2017 (8) TMI 34 - HC - Income Tax

Condonation of delay - reason of delay - Held that - The right of Appeal is a statuary right. Of course, the litigant has to be diligent. The Appellant herein is a Society naturally acting for and on behalf of the members. The affidavit has been filed by the Appellant thereby accepting that it had received the notice under Section 263 of the Income Tax Act on 18/03/2014 and had been to the Income Tax Officer and it was represented to it that the assessment would be taken up by the later date. The affiant of the said affidavit further states that he was not aware that the Appeal could be filed. The Society employed the Charted Accountant on 28th January 2015 and because of which the delay has been caused. It does not appear that the Appellant would stand to gain by delay. It is trite that when the cause for substantial justice and technical consideration are pitted against each other, cause for substantial justice has to be sub-served. As it is found that the Appellant was not to gain by delay and for the reasons stated in the affidavit, we are inclined to exercise our discretion in favour of the Appellant and condone the delay. However, the Appellant also deserves to be mulct with cost for delay that has been caused. In the result, we pass the following order. The impugned order is quashed and set aside on condition that the Appellant deposit cost of ₹ 20000/with the Tribunal on or before 21st August 2017.On deposit of said cost within the period as stipulated above, the Tribunal shall proceed and decide the Appeal on merits after hearing all the parties concerned.

Summary

Issues:
Appeal against Order dated 26th April 2017 - Condonation of delay - Ignorance of law as a reason for delay - Society acting on behalf of members - Exercise of discretion in favor of the Appellant - Imposition of cost for delay.

Analysis:
The appeal before the Bombay High Court pertained to the Assessment Years 2008-09 and was filed against an order dated 26th April 2017. The Appellant contended that the Tribunal did not consider the grounds raised in the Application for condonation of delay, emphasizing that the delay was unintentional and should be liberally construed under the expression "sufficient cause." The Appellant, a Society, stated that it was not guided about the remedy of appeal after receiving the order under Section 263 of the Income Tax Act. The Tribunal had dismissed the appeal due to a delay of 300 days, which the Appellant claimed was actually 249 days. The Appellant argued that ignorance of law should be considered for condonation of delay, especially as the Society was acting on behalf of its members.

The Revenue's counsel argued that ignorance of law cannot be an excuse for condonation of delay and criticized the Appellant's casual approach. The Tribunal's decision to dismiss the appeal was supported by the Revenue, stating that the Appellant's approach was not diligent and did not constitute "sufficient cause." However, the High Court noted that the right of appeal is statutory and that the Appellant, being a Society representing members, had shown efforts to rectify the delay by engaging a Chartered Accountant. The Court acknowledged that the Appellant did not stand to gain by the delay and decided to exercise discretion in favor of the Appellant, condoning the delay.

In its judgment, the High Court emphasized the importance of balancing substantial justice and technical considerations. Despite imposing a cost of ?20,000 on the Appellant for the delay caused, the Court quashed the impugned order and set conditions for further proceedings. The Appellant was directed to deposit the specified cost with the Tribunal by a given date, after which the Tribunal would proceed to decide the appeal on its merits. The Court disposed of the appeal accordingly, emphasizing the statutory right of appeal and the need for diligence while also considering the circumstances of the Society acting on behalf of its members.