2019 (8) TMI 616 - HC - Income Tax

Condonation of delay - Tribunal power to condone the delay in filing the appeal by invoking Section 5 of the Limitation Act - HELD THAT - Rules of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life span for such legal remedy for the redress of the legal injury so suffered. There is no presumption that delay in approaching the court is always deliberate. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, utmost consideration shall be shown to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the explanation offered for the delay need not be accepted. It is also a salutary guideline that when delay occurred due to laches on the part of a litigant is condoned, the opposite party shall be compensated by payment of costs for the loss and hardship suffered by him (See Balakrishnan v. Krishnamurthy 1998 (9) TMI 602 - SUPREME COURT ). It is always not necessary to adduce medical evidence in applications filed under Section 5 of the Limitation Act to prove illness of a party. In the present case, there is nothing to show that the delay in filing the appeal before the Tribunal was deliberately caused by the assessee. In fact, the assessee would have derived no advantage or benefit by causing delay. In such circumstances, we are of the view that, the Tribunal should have adopted a liberal approach and condoned the delay of 132 days in filing the appeal before it. We find that the Tribunal failed to construe the expression sufficient cause occurring in Section 5 of the Limitation Act in its proper perspective. The substantial question of law raised in the appeal is answered in favour of the assessee and against the revenue.

Summary

Issues:
Assessment of income tax for the assessment year 2014-15 - Treatment of interest income as business income or income from other sources - Delay in filing appeal before the Income Tax Appellate Tribunal - Interpretation of "sufficient cause" in Section 5 of the Limitation Act.

Analysis:
The judgment pertains to an appeal by a Co-operative Bank against an order treating its interest income as income from other sources instead of business income for the assessment year 2014-15. The Assessing Officer's decision was upheld by the Appellate Authority, leading to an appeal before the Income Tax Appellate Tribunal, Cochin Bench. However, a delay of 132 days in filing the appeal was not condoned by the Tribunal, resulting in the dismissal of the appeal.

The main issue in this case revolves around the interpretation of "sufficient cause" under Section 5 of the Limitation Act. The Tribunal found that the appellant failed to provide a satisfactory reason for the delay, as the advocate was out of station and the Secretary of the society was reportedly sick. However, no medical certificate was produced to substantiate the illness claim, leading the Tribunal to dismiss the appeal based on the delay.

The High Court emphasized the need for a liberal approach in interpreting "sufficient cause" to ensure substantial justice and avoid technicalities. It highlighted that rules of limitation aim to prevent dilatory tactics rather than deny legitimate remedies. The Court noted that delay does not always imply deliberate action and must be assessed considering the circumstances of each case. In this instance, the Court opined that the delay was not intentional, and the appellant stood to gain no advantage from it.

The Court criticized the Tribunal for not adopting a liberal approach in condoning the delay, especially since there was no evidence of deliberate delay by the appellant. Consequently, the substantial question of law was resolved in favor of the assessee, and the appeal was allowed. The Court directed the condonation of the delay upon the payment of costs by the assessee to the department, reinstating the appeal before the Tribunal for a fresh consideration on merits.

In conclusion, the judgment underscores the importance of a balanced approach in interpreting legal provisions like "sufficient cause" under the Limitation Act to uphold the principles of justice and fairness in legal proceedings.