2020 (8) TMI 368 - HC - Income Tax

Condonation of delay in filing an appeal before ITAT - delay of 154 days in filing the I.T.A. - Unexplained investment on Gold and silver jewellery found during the course of search and seizure proceedings - HELD THAT - The Supreme Court in N.Balakrishnan Vs. M. Krishnamurthy 1998 (9) TMI 602 - SUPREME COURT has held that the primary function of a Court is to adjudicate the dispute between the parties and to advance substantial justice; and that rules of limitation are not meant to destroy the right of parties, but they are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. It held that there is no presumption that delay in approaching the Court is always deliberate, and the words sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice. Every case of delay there can be some lapse on the part of the litigant concerned, but that alone is not enough to turn down his plea and to shut the door against him; and if the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the Court must show utmost consideration to the suitor. It also observed that if the delay is deliberate, then the Court should not accept the explanation. It held that while condoning the delay, the Court should compensate the opposite party with costs. Applying the principles laid down in the above case to the instant case, we are of the opinion that, in the facts and circumstances of the case, the explanation for the delay offered by the appellant cannot be said to smack of mala fides or that it was put forth as a part of a dilatory strategy, and therefore, the Tribunal ought to have condoned the delay of said period of 154 days in filing the I.T.A. and taken up the matter on merits.

Summary

Issues involved:
Challenge to order under Section 260A of the Income Tax Act, 1961 regarding assessment, condonation of delay in filing appeal before the Tribunal.

Analysis:

Challenge to Order under Section 260A:
The appellant, an individual assessee, challenged the order of the Revisional Authority under Section 263 of the Income Tax Act, 1961. The Revisional Authority proposed an addition to the appellant's income for unexplained investment in gold and silver jewellery found during a search and seizure operation. The appellant contended that detailed submissions and evidence were provided, including separate returns under the Wealth Tax Act, 1957, and affidavits from family members. Despite this, the Revisional Authority set aside the original assessment, directing a reassessment with detailed inquiries. The Assessing Officer completed the reassessment, leading to an appeal before the Tribunal challenging the Revisional Authority's order. The Tribunal dismissed the appeal due to a delay in filing, prompting the appellant to challenge this decision.

Condonation of Delay in Filing Appeal:
The appellant explained the delay of 154 days in filing the appeal before the Tribunal by stating a mistaken impression that only the consequential order of the Assessing Officer needed to be challenged, not the Revisional Authority's order. The Tribunal rejected the explanation, emphasizing why the appellant did not approach legal counsel after receiving the Revisional Authority's order. However, the High Court opined that as an individual, the appellant might not be well-versed in legal matters and could have reasonably believed that only the Assessing Officer's order needed challenging. Citing the Supreme Court's stance on the liberal construction of "sufficient cause" under the Limitation Act, the High Court held that the delay explanation did not indicate mala fides or dilatory tactics. Consequently, the High Court allowed the appeal, setting aside the Tribunal's order, condoning the delay, and instructing the Tribunal to hear the appeal on merits.

In conclusion, the High Court's judgment revolved around the challenge to the Revisional Authority's order under Section 263 of the Income Tax Act and the condonation of delay in filing the appeal before the Tribunal. The Court emphasized the need for a liberal interpretation of "sufficient cause" for delay, considering the circumstances of the appellant's case. The decision allowed the appeal, setting aside the Tribunal's order and directing a hearing on the appeal's merits.