2017 (6) TMI 832 - HC - Income Tax

Condonation of delay - Held that - When the applicant has failed to explain the huge delay of 1564 days, more particularly, has failed to explain the delay for the period from the date of receipt of the order of the learned tribunal and the filing of rectification applications and there is a huge delay of 1564 days, both these applications deserve to be dismissed and are accordingly dismissed.

Summary

Issues Involved:
1. Condonation of delay in filing Tax Appeals.
2. Justification for the delay in filing rectification applications.
3. Application of legal precedents regarding condonation of delay.

Detailed Analysis:

Condonation of Delay in Filing Tax Appeals:
The primary issue is the condonation of a substantial delay of 1564 days in filing Tax Appeals against the judgment of the Income Tax Appellate Tribunal. The applicant argued that the delay occurred due to pursuing rectification applications under Section 254(2) of the Income Tax Act, which were considered a cheaper and better remedy. The rectification applications were filed within the permissible four-year period but were ultimately dismissed. The applicant contended that the delay was due to genuine and bona fide circumstances and requested the court to condone the delay.

Justification for the Delay in Filing Rectification Applications:
The applicant received the tribunal's judgment on 03/08/2012 but filed rectification applications only on 24/12/2015, nearly three years later. The applicant claimed that the four-year limitation period for rectification applications justified the delay. However, the court noted that the applicant failed to explain why the rectification applications were not filed earlier. The court emphasized that merely having a four-year limitation period does not justify waiting until the last moment to file. The applicant's relaxed attitude and reliance on being reminded by their Chartered Accountant were deemed insufficient reasons for the delay.

Application of Legal Precedents Regarding Condonation of Delay:
The applicant cited several Supreme Court decisions advocating for a liberal approach in condoning delays:
- N. Balakrishnan Vs. M. Krishnamurthy
- GMG Engineering Industries Vs. ISSA Green Power Solution
- State of Goa Vs. A.H. Jaffar and Sons
- Improvement Trust, Ludhiana Vs. Ujagar Singh

The court, however, referred to more recent Supreme Court rulings that emphasize the necessity of a sufficient and reasonable explanation for delays:
- Lanka Venkateshwarlu Vs. State of A.P.
- Balwant Singh (Dead) Vs. Jagdish Singh
- Postmaster General Vs. Living Media India Limited

These decisions highlight that liberal approaches should not undermine the substantial law of limitation, and delays must be justified with adequate reasons.

Court's Conclusion:
The court concluded that the applicant failed to provide a sufficient explanation for the delay, particularly for the period between receiving the tribunal's order and filing the rectification applications. The court noted that while a liberal approach to condonation of delay is often warranted, it cannot be applied when there is a lack of due diligence and bona fide reasons. Consequently, the applications for condonation of delay were dismissed, leading to the dismissal of the related Tax Appeals on the grounds of limitation.

Summary:
The court dismissed the applications for condonation of a 1564-day delay in filing Tax Appeals, citing insufficient explanation for the delay. The applicant's reliance on the four-year limitation period for rectification applications and subsequent relaxed attitude were deemed inadequate. The court emphasized the necessity of a sufficient and reasonable explanation for delays, referencing recent Supreme Court rulings that caution against undermining the substantial law of limitation. As a result, the related Tax Appeals were also dismissed on the grounds of limitation.