2009 (7) TMI 728 - HC - Income Tax

Condone the delay Rectification of mistakes - Time limitation - Held that - The appellant has shown just and sufficient cause for the delay in filing the appeal, it cannot be said that the delay is mala fide or intentional. Thus, the appeal is allowed, the order of the Tribunal is set aside. The matter is remanded to the Tribunal to decide the appeal on the merits of the case after giving an opportunity of hearing to the appellant in accordance with law.

Issues Involved:
1. Whether the Income-tax Appellate Tribunal was correct to reject the application under section 5 of the Limitation Act by refusing to condone the delay of 279 days.
2. Whether the Tribunal's order rejecting the application under section 5 of the Limitation Act is sustainable in view of various judicial decisions.

Detailed Analysis:

Issue 1: Rejection of Application under Section 5 of the Limitation Act

The appellant's appeal was dismissed by the Tribunal as time-barred due to a delay of 279 days. The appellant argued that the delay was due to the time taken in pursuing a rectification application under section 154 of the Income-tax Act, based on the advice of their counsel. The counsel had advised the appellant to first seek rectification of the order dated September 25, 2002, which led to the delay. The Tribunal rejected the appeal on the grounds that the delay condonation application was not filed along with the memo of appeal and that there was no affidavit from the local counsel to justify the delay.

Upon reviewing the facts, it was noted that the appellant had deposited the statutory fees and miscellaneous expenses on December 21, 2002, and had filed the application under section 154 within the stipulated time. The delay was not intentional or negligent but was based on the bona fide belief formed on the counsel's advice. The Tribunal's rejection of the appeal on technical grounds, such as the incorrect date mentioned in the memo of appeal and the absence of the local counsel's affidavit, was deemed insufficient to deny condonation of delay.

Issue 2: Sustainability of Tribunal's Order in View of Judicial Decisions

The appellant relied on various judicial decisions to support the contention that the delay should be condoned. The Supreme Court in cases like Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy has held that the term "sufficient cause" should receive a liberal construction to advance substantial justice. The court emphasized that rules of limitation are meant to ensure that parties seek their remedies promptly, not to destroy their rights.

The court also referred to the case of State of West Bengal v. Administrator, Howrah Municipalities, where it was held that acting on wrong advice from counsel does not constitute negligence that would disentitle a party from pleading sufficient cause under section 5 of the Limitation Act. The court further noted that in the case of Bharat Auto Center v. CIT, a similar situation was addressed where the delay caused by the pendency of an application under section 154 was considered sufficient cause for condonation.

The court concluded that the appellant had shown just and sufficient cause for the delay, which was neither mala fide nor intentional. The Tribunal's order was set aside, and the matter was remanded to the Tribunal to decide the appeal on its merits after providing an opportunity for a hearing to the appellant.

Conclusion:
The appeal was allowed, and the Tribunal's order dated July 8, 2005, was set aside. The case was remanded to the Tribunal to decide the appeal on its merits, emphasizing a liberal and justice-oriented approach in matters of condonation of delay.

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