Analysis:
The judgment by the Karnataka High Court involved an appeal by an assessee against the order of the appellate Tribunal, which was dismissed due to being barred by limitation. The assessee, a Government company engaged in plantation business, filed the income tax return for the assessment year 2003-04 on 2-12-2003, declaring an income of Rs. 12,98,350. The return was selected for scrutiny, and after examination, an order was passed. The assessee filed a petition for rectification under section 154 of the Income-tax Act, claiming deductions as per Rule 7A of the Income-tax Rules. The requisition was rejected, leading to an appeal being filed against the orders, which was also dismissed. Subsequently, an appeal was made to the Tribunal, but there was a delay of 310 days in filing the appeal.

The Tribunal, after hearing the parties, declined to condone the delay, stating that the reasons shown in the affidavit did not constitute a sufficient cause under section 5 of the Limitation Act. However, the High Court, upon reviewing the case, found that the delay was due to a change in the Managing Director of the company, resulting in the appeal papers not being signed and filed in time. The Court noted that in cases involving Government entities, leniency has been shown in condoning delays due to the bureaucratic processes involved. The Court emphasized that the focus should be on whether the appellant's valuable rights would be affected by not condoning the delay, especially in tax matters where the ultimate concern is the correct tax liability. The Court disagreed with the Tribunal's narrow approach and held that the appellant had provided a sufficient cause for condonation of the delay.

Therefore, the High Court allowed the appeal, set aside the Tribunal's order dismissing the appeal as barred by limitation, and directed the Tribunal to consider the appeal on its merits without revisiting the issue of limitation. The Court concluded the judgment by stating that no costs were to be awarded in this matter.