2025 (7) TMI 319 - HC - Income Tax

Delay in filing appeals u/s 260A - appeal was preferred with a delay of 40 days - Applicants claim that they were unaware of the order passed - whether the copy of the order passed by the Tribunal when served upon the Chartered Accountant is sufficient service and whether it can be construed as copy received by the assesse/applicant ? - Appearance by authorised representative HELD THAT - The authorised representative for the purposes of the Act of 1961 means a person authorised by the assessee in writing to appear on his behalf being - (iv) an accountant The explanation appended to the Section further clarify that accountant means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act 1949 who hold a valid certificate of practice under sub-section (1) of section 6 of that Act. There can be no doubt in our mind that the assessee can be represented by a Chartered Accountant and he may act as his authorised representative. In light of the aforesaid scheme of the statute it is evidently clear that upon the order being passed u/s 254 by the Appellate Tribunal it shall send a copy of the order to the assessee and even the Rules make it imperative for the Tribunal after the order is signed to cause it to be communicated to the assessee and to the Commissioner. The term cause it to be means to make something happen or to bring something about. A conjoint reading of the provision of the Act along with Rule 35 clearly provide that after the order is passed the Tribunal shall communicate the order to the assessee and there is not escape from this provision. It is the stand adopted by the Revenue that communication of the order passed by ITAT Panaji to the Chartered Accountant who was representing the assessee in the proceedings before the Tribunal is akin to the communication to the assessee i.e. the Applicant. We however disagree with the said proposition for the reason which we would reveal in the paragraph to follow. The statutory scheme cast a burden upon the Tribunal to ensure that the assessee is made aware of the order so that within 120 days as prescribed he can file an appeal before the High Court. Since the facts involved clearly reveal that the copy of the order against which the appeal is preferred is received by the Chartered Accountant who has filed his affidavit categorically stating that he is unable to recollect if the copies were given by him to Mrs Neelam Phatarpekar or the legal heirs of Mr Ajit Phatarpekar in the year 2016 and since we are of the view that service upon the Chartered Accountant do not absolve the Tribunal of serving the copies of the order upon the assesse who has adopted a specific stand before us that it is only upon receipt of the recovery notice the applicant gained knowledge about the impugned order and thereafter preferred an application for certified copy of the order which was received on 17.05.2024 and the appeal was preferred with a delay of 40 days. We are convinced with the justification of the Applicant that she was unaware of the impugned order being passed on 14.09.2016 until April 2024 when she was served with the recovery notice for the Assessment Year 2009-2010 thereafter steps were taken by her so as to institute the appeals against the said order which is filed beyond the period of limitation prescribed u/s 260(A). As the Applicant had no knowledge of passing of the impugned order only on receipt of the certified copy of the same she has preferred the Appeals. We are of the view that the Appeals deserve to be decided on merits by condoning the delay that has occurred in instituting the Appeals. The applications are therefore made absolute in terms of the prayer clauses by condoning the delay of 40 days from the date of receipt of the impugned order.

The core legal questions considered by the Court revolve around the condonation of delay in filing appeals under Section 260A of the Income Tax Act, 1961, specifically:

1. Whether the delay of 40 days in filing the appeals after receipt of the certified copy of the Tribunal's order can be condoned as bona fide under Section 260A(2A).

2. Whether the receipt of the Tribunal's order by the Chartered Accountant, who was the authorised representative of the assessee before the Tribunal, constitutes effective service on the assessee for the purpose of limitation under Section 260A.

3. The interpretation of the statutory provisions relating to communication of orders by the Appellate Tribunal to the assessee and the role and authority of an authorised representative, particularly a Chartered Accountant, in receiving such communication.

4. The applicability and relevance of precedents concerning service of orders on authorised representatives and the consequent impact on the limitation period for filing appeals.

Issue-wise Detailed Analysis:

1. Condonation of Delay under Section 260A(2A) of the Income Tax Act

The legal framework under Section 260A provides that an appeal to the High Court against the Appellate Tribunal's order must be filed within 120 days from the date the order is received by the assessee. Sub-section (2A) permits condonation of delay if the Court is satisfied that there is sufficient cause for not filing within the prescribed period.

The Court examined the factual matrix wherein the impugned order was passed on 14.09.2016, but the applicant claimed ignorance of the order until April 2024, when a recovery notice was served. The certified copy of the order was obtained on 17.05.2024, and the appeal was filed with a 40-day delay thereafter.

