2025 (4) TMI 301 - HC - Income Tax

Delay of 1797 days in filing an appeal before ITAT - HELD THAT - As going through the reasons assigned for delay in filing the appeal this Court is of the considered opinion that although a delay cannot be condoned without sufficient cause but the merits of the case cannot be discarded solely on the technical grounds of limitation. A liberal approach should be taken in condoning delays when the limitation ground undermines the merits of the case and obstructs substantial justice. Hence this Court finds that the appellant has been able to put forth sufficient cause for the delay in filing the appeal before ITAT.The delay in filing an appeal before the ITAT is herby condoned.

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment was whether the delay of 1797 days in filing an appeal before the Income Tax Appellate Tribunal (ITAT) could be condoned. The appeal was initially dismissed by the ITAT on the grounds of being time-barred. The court needed to determine if "sufficient cause" was shown for the delay and whether the merits of the case warranted consideration despite the procedural lapse.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework revolves around Section 260-A of the Income Tax Act, 1961, which allows appeals to be filed against orders of the ITAT. The concept of "sufficient cause" for condonation of delay is central to this case. The court referred to precedents set by the Supreme Court in Mool Chandra Vs. Union of India and Inder Singh Vs. State of Madhya Pradesh, which emphasize examining the cause of delay rather than its length.

Court's Interpretation and Reasoning

The court interpreted "sufficient cause" as a flexible concept that should be applied liberally to ensure justice is served. It noted that procedural technicalities should not overshadow the substantive merits of a case. The court highlighted that the Supreme Court has consistently held that if the cause for delay falls within the scope of "sufficient cause," it should be condoned irrespective of the delay's length.

Key Evidence and Findings

The appellant argued that the delay was due to unavoidable circumstances, including family issues, relocation, and lack of communication with tax consultants. The appellant's brother was involved in various litigations, which caused distress and disruption. The appellant claimed not to have received notices from the CIT(A) and only became aware of the situation in 2024. The court found these reasons constituted "sufficient cause" for the delay.

Application of Law to Facts

The court applied the principles from the precedents to the facts, recognizing that the appellant's circumstances justified the delay. It determined that the appellant had not acted negligently or with malafide intent. The court noted that the delay during the COVID-19 pandemic was already condoned by the Supreme Court's suo moto order, reducing the unexplained delay to 990 days.

Treatment of Competing Arguments

The respondent argued that the appellant failed to demonstrate sufficient cause for the delay, warranting dismissal of the appeal. However, the court favored a justice-oriented approach, prioritizing the merits of the case over procedural technicalities. It emphasized that justice should not be denied due to rigid adherence to limitation periods when substantial rights are at stake.

Conclusions

The court concluded that the appellant had successfully demonstrated "sufficient cause" for the delay. It set aside the ITAT's order dismissing the appeal on limitation grounds and directed the ITAT to hear the appeal on its merits, ensuring both parties have a fair opportunity to present their case.

SIGNIFICANT HOLDINGS

The court established that:

"A liberal approach should be taken in condoning delays when the limitation ground undermines the merits of the case and obstructs substantial justice."

"If no fault can be laid at the doors of the appellant and cause shown is sufficient, then both the Tribunal and the High Court were in error in not adopting a liberal approach or justice-oriented approach to condone the delay."

Core Principles Established

1. The length of delay is secondary to the cause of delay when considering condonation.

2. Procedural technicalities should not prevent the examination of a case's merits.

3. A justice-oriented approach should be prioritized to ensure substantial justice.

Final Determinations on Each Issue

The delay in filing the appeal before the ITAT was condoned, and the matter was remanded back to the ITAT for a fresh hearing on merits, with directions to provide a reasonable opportunity for both parties to be heard.

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