2014 (6) TMI 12 - HC - Income Tax

Rejection of application for condonation of delay Delay of 253 days Held that - Shaikh Ahmad, who was the senior partner of the firm was looking after the accounts and income-tax matters of the appellant-firm and therefore the explanation offered by the appellant-firm that on account of the death of Shaikh Ahmad, senior partner on 15 November 2011, the continuing partners, who are young and inexperienced, could not apply their mind immediately for taking legal opinion and for giving suitable instructions for filing an appeal - the assessee s case is that the appellant-firm has been making loss and the appellant was required to take legal opinion on the question arising from u/s 44AF and 43B of the Act. It is true that the delay is not of few days , but at the same time the delay is not inordinate and there is nothing to doubt the bonafides of the continuing partners of the appellant-firm for the delay in filing an appeal by applying the test for interpretation on expression sufficient cause the assessee has shown sufficient cause for condonation of 253 days in filing an appeal - The Tribunal did not apply the correct legal test and did not even consider the explanation offered by the assessee that the senior managing partner of the appellant-firm had died a few months before the CIT (A) passed the order adverse to the appellant-firm - the Tribunal committed substantial error of law in not considering the material on record If the Tribunal had any doubt about the stand adopted in the addendum dated 19 June 2013, the same should not have been brushed aside only on the ground that there was no affidavit filed in support of the said addendum. - thus, the order of the Tribunal is set aside Decided in favour of Assessee.

Summary

Issues:
1. Whether the Tribunal erred in rejecting the application for condonation of delay in filing an appeal against the order of CIT(Appeals)?
2. Whether the delay in filing the appeal was justified due to the circumstances presented by the appellant?
3. Whether the Tribunal considered the explanation provided by the appellant for the delay in filing the appeal?

Analysis:

Issue 1:
The appeal raised substantial questions of law regarding the rejection of the application for condonation of delay by the Income Tax Appellate Tribunal (ITAT). The Tribunal dismissed the appellant's application for condonation of 253 days delay in filing an appeal against the order of CIT(Appeals) dated 30 March 2012. The Tribunal's decision was challenged under Section 260-A of the Income Tax Act, 1961.

Issue 2:
The appellant, in its application for condonation of delay, cited reasons such as seeking legal opinion from counsel, which caused the delay. Additionally, it was revealed during the hearing that the managing partner of the appellant-firm had passed away, leading to a disruption in the business operations. The continuing partners, who were inexperienced, faced challenges in handling the affairs of the firm after the demise of the senior partner. The delay in seeking legal opinion on relevant provisions further contributed to the delay in filing the appeal.

Issue 3:
The Tribunal noted that the appellant had not provided specific details regarding the legal opinion sought, the timeline of seeking the opinion, and when it was received. However, upon further examination, it was established that the deceased partner had been primarily responsible for managing the income-tax affairs of the appellant-firm. The delay, although not insignificant, was justified considering the circumstances presented by the appellant. The High Court, applying the principles for condonation of delay, found that sufficient cause was shown for the delay in filing the appeal.

In conclusion, the High Court allowed the appeal, setting aside the Tribunal's order and directing a fresh hearing on the merits of the appellant's appeal for the assessment year 2006-07. The Court emphasized the importance of considering the circumstances and reasons for the delay in condoning such delays, especially when genuine reasons are presented by the appellant.