2003 (9) TMI 286 - AT - Income Tax

Scope and ambit of Tribunal's powers contemplated in s. 254(1) - payment of agreed taxes - search operation - Expression Sufficient cause or reason - limitation provided in s. 249(2) and its condonation thereof as per s. 249(3) - violation of s. 249(4) - HELD THAT - On plain reading of sub-s. (3) of s. 249 shall reveal that if the assessee showed sufficient reasons for late filing of his appeals, then such delay can be condoned and controversy would be silenced on merit. Similarly, for sake of explanation, if an assessee did not have sufficient funds for complying the requirement of s. 249(4) and has not filed the appeal within the time provided under s. 249(2), subsequent to expiry of limitation, he made compliance of s. 249(4) and filed the appeal with a prayer of condonation of delay then it would be in discretion of the first appellate authority to see whether sufficient reasons for late filing of appeal exist or not. If the learned CIT(A) arrived at a conclusion that sufficient reasons exist then again the controversy would be decided on merit. Thus, on conjoint reading of sub-ss. (3) and (4), it is inferred that defect arises due to non-compliance of s. 249(4) is a curable one and in a given case if the Tribunal is satisfied that there exist sufficient reasons for curing such defects after expiry of limitation, it would be in the realm of Tribunal's discretion to restore such matters to the file of the CIT(A) for deciding the controversy on merit because sub-s. (1) of s. 254 provides wide powers to the Tribunal for passing such orders thereon as it thinks fit in the interest of justice. Whether sufficient reasons exist for curing defect after expiry of limitation provided u/s 249(2) of the Act. Since, we have held in the upper part of the order that appeal filed in violation of s. 249(4) would be termed as a defective one and the moment defect is cured then those can be disposed of on merit subject to limitation. The Courts and the quasi-judicial bodies are empowered to condone the delay if a litigant satisfies the Court that there were sufficient reasons for availing the remedy after expiry of limitation. Such reasoning should be to the satisfaction of the Court. The expression sufficient cause or reason , as provided in sub-s. (3) of s. 249 of the Act, is used in identical position in a number of statutes and the Hon'ble Supreme Court as well as the Hon'ble High Courts have time and again held that expression sufficient cause for condonation of a delay should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fide is imputable to a party because the judiciary is expected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Thus, we are of the opinion that these appeals deserve to be allowed and, accordingly, allowed. We set aside the order of the learned CIT(A) and restore the matters before him for deciding the controversy on merit. In the result, all the appeals are allowed for statistical purposes.

Issues Involved:
1. Scope and ambit of Tribunal's powers u/s 254(1).
2. Whether non-payment of agreed taxes at the time of filing appeals u/s 249(4) renders the appeal defective.
3. Whether non-availability of funds can be considered a reasonable cause for delay in compliance with s. 249(4).
4. Whether sufficient reasons exist for curing defects after the expiry of limitation provided in s. 249(2).

Summary:

Scope and Ambit of Tribunal's Powers u/s 254(1):
The Tribunal examined whether it has the authority under s. 254(1) to treat an appeal filed in violation of s. 249(4) as defective and whether it can decide the appeal on merit once the defect is cured by payment of agreed taxes. The Tribunal referred to the Supreme Court's interpretation in Hukmichand Mills Ltd. vs. CIT and CIT vs. Assam Travels Shipping Service, which confirmed that the Tribunal has wide powers to pass orders as it thinks fit, including remanding cases for further inquiry.

Non-Payment of Agreed Taxes and Defective Appeals:
The Tribunal considered whether non-payment of agreed taxes at the time of filing appeals u/s 249(4) renders the appeal defective. It was noted that the assessee had made substantial tax payments during the pendency of the appeals. The Tribunal concluded that the defect due to non-compliance with s. 249(4) is curable and, if sufficient reasons exist, the Tribunal can restore the appeal to the CIT(A) for a decision on merit.

Non-Availability of Funds as Reasonable Cause:
The Tribunal evaluated whether non-availability of funds for paying agreed taxes could be considered a reasonable cause for filing defective appeals. It was observed that the assessee had paid over Rs. 75 lakhs in taxes in installments, indicating a lack of sufficient funds at the relevant time. The Tribunal emphasized the principles of natural justice and concluded that non-availability of funds should be considered a reasonable cause for delay.

Curing Defects After Expiry of Limitation:
The Tribunal assessed whether sufficient reasons exist for curing defects after the expiry of the limitation period provided in s. 249(2). It was held that the expression "sufficient cause" should be liberally construed to advance substantial justice. The Tribunal cited the Supreme Court's decision in Collector, Land Acquisition vs. Mst. Katiji & Ors., which advocated for a liberal interpretation of "sufficient cause" to avoid injustice. The Tribunal found that there were sufficient reasons for the delay and restored the appeals to the CIT(A) for adjudication on merit.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, set aside the orders of the CIT(A), and restored the matters to the CIT(A) for a decision on merit, emphasizing the importance of substantial justice over technical considerations.

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