2020 (3) TMI 887 - HC - Income Tax

Condonation of delay - delay of 586 days in filing the appeal - TDS u/s 194H - payment to the distributors in prepaid SIM cards is a discount or commission - HELD THAT - Revenue acted with due diligence, in our opinion, inasmuch as on 3rd April, 2018 the judicial folder was sent by the Income Tax department to the Ministry of Law and Justice for preparing the appeal. 4th April, 2018 was the last date for preferment of the appeal. The very next day after receiving the folder, the Ministry of Law and Justice handed over the file to learned counsel for preparation of the appeal. On 9th April, 2018 learned counsel handed over the drafts to the Ministry of Law. Had the appeal been expeditiously filed thereafter, there would have been a delay of not more than two weeks in filing it. However, the appeal papers after moving through various departments of the government for scrutiny, approval and so on, was ultimately filed on 13th November, 2019. There is no explanation for this delay. Although Mr. Dutta, learned advocate for the appellant contends that considering the issue involved we should condone the delay, we are of the view that even if some explanation was offered, we could have exercised our discretion. In this case, condonation of the delay would amount to condoning the utter failure or negligence on the part of the department to take steps with regard to this appeal.

Summary

Issues:
- Appeal under Section 260A of the Income Tax Act, 1961 regarding payment to distributors in prepaid SIM cards.
- Determination of whether the payment constitutes a discount or commission.
- Application for condonation of delay of 586 days in filing the appeal.

Analysis:
The High Court of Calcutta addressed an appeal under Section 260A of the Income Tax Act, 1961, involving a substantial revenue of over ?3 crores. The central issue at hand was to ascertain whether payments made to distributors in the form of prepaid SIM cards should be classified as a discount or commission, thereby potentially falling under the purview of Section 194H of the Income Tax Act, 1961.

The Court noted a significant delay of 586 days in filing the appeal. Despite the contention that the revenue's counsel acted diligently, the Court found that the appeal process was marred by a lack of promptness and efficiency. It was highlighted that the judicial folder was dispatched to the Ministry of Law and Justice for appeal preparation on 3rd April 2018, just a day before the appeal deadline of 4th April 2018. The subsequent delay in filing the appeal until 13th November 2019 was not adequately explained.

While the appellant's counsel sought leniency due to the complexity of the issue involved, the Court emphasized that condoning the delay in this instance would essentially amount to excusing the department's negligence and failure to expedite the appeal process effectively. Consequently, the Court dismissed the Section 5 application (GA 2589 of 2019) seeking condonation of delay, along with the appeal (ITAT 179 of 2019) and the stay application (GA 2590 of 2019). The judgment underscored the importance of timely and diligent procedural compliance in legal matters, refusing to overlook unjustifiable delays in the appeals process.