2019 (1) TMI 863 - HC - Income Tax

Condonation of delay - explanation to the delay which is of 507 days - Held that - Nevertheless when the delay is substantial, at least a proper explanation for the bulk of the period should be necessary. In the present case, principally, the explanation of the applicant, as noted above is that the ex-employee who received the order of the Tribunal put it in his drawer and left the company without intimating anybody. It was only about a month before filing of the appeal when his substitute new employee found the papers from the drawer. For multiple reasons, this explanation does not inspire confidence. We had inquired with the learned counsel for the applicant why the ex-employee had not filed affidavit. It was stated that he was a part time employee and now having left the service was not traceable. Mrs. Jaya Patel, the director of the company states that she came to know about the Tribunal s order on 30.5.2018. It is also stated, as noted earlier, that the new employee Mr. Naidu was the first one to to tumble upon the order lying in the drawer of the previous employee. The applicant has filed affidavit of said Mr. Naidu who states that he had found the order of the Tribunal on 8.8.2018 and showed the same to Mrs. Jaya Patel who was surprised to see it as she was not shown the same earlier. We also notice that on 26.10.2016 when the Tribunal heard the appeal, it was the husband of the director of the company who was present before the Tribunal and who even going by the account of the deponent, was heard by the Tribunal on appeal despite his reluctance. If that is so, nothing prevented the appellant company and its officials from making inquiries with the Tribunal through their Tax Practitioner to find out the outcome of the appeal. Appeal diminished.

Summary

Issues:
Delay in filing Tax Appeal, Explanation for the delay, Sufficiency of the explanation provided.

Analysis:
The judgment by the Bombay High Court involved two Motions filed for condonation of delay in respective Tax Appeals. The applicant, a company, sought condonation for a delay of 507 days in filing the Tax Appeal challenging the judgment of the Income Tax Appellate Tribunal. The applicant's explanation for the delay was that an ex-employee received the Tribunal order but did not inform the management, and it was only discovered by a new employee about a month before filing the appeal. Additionally, the husband of one of the directors was facing criminal proceedings, which was cited as another reason for the delay.

The Court emphasized that a substantial delay requires a proper explanation, and the applicant's explanation did not inspire confidence. The Court noted inconsistencies in the declarations made by the applicant and its officials. It was questioned why the ex-employee did not file an affidavit, and the applicant's reliance on a part-time employee for such a crucial task was deemed questionable. Furthermore, the Court highlighted that the director's husband had appeared before the Tribunal previously, indicating that the appellant company could have made inquiries about the appeal's outcome through their Tax Practitioner.

Ultimately, the Court found the explanation provided by the applicant to be insufficient and lacking credibility. The Notices of Motions were dismissed, leading to the dismissal of the Appeals as well. The judgment underscored the importance of a valid and reliable explanation for delays in legal proceedings, especially when the delay is significant, to ensure the integrity of the judicial process.