2016 (7) TMI 1677 - AT - Income Tax

Rectification of mistake u/s 254 - Appeal challenged by the assessees after a period of 04 years - HELD THAT - In the case of Parsuram Potteries Works Co. Ltd 1976 (11) TMI 1 - SUPREME COURT observed that stale issues should not be re-activated beyond a particular stage and there must be a point of finality in all the legal proceedings; lapse of time must induce or set at rest all judicial and quasi-judicial controversies as it must in others spheres of human activity. A proper approach is to challenge the order before a higher Forum either under section 260-A of the Income Tax Act or in writ jurisdiction by taking immediate steps after disposal of the appeals. Here is a case where there was more than 07 years delay and in fact the assessees did not choose to pursue such a kind of remedy. At the same time assessee submits that the impugned order passed by the Tribunal cannot be treated as an order passed under section 254(1) - Section 254(2) of the Act speaks of rectifying mistakes in the orders passed under section 254(1) of the Act and if the assessees claim that there was no order passed under section 254(1) there is no right of filing a petition u/s 254(2) of the Act. The impugned order was passed by the Tribunal u/s 254(1) of the I.T. Act and in the given circumstances dismissal of the appeals is the only conclusion that can be drawn which could have been challenged by the assessees within a period of 04 years and beyond such period the Tribunal has no power to condone the delay and therefore the M.As are not maintainable. Dismissal of appeal for want of prosecution - Even if it is presumed that the Tribunal has got the power to condone the delay the reasons given by the assessees herein are vague and not supported by proper evidence and therefore it has to be concluded that the assessees have no sufficient cause for the delay in filing M.As. If the assessees claim that the common order passed by the Tribunal in 2008 dismissing the appeals for want of prosecution cannot be equated to an order passed under section 254(1) of the I.T. Act and therefore section 254(2) does not come into play and consequently the period of limitation does not apply then the remedy to the assessees would have been to approach an appropriate Forum to challenge the order which is claimed to be invalid in law. But the assessees chose not to prefer either appeal or writ petition before the Hon ble High Court and thus by efflux of time it has attained finality and such stale issues should not be reactivated at this stage in the light of observations of the Hon ble Supreme Court in the case of Parsuram Potteries Works Co. Ltd. vs. ITO 1976 (11) TMI 1 - SUPREME COURT - M.As filed by the assessees are dismissed.

Summary

Issues Involved:
1. Whether the Miscellaneous Applications (M.As) are barred by limitation.
2. Whether the Tribunal had the power to dismiss the appeals for want of prosecution.
3. Whether the Tribunal can condone the delay in filing M.As beyond the prescribed period.
4. Whether the assessees provided sufficient cause for the delay in filing M.As.

Detailed Analysis:

1. Whether the Miscellaneous Applications (M.As) are barred by limitation:
The Tribunal noted that as per the law existing at the relevant time, a Miscellaneous Application (M.A.) must be filed within four years from the date the Tribunal passes an order. In these cases, the M.As were filed beyond the period of limitation, and there is no provision to condone the delay in such instances. Therefore, the M.As are barred by limitation and deserve to be dismissed as un-admitted.

2. Whether the Tribunal had the power to dismiss the appeals for want of prosecution:
The assessees argued that the Tribunal's order dismissing the appeals for want of prosecution is not valid under Section 254(1), which mandates disposal of an appeal on merits even if no one appears for the assessee. The Tribunal observed that the appeals were dismissed due to the assessees' repeated requests for adjournments and lack of prosecution. The Tribunal cited the case of CIT vs. S. Chenniappa Mudaliar and Balaji Steel Re-rolling Mills, where it was held that the Tribunal has no power to dismiss an appeal for want of prosecution. However, the Tribunal concluded that the proper remedy for the assessees would have been to challenge the order before the High Court, which they failed to do.

3. Whether the Tribunal can condone the delay in filing M.As beyond the prescribed period:
The Tribunal emphasized that Section 254(2) mandates that an M.A. must be filed within four years from the date of the order. The Tribunal has no power to condone the delay beyond this period. The Tribunal referred to the decision of the Hon’ble Supreme Court in Sri Ayyanar Spinning & Weaving Mills Ltd., which stated that if an application is moved within the allowed period, the Tribunal may dispose of the application even if the time taken is beyond four years. However, in this case, the M.As were filed after seven years, making them inadmissible.

4. Whether the assessees provided sufficient cause for the delay in filing M.As:
The assessees contended that the delay was due to the illness and subsequent death of the managing director, which caused the family to shift to their native place. The Tribunal found this explanation vague and unsupported by proper evidence. The Tribunal noted that the assessees failed to provide proof of their complete shift from Hyderabad and did not make any effort to file a petition immediately after returning in 2012. Therefore, the Tribunal concluded that the assessees did not have a reasonable cause for the delay in filing the M.As.

Conclusion:
The Tribunal dismissed the M.As filed by the assessees as they were barred by limitation and lacked sufficient cause for the delay. The Tribunal reiterated that it has no power to condone the delay beyond the prescribed period of four years under Section 254(2). The Tribunal also highlighted that the assessees should have challenged the dismissal order before the High Court, which they failed to do, leading to the finality of the Tribunal's order. The decision underscores the importance of adhering to statutory timelines and the limited scope for condoning delays in legal proceedings.