2017 (12) TMI 425 - HC - Income Tax

Applications u/s 264 for revision in favor of assessee - Condonation of delay - eligible reasons for delay - Held that - Referring to case of Collector, Land Acquisition vs. Mst. Katiji & Others 1987 (2) TMI 61 - SUPREME Court it was not necessary for the petitioner to have explained each and every day s delay. On the contrary, the Apex Court held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice is to be preferred. The Apex Court also held there is no presumption that delay is intentional and deliberate, as normally a litigant does not stand to benefit by resorting to delay. As stated earlier, in the application dated 20th March, 2014 seeking invocation of the power under Section 264, the delay has been adequately explained. Perusal of the impugned order shows that the Commissioner has misdirected himself by going into the question whether the petitioners could have made the claim. The question of going into maintainability of the claim made by the petitioners could have been gone into on merits, only if the delay was condoned. Proviso to Sub-Section (3) of Section 264 confers a statutory power on the Commissioner to condone the delay. Therefore it was not necessary for the Commissioner to have taken recourse to Section 5 of the Limitation Act, 1963. We direct the Commissioner of Income Tax to decide both Revision Applications on merits as expeditiously as possible and preferably within a period of three months from the date on which an authenticated copy of this Order is produced in his office.

Summary

Issues:
1. Challenge to orders dated 12th November, 2014 passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act.
2. Delay in filing applications under Section 264 and condonation of the same.
3. Interpretation of Section 264(3) regarding the power to condone delay.
4. Adjudication on merits of the claim made by the petitioners.
5. Application of principles regarding delay in legal proceedings.

Analysis:
Issue 1: The petitioners challenged orders dated 12th November, 2014, passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act for Assessment years 2007-08 and 2008-09. The Commissioner dismissed the Revision Applications citing uncondonable delay in filing.

Issue 2: The petitioners argued that the Commissioner misdirected himself by not considering the power vested in him to condone the delay under Section 264(3). The petitioners provided reasons for the delay in their Revision Application, which was filed promptly after a favorable order in a related matter.

Issue 3: Section 264(3) allows the Commissioner to condone delay if satisfied that the assessee was prevented by sufficient cause. The petitioners adequately explained the delay in their Revision Application, and the Commissioner should have exercised this power without resorting to Section 5 of the Limitation Act.

Issue 4: The Commissioner's order failed to address the merits of the claim made by the petitioners under Section 80IB(10) for the Assessment year 2009-10. The petitioners had a valid explanation for not claiming the deduction earlier, which was accepted by the CIT (Appeals) in a subsequent year.

Issue 5: The High Court emphasized the need for a pragmatic approach towards delay in legal proceedings, citing the Supreme Court's stance on substantial justice over technical considerations. The Court held that the delay in this case was adequately explained, and substantial justice required condonation of the delay.

Conclusion: The High Court partly allowed the Writ Petitions by setting aside the impugned orders and condoning the delay in filing Revision Applications. The matters were remanded to the Commissioner for fresh adjudication on merits, with a directive to decide expeditiously. All contentions on the merits of the Revision Applications were kept open for further consideration by the Revisional Authority.