2024 (12) TMI 1110 - HC - Income Tax

Delay of 53 days in preferring the appeal - Justifiable reasons for delay - registration u/s 12A - HELD THAT - Expression sufficient cause employed in sub-section (5) of Section 253 of the IT Act must receive a liberal construction so as to advance substantial justice and generally delays in preferring appeals are required to be condoned in the interest of justice where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay. The party should show that besides acting bona fide, it had taken all possible steps within its power and control and had approached the court without any unnecessary delay. The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention. (See Balwant Singh v. Jagdish Singh 2010 (7) TMI 556 - SUPREME COURT ) The expression sufficient cause necessarily implies an element of sincerity, bona fide and reasonableness.(See Sankaran Pillai v. V.P. Venuguduswami 1999 (7) TMI 717 - SUPREME COURT ) Appellant has explained that on account of wrong advise of his counsel to reapply for registration, he had firstly preferred application afresh u/s 12A of the IT Act for registration and thereafter, due to delay in deciding the second application for registration and realising the mistake, he preferred appeal with a delay of 55 days, that is how the delay in filing the appeal has taken place. The cause shown for delay in filing the application supported by affidavit remains uncontroverted and it would constitute sufficient cause within the meaning of Section 253 (5) of the IT Act. The rejection of application for condonation of delay has serious civil consequences upon the status of the Society, as by rejection of the application of the appellant Society, the Society would not be able to claim tax exemption under the provisions contained in Sections 11 12 of the IT Act, and that too in absence of counter-affidavit filed by the Revenue opposing the application for condonation of delay supported by affidavit. ITAT ought to have condoned the delay in preferring the appeal as there is no allegation that delay in filing the appeal is mala fide or it is deliberate, rather it is bona fide based on wrong advise of his counsel to reapply for registration. In that view of the matter, the order impugned passed by the Income Tax Appellate Tribunal is set aside and delay of 55 days in preferring the appeal is hereby condoned.

Summary

Issues Involved:

1. Whether the Income Tax Appellate Tribunal (ITAT) was justified in holding that the appellant failed to show sufficient cause for a delay of 55 days in filing the appeal.

Issue-wise Detailed Analysis:

1. Justification of ITAT's Decision on Delay:

The primary issue in this case was whether the ITAT was justified in rejecting the appellant's application for condonation of delay in filing an appeal. The appellant's appeal was delayed by 55 days, and the ITAT held that sufficient cause for the delay was not shown, leading to the dismissal of the appeal.

The appellant argued that the delay was caused by the wrong advice from their counsel, who suggested reapplying for registration under Section 12A of the Income Tax Act instead of filing an appeal against the rejection of their initial application for permanent registration. The appellant later realized the mistake and filed the appeal, which resulted in the delay. The Revenue did not file a reply to the application for condonation of delay, nor did it controvert the reasons provided by the appellant.

The court emphasized that the expression "sufficient cause" should be interpreted liberally to advance substantial justice. It noted that generally, delays in preferring appeals should be condoned in the interest of justice unless there is gross negligence, deliberate inaction, or lack of bona fides. The court referred to several Supreme Court judgments, which highlighted that the judiciary should focus on substantial justice rather than technicalities, and delays should be condoned if they are not deliberate or mala fide.

The court observed that the appellant's explanation for the delay was bona fide and not opposed by any counter-affidavit from the Revenue. It concluded that the appellant had shown sufficient cause for the delay, which was not deliberate or mala fide but was based on wrong legal advice. The rejection of the application for condonation of delay would have severe civil consequences for the appellant, as it would prevent the Society from claiming tax exemption under relevant sections of the Income Tax Act.

Conclusion:

The court set aside the ITAT's order rejecting the application for condonation of delay. It condoned the 55-day delay and restored the appeal to its original status, directing the ITAT to decide the appeal afresh on merits within three months. The court made it clear that it had not expressed any opinion on the merits of the case itself. The tax appeal was allowed with no order as to costs.