2016 (1) TMI 1439 - HC - Income Tax

Condonation of delay for filling Rectification of mistake - reopening of assessment being without jurisdiction - recording of not pressing its grievance with regard to reopening of the assessment at the time of hearing of an appeal - HELD THAT - The impugned order dated 5th June 2009 of the Tribunal had no occasion to deal with the issue of reopening of the assessment. The Applicant if aggrieved by the decision dated 5th June 2009 of the Tribunal incorrectly recording its withdrawal of challenge to the reopening of the assessment the Applicant should have been filed an application for rectification immediately. The Applicant accepted the order of the Tribunal on the issue of reopening of assessment and chose not to file any Miscellaneous Application seeking to rectify any mistake in order dated 5th June 2009. This itself would be an indication of the fact that the Applicant was not aggrieved by the Tribunal recording that the issue of reopening of an assessment was not being pressed. This is so as if the Applicant had any grievance it would have filed a Miscellaneous Application. In any case the right of filing an appeal in respect of reopening of an assessment arose when the order dated 5th June 2009 of the Tribunal was received by the Applicant. The right of appeal of the Applicant on the issue of reopening of assessment did not arise as a consequence of the order of the Tribunal dated 23rd March 2010 allowing the Revenue s application for rectification withdrawing the benefit of Section 80IB of the Act to the Applicant. There is no explanation as to what prevented the Applicant from filing an application for rectification before the order dated 23rd March 2010 of the Tribunal allowing the Revenue s application for withdrawing the benefit of Section 80IB of the Act. This event viz order dated 23rd March 2010 does not explain the delay from order dated 5th June 2009 (received on 30th June 2009) upto its first applications for rectification on 22nd February 2011. Be that as it may even if we accept the submission made on behalf of the Applicant that the time spent between 22nd February 2011 to 17th December 2014 in prosecuting the repetitive Miscellaneous Application on the same issue before the Tribunal filing Writ Petition and appeal from the order on the Miscellaneous Applications is a bonafide and diligent pursuit of a remedy yet the affidavit in support of the Notice of Motion makes no attempt to explain the period spent between 30th June 2009 to 22nd February 2011. In the present facts we are of the view that the rectification application was moved on the ground that the recording of not pressing its grievance with regard to reopening of the assessment at the time of hearing of an appeal leading to the impugned order dated 5th June 2009 was not correct. Therefore even if we exclude the period between 22nd February 2011 to 30th October 2014 no satisfactory explanation for the time spent between 30th June 2009 to 22nd February 2011, when the first Miscellaneous Application was filed i.e. 18 months. Besides affidavit in support does not explain the delay of approximately one and half months after the withdrawal of the Appeal from the order on the Miscellaneous Application up to the filing of the accompanying appeal on 17th December 2014. Thus there being no explanation even attempted in the affidavit in support of the notice of motion no occasion to condone the delay can arise. Application for condonation of delay cannot be allowed as the Applicant has not made out sufficient cause for condoning the delay.

Summary

Issues:
Delay in filing the appeal before the High Court from the order of the Income Tax Appellate Tribunal (Tribunal) relating to Assessment Years 1998-1999.

Analysis:

1. The Applicant sought condonation of 1873 days in filing the appeal due to various events leading to the delay. The Tribunal dismissed the appeal on the issue of reopening of assessment but upheld the entitlement to deduction under Section 80IB of the Income Tax Act, 1961. However, the Supreme Court reversed the decision on Section 80IB, leading to a series of applications for rectification by both parties.

2. The Applicant argued that the time spent in filing rectification applications should be excluded as it was diligently pursuing its remedy. The Applicant emphasized the need for a liberal approach in condoning the delay to enable a review of the reopening of assessments on merits.

3. In contrast, the Revenue contended that the delay of 1873 days was unacceptable and highlighted the lack of diligence in repeatedly filing rectification applications. The Revenue argued that the Applicant failed to provide a satisfactory explanation for the delay, especially during certain periods.

4. The Court emphasized the need to balance the liberal construction of delay condonation with the importance of adhering to limitation laws. The Court noted that the Applicant did not promptly challenge the Tribunal's decision on reopening of assessment and failed to explain the delay adequately.

5. The Court found that the Applicant's actions, including not filing rectification applications promptly after adverse decisions and lack of explanation for certain periods, indicated a lack of diligence. Despite arguments for excluding certain periods, the Applicant failed to provide a satisfactory explanation for the overall delay.

6. Ultimately, the Court dismissed the Notice of Motion as the Applicant did not establish sufficient cause for condoning the delay. The Court highlighted the importance of timely action in legal proceedings and the need for parties to diligently pursue their remedies within the prescribed time limits.