2010 (7) TMI 185 - HC - Income Tax

Delay in filing - Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income-tax (Appeals) declining to condone the delay of 178 days in filing the appeal ? Held that- the notice was admittedly served only on an employee of the company. The explanation was that since the company was on strike there was no regular working in the office and therefore it escape the attention of the concerned authority to prefer the appeal in time. The principle of natural justice warranted an opportunity to be extended to the assessee to challenge the order by which a civil consequence followed namely imposition of penalty to the tune of Rs. 1, 84, 00, 000 on the assessee. The delay of 178 days in filing the appeal ought to have been condoned. The Commissioner (Appeals) was to dispose of the appeal on merit.

Summary

Issues involved:
Delay in filing appeal before the Commissioner of Income-tax (Appeals), condonation of delay, principles of natural justice.

Analysis:
The case involved a delay of 178 days in filing an appeal before the Commissioner of Income-tax (Appeals) regarding a penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. The appellant attributed the delay to a strike in the company between March 2004 and October 2005, which disrupted regular office operations. The Commissioner of Income-tax (Appeals) dismissed the application for condonation of delay, alleging intentional delay to quash the penalty order on a technicality. The Tribunal upheld this decision, citing negligence on the appellant's part for not taking proper action to file the appeal within the prescribed time.

Upon review, the High Court considered the explanation provided by the appellant regarding the strike situation and found it to be genuine. The court emphasized the principles of natural justice, stating that the appellant should have been given an opportunity to challenge the penalty order, especially considering the significant financial consequence imposed. The court held that the delay of 178 days should have been condoned, disagreeing with the decisions of the Commissioner of Income-tax (Appeals) and the Tribunal. Consequently, the court set aside the previous orders, allowed the appeal, and directed the Commissioner of Income-tax (Appeals) to restore and dispose of the appeal on its merits and in accordance with the law.

In conclusion, the High Court ruled in favor of the appellant, emphasizing the importance of considering genuine reasons for delay and upholding principles of natural justice in tax matters. The court's decision highlighted the need for a fair opportunity for appellants to challenge significant penalties, ultimately leading to the allowance of the appeal and the restoration of the case for further proceedings.