2019 (4) TMI 632 - HC - Income Tax

Condonation of delay of 439 days - sufficient cause - lack of proper advice - assessee was under the impression that he need only to challenge the assessment order before the CIT (Appeals) - no Challenge of order of CIT passed u/s 263 - after getting proper legal advice, subsequently Challenge before the Tribunal in appeal with condonation of delay - HELD THAT - The assessee had preferred an appeal against the assessment order issued against him, within the time stipulated, before the CIT (Appeals). Therefore it is not a case where there was a total lack of diligence on the part of the assessee. On the other hand, it has to be accepted that there occurred a lack of proper advice upon him in the matter of preferring the appeal against the order of the CIT, before the Tribunal under Section 253(1)(c). Hence, we are of the view that it is not a case where the appellant had not shown any cause at all to condone the delay. The sufficiency of the cause shown by the appellant is a matter to be weighed on the scales of justice, which the Tribunal had virtually failed to do. Therefore, there exist a substantial question of law as to whether the Tribunal had acted in accordance with law while it refused to condone the delay, at least in terms of cost. We are satisfied that there is failure in this regard on the part of the Tribunal. Consequently, the said question need to be answered in favour of the appellant and against the revenue. In view of such finding we need not answer any other questions of law framed, because the matter need to be remitted to the Tribunal for consideration of the appeal on its merits. The above appeal is hereby allowed.

Summary

Issues:
1. Condonation of delay in filing an appeal against an order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act.
2. Justification of the Income Tax Appellate Tribunal's decision to reject the application for condonation of delay.
3. Evaluation of the Tribunal's application of principles for considering applications for condonation of delay.

Analysis:
1. The appeal was filed under Section 260A of the Income Tax Act against the Tribunal's order dismissing the appeal due to a delay of 439 days in filing. The appellant, a senior Neuro Surgeon, had initially challenged an order by the Commissioner of Income Tax before the CIT (Appeals) but later realized the need to appeal before the Tribunal. The Tribunal's primary reason for dismissal was the appellant's failure to seek proper legal advice despite his professional background.

2. The High Court framed substantial questions of law regarding the Tribunal's rejection of the application for condonation of delay. The Court noted that the appellant had shown diligence by appealing within the stipulated time before the CIT (Appeals) and highlighted the lack of proper advice as the main cause for the delay. The Court emphasized that the Tribunal failed to weigh the sufficiency of the cause shown by the appellant, leading to a significant legal question.

3. The Court found that the Tribunal's failure to consider the appeal on merits necessitated a decision based solely on the condonation of delay issue. The Court concluded that the Tribunal's refusal to condone the delay was not in accordance with the law, indicating a lack of proper assessment of the situation. As a result, the Court allowed the appeal, set aside the Tribunal's order, and directed the Tribunal to restore the appeal on its files, subject to the appellant paying a cost of ?10,000 to the Department within two weeks.

This detailed analysis of the judgment highlights the key legal issues involved, the arguments presented, and the Court's reasoning leading to the final decision in the case.