Condonation of delay in filing appeal due to rectification proceeding is also desirable. A need of review of order of the Supreme Court, read with judgment of High Court, in the case of SPINACOM INDIA PVT. LTD is desirable

[CA DEV KUMAR KOTHARI]

Judgment under study links and  references with broad notes:

1. SPINACOM INDIA PVT. LTD. VERSUS COMMISSIONER OF INCOME TAX 1- 2018 (8) TMI 930 - SUPREME COURT OF INDIA  SLP of assesse dismissed.
2. The above appeal wasagainst order and judgment in case Agnity Technologies Pvt. Ltd. Versus Commissioner of Income Tax-1 - 2017 (9) TMI 1716 - DELHI HIGH COURT.

Related provisions for study by readers:

Rectification provisions like S.154 and 254 of the Income-tax Act,1961.

Period of limitations in various proceeding under tax laws and provision of Limitation Act in relation to originally time allowed and scope of condonation of delay in filing of petitions and appeal etc.

Main issue:

The dispute before the High Court was about condonation of delay in filing an appeal before the  High Court. It appears that the assesse had taken only one plea that when a rectification petition u/s 254.2 was filed before the Ld. Tribunal, delay due to pendency of an application u/s 254(2) of rectifying 'mistakes apparent from the record' should be allowed.

It seems that there was no other reason given for delay in filing of appeal as appears on reading of the judgment of the High Court.

The High Court observed and  held as follows in paragraph 4 and 5: 

             “ It is then submitted by Mr. Kapoor that the ITAT has been rejecting applications filed under Section 254(2) of the Act on the ground that the applicant has in the meanwhile filed an appeal in the High Court under Section 260 A of the Act. While the correctness of such an order if challenged would have to be examined on a case by case basis, it cannot possibly constitute a sufficient justification for not filing the appeal under Section 260 A of the Act in time.

5. No satisfactory reason has been provided by the Appellant for the extraordinary delay of 439 days in the filing the appeal.”

Result:

As noted earlier the honourable Supreme Court has also dismissed SLP of assesse. As a result we find that the assesse is deprived of justice.

Mistake of assesse/ his counsels:

It appears that condonation of delay was sought only for reason of rectification petition. No other reason for delay was made out. In absence of no other reason, the COD was not allowed by honourable High Court. Now assesse seems to have no effective remedy except to pursue Rectification Petition ( which seems to be pending at the time of hearing before High court) or in case Rectification petition is dismissed then to file appeal against the same. Possibility of appeal against order in original appeal read with order on rectification petition can be explored.

Rectification of mistakes can be a way to render expeditious justice:

Many times mistakes in order takes place which can be rectified for expeditious justice. This can include even mistakes which can be rectified based on finality of legal position by way of subsequent orders or judgments. The Supreme Court has taken liberal view on the issue of rectification in many judgments. 

Tribunal is a final fact finding authority:

Tribunal is final fact finding authority. Therefore if there is any mistake in its order on facts or on legal point the same should be allowed to be rectified to render justice expeditiously.

Mistakes can be in recording of facts and order due to omission of  the Tribunal (or other authority)  to consider  documents on records and  binding precedence.

A mistake in order of Tribunal must preferably be rectified by Tribunal so that injustice caused due to mistake of Tribunal is  removed by making correction in order, by Tribunal and there is no need to approach High Court and then to the Supreme Court.

Similarly mistakes in orders by other authorities should also be rectified.

Unfortunately mistakes are generally not rectified:

Unfortunately  mistakes even if apparent from records are  not rectified by authorities and even Tribunal and petitions are dismissed summarily, by holding  that  there is no mistake apparent from records, or the mistake is not rectifiable or it will amount to review, which is not permissible.

This is sometimes against well settled legal position that  a mistake , apparent from record should be rectified to render justice and that for mistake of Tribunal (or other authority) party to lis should not suffer.

Rectification by Tribunals and other authorities can reduce litigation:

If rectification petitions are considered and decided large number of appeals and other proceedings can be avoided. This will reduce litigation and pending cases. In fact, rectification provisions and practices for rectification should be made more liberal so that any party to dispute does not suffer for the mistake of Tribunal or Court.

Rectification vis a vis appeals:

If a matter can be rectified, and grievance of suffering party can be resolved / satisfied, there will be no need to file an appeal against the order. However, because rectifications are not done, as they should be, one need to file an appeal also for the same matte. Rectification proceeding can be very much use full for the assesse and the tax authorities both. Therefore, when a rectification petition is made and it is found to be in pursuit of rectification of mistake committed by Tribunal or Court, it must be considered as an alternate and effective process. If rectification is allowed, after allowing parties hearing, it can render justice.

Appeal against original order read with rectification order:

Rectification petition can be first step for seeking same relief which can also be sought by filing an appeal before higher forum of Court. If rectification is allowed an all parties are satisfied with it, there will not be further litigation. If a party is not satisfied with order allowing or not allowing rectification, then aggrieved party can file an appeal.

In case a rectification petition is allowed, the party who got relief will have no reason to file appeal. In case an appeal has already been filed, it can be withdrawn.

Therefore, rectification proceedings should be considered as an alternate and effective remedy to avoid un-necessary appeals. This should also be considered as an extension of original proceeding from which rectification petition arose.

When an order is passed on rectification petition either allowing rectification or not allowing the same on any issue, the original order need to be read with rectification order also.

Therefore, time taken in pursuing rectification petition / process should be allowed as extension of time for filing of appeal, in case rectification is not allowed.

Mandatory provision to follow binding precedence:

If we really want to reduce litigation there must be provisions to follow binding precedence by authorities and Tribunals. There should also be provision that in case binding precedence followed now, is reversed then the order can further be rectified based on change in legal position due to new judgments/ new binding precedence. If that be done there will be lot of reduction in litigation.

However, unfortunately no one seems to be interested in reducing litigation because litigation is considered a big service sector providing jobs for Judges, Members of Tribunals, and professionals engaged in litigation. Unfortunately we find that the persons engaged in litigation (even un-necessary and frivolous litigation) are rewarded much higher than persons on same calibre in other fields. This is one of reason of  brain drain and unproductive work.