The applicant's counsel submitted that the delay was bona fide, caused by the applicant's unawareness due to the demise of her husband, who was handling the tax matters, and that the appeal was filed promptly upon receipt of the certified copy.

The Revenue opposed, asserting the delay was actually 2961 days (over 8 years), arguing that the applicant was aware of the order as the authorised representative had received the copy in 2016.

The Court considered the bona fide nature of the delay and the applicant's affidavit supported by the communication from the Chartered Accountant, who could not confirm whether the order copies were communicated to the applicant or legal heirs at the relevant time. The Court accepted that the applicant gained knowledge only upon receipt of the recovery notice and thereafter acted diligently.

Accordingly, the Court found sufficient cause to condone the delay of 40 days from the date of receipt of the certified copy.

2. Whether Receipt of Order by Chartered Accountant Constitutes Receipt by the Assessee

The Court analyzed Section 254(3) of the Income Tax Act, which mandates the Appellate Tribunal to send a copy of the order to the assessee and the Principal Commissioner or Commissioner. Rule 35 of the Income-tax (Appellate Tribunal) Rules, 1963, further requires the Tribunal to cause communication of the signed order to the assessee and the Commissioner.

Section 288 defines an authorised representative, including a Chartered Accountant, who may appear on behalf of the assessee before income tax authorities.

The Revenue's contention was that service of the order on the Chartered Accountant, as authorised representative, equated to service on the assessee for the purpose of limitation.

The Court rejected this contention, emphasizing that while a Chartered Accountant is an authorised representative for appearances and submissions, the statutory scheme requires communication of the order specifically to the assessee. The Court distinguished the role of a Chartered Accountant from that of a legal practitioner (advocate), who, by virtue of a Vakalatnama, may be authorised to accept service of documents on behalf of the client.

The Court held that the Chartered Accountant does not act as an agent empowered to accept service of orders, and thus receipt by the Chartered Accountant does not amount to receipt by the assessee.

The Court further noted that the statutory language "cause it to be communicated" imposes a duty on the Tribunal to ensure the assessee receives the order, which was not fulfilled here.

3. Treatment of Precedents on Service of Orders and Role of Authorised Representatives

The Court examined the decision of the Allahabad High Court in Sultanpur Kshetriya Gramin Bank v. Joint Commissioner of Income Tax, which held that service on an advocate authorised by Vakalatnama was sufficient service on the assessee. The Court distinguished this precedent on the basis that a Vakalatnama confers authority to accept service, whereas no such authority was conferred on the Chartered Accountant in the present case.

The Court also considered the Orissa High Court decision in Nandram Hunatram v. Commissioner of Income-tax, which held that in absence of express authorisation, service on a lawyer does not constitute service on the assessee for limitation purposes. The Court found this decision more applicable, as the Chartered Accountant here was not expressly authorised to receive the order.

The Court rejected the application of Order 5 Rule 12 of the Code of Civil Procedure invoked by the Revenue, noting that it applies to agents empowered to accept service, which was not the case here.

4. Application of Law to Facts and Conclusion on Service and Limitation

Given the statutory mandate and the factual scenario where the Chartered Accountant received the order but could not confirm delivery to the assessee, and the assessee's own lack of knowledge until 2024, the Court concluded that the limitation period under Section 260A commenced only upon actual receipt of the order by the assessee.

Therefore, the appeal filed with a 40-day delay after receipt of the certified copy was within a reasonable period and the delay was condonable.

Significant Holdings:

"The statutory scheme cast a burden upon the Tribunal to ensure that the assessee is made aware of the order so that within 120 days as prescribed, he can file an appeal before the High Court."

"The Chartered Accountant since is not also authorised specifically to accept copy of the order, cannot be said to be a recognised agent of the Assessee."

"Receipt of the order by the Chartered Accountant does not absolve the Tribunal of serving the copies of the order upon the assessee."

"The appeal deserves to be decided on merits by condoning the delay that has occurred in instituting the Appeals."

The Court's final determination was to allow the applications for condonation of delay, holding that the appeals filed beyond the prescribed period but within 40 days of actual receipt of the certified copy of the order were maintainable. The appeals were directed to be listed for hearing on merits.

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