2023 (9) TMI 222 - HC - Income Tax

Condonation of delay in filing appeal before the Tribunal - delay of 1529 days - as submitted by the appellant is a Co-operative bank under liquidation and as the official liquidator was not conversant with the tax matters and did not take note of letter addressed by the AO and therefore could not take steps in time - further submit that a lenient view may be taken, since the appellant is being officiated by official liquidator and further, the appellant has very good case on merits - HELD THAT - It is an admitted fact that the license of appellant was cancelled by the RBI on 14.02.2014 and the appellant was under liquidation and is being operated by official liquidator and is responsible for administrative and other activities concerning the appellant bank. The averments made in the affidavit that the official liquidator did not notice the letter dated 15.03.2017 addressed by AO and that due to lack of knowledge of income tax proceedings, the appeal could not be filed and thus, a delay of 1529 days occurred in preferring the appeal, does not inspire the confidence of this Bench. This Bench is concerned with the difficulty, injustice that may result to the depositors of the appellant-bank. To a query of this Bench with regard to refund of the amounts to the depositors, the learned counsel for appellant informed the Bench that the depositors are being paid their amounts in pro-rata basis from the amounts that are being received by the bank from time to time. In the above factual matrix, if the delay application is dismissed on the technicalities, the depositors would be put to further hardship for no fault of them. This Bench is inclined to condone the delay of 1529 days in preferring the appeal subject to payment of costs of Rs. 15,000/- (Rupees fifteen thousand only), payable to the Secretary, State Legal Services Authority, within a period of four weeks from today and matter is remanded back to the Respondent for adjudication on merits in accordance with law in expeditious manner.

Summary

Issues Involved:
The issues involved in the judgment include the delay in filing the appeal, assessment of income tax for the appellant for the Assessment Year 2005-06, disallowance of deductions under Non-Performing Asset (NPA) provision and Section 80P of the Income Tax Act, and the impact on depositors of the appellant bank.

Delay in Filing the Appeal:
The appellant, a Co-operative Society under liquidation, filed an appeal against the assessment order for the Assessment Year 2005-06 with a delay of 1529 days. The Tribunal dismissed the appeal due to the delay, stating that the reasons for delay were not relevant. The appellant contended that despite plausible reasons, the delay should have been condoned. The Bench considered the impact on depositors and decided to condone the delay, subject to the payment of costs.

Assessment of Income Tax:
The appellant, engaged in banking business, filed returns for the Assessment Year 2005-06 showing a loss. The assessment was reopened due to the cancellation of the banking license by RBI. The income was determined at a higher amount, disallowing deductions under NPA provision and Section 80P of the Act. Appeals were filed at various levels challenging the assessment, leading to the present appeal before the High Court.

Impact on Depositors:
The appellant bank, under liquidation, was being operated by the official liquidator. The delay in filing the appeal had implications on the depositors, as funds were being paid to them in a pro-rata basis. The Bench considered the plight of the depositors and decided to condone the delay to ensure that the appeal is adjudicated on its merits, without causing prejudice to the respondents.

Conclusion:
The High Court, after considering the circumstances and the impact on the depositors, decided to condone the delay in filing the appeal. The appellant was directed to pay costs and the matter was remanded back to the Respondent for adjudication on merits in an expeditious manner. The appeal was disposed of with no order as to costs, and pending miscellaneous applications were to be closed.