2025 (7) TMI 510 - AT - Income Tax

Condonation of delay in filing of Appeal - sufficient cause for the unreasonable admitted delay of 819 days - delay occured due to wrong advice of CA - desirability of liberal approach - HELD THAT - In cases where the assessee has not come up clean and the reasons given are not based on facts the delay cannot be condoned merely because of sympathy. The delay is undoubtedly substantial although the assessee has claimed that it was mainly on account of wrong advise of his CA who did not give correct advise at the relevant point of time. As a result the assessee who was banking upon the CA remained unaware of filing of appeal. The assessee has also submitted an affidavit of the concerned CA who was also presented before us during appeal. Though we do not find any reasons to conclude that the delay was malafide the fact remains that the assessee being an individual taxpayer should have been more conscious of his statutory obligations knowing fully well the implication thereof. It is further noticed from the assessment order that the assessee himself attended assessment proceedings. Therefore certain element of negligence is palpable on his part and putting all the blame on the tax consultant would not absolve him of his own responsibility in this regard. In the case under consideration it is nowhere evident that whether the assessee made any effort or attempt to contact his counsel engaged in the tax proceedings after passing of impugned order appeal order passed by the ld.CIT(A). Even in respect of the claim of deduction u/s 54 of the Act it appears from the record that the stand of the assessee attitude is dilatory and inconsistent which is evident from the fact that the assessee made only part compliance before the AO. Before the CIT(A) the assessee made a fresh claim of deduction even in respect of construction cost incurred before the date of sale of the impugned property. Before us the assessee took a fresh ground claiming that it he is eligible even for the purchase of a new property in Bangalore a claim which was hitherto not raised before the lower authorities. Seen in the light of these above stated facts and legal position emerging from the catena of judgement of hon ble Apex court like Oriental Aroma Chemical Industries Limited Vs. Gujarat Industrial Development Corporation 2010 (2) TMI 1121 - SUPREME COURT we conclude there was no sufficient cause for this unreasonable admitted delay of 819 days in filing appeal before the Bench which cannot be condoned. Appeal is dismissed on account of delay.

Summary

The core legal questions considered by the Appellate Tribunal (AT) in this judgment primarily relate to the condonation of delay in filing an appeal under the Income-tax Act, 1961. Specifically, the issues are:

1. Whether the delay of 819 days in filing the appeal against the order of the Commissioner of Income-tax (Appeals) (CIT(A)) can be condoned under Section 5 of the Limitation Act, 1963, considering the explanation offered by the assessee.

2. Whether the explanation provided by the assessee, including reliance on the Chartered Accountant's mistake and bonafide belief that the appeal had been filed, constitutes 'sufficient cause' to justify condonation of delay.

3. The broader legal principle concerning the interpretation and application of 'sufficient cause' under Section 5 of the Limitation Act in the context of delay condonation in income tax appeals.

4. Ancillary to the above, whether the delay condonation application can be granted in the absence of a satisfactory explanation for the entire period of delay, especially in cases of inordinate delay.

Issue-wise Detailed Analysis:

1. Legal Framework and Precedents on Condonation of Delay

The Tribunal examined Section 5 of the Limitation Act, which empowers courts and appellate authorities to condone delay if 'sufficient cause' is shown. The expression 'sufficient cause' has been interpreted in numerous Supreme Court decisions, emphasizing that it is not to be liberally construed to allow negligence or inaction to qualify as sufficient cause.

Key precedents relied upon include:

• Basawaraj and Ors vs The Special Land Acquisition Officer (AIR 2014 SC 746) - held that 'sufficient cause' excludes negligent or non-bonafide conduct, and requires valid explanation for each day of delay.
• Anshul Agarwal vs New Okhla Industrial Development Authority (2011) - reason for delay must be beyond individual's control.
• N. Balakrishnan v. M. Krishnamurthy (AIR 1998 SC 3222) - stressed the importance of limitation rules to prevent unending litigation and uncertainty.
• State of West Bengal vs. Administrator, Howrah Municipality (AIR 1972 SC 749) - delay must be bonafide, expeditious, and reasonable; negligent litigants cannot claim condonation.
• Surinder Kumar Boveja vs. CWT (287 ITR 52) - prolonged delay without due diligence cannot be excused.
• Rankak and Ors. v Rewa Coalfields Ltd. (AIR 1962 SC 361) - condonation is discretionary and requires explanation for delay on each day.
• Brijbandhu Nanda (44 ITR 688) - even one-day delay was not condoned due to lack of justification.
• Mewa Ram & Ors. v. State of Haryana (AIR 1987 SC 45) and Jagdish Lal and Others v. State of Haryana (1996) - delay cannot be condoned on sympathetic grounds alone.
• Oriental Aroma Chemical Industries Ltd. v. Gujarat Industrial Development Corporation (2010) - liberal approach for short delays, stricter approach for inordinate delays.

2. Court's Interpretation and Reasoning

The Tribunal undertook a detailed scrutiny of the facts and the explanation tendered by the assessee. The assessee's case was that the delay was caused due to a bonafide mistake by the Chartered Accountant (CA) and his staff, who failed to file the appeal within time despite the assessee's instructions. The assessee argued that the delay was unintentional, without malafide intent, and that the appeal had merit which would cause grave injustice if dismissed.

The Tribunal noted that while no malafide was found, the assessee, being an individual taxpayer and having personally attended the assessment proceedings, ought to have been more vigilant and conscious of statutory obligations. The Tribunal observed that the assessee's reliance on the CA's mistake did not absolve him of responsibility. There was no evidence that the assessee made any effort to follow up with the CA or take remedial steps after the CIT(A) order.

Further, the Tribunal found the delay of 819 days to be substantial and inordinate. The explanation was general and did not satisfactorily explain the delay for each day. The Tribunal also noted a pattern of dilatory and inconsistent conduct by the assessee in the proceedings, including making fresh claims before the Tribunal that were not raised earlier, indicating an attempt to prolong the matter.

The Tribunal emphasized that the law requires the appellant to demonstrate diligence and provide a valid, convincing explanation for the entire delay. Mere sympathetic grounds or general pleas are insufficient. The principle that "interest reipublicae ut sit finis litium" (it is for the general welfare that litigation has an end) was underscored.

3. Application of Law to Facts and Treatment of Competing Arguments

The assessee's argument for condonation rested on the CA's error and the bonafide nature of the delay. The Department vehemently opposed, highlighting the inordinate delay and lack of sufficient cause.

The Tribunal applied the settled legal principles, holding that the delay was neither satisfactorily nor convincingly explained. The assessee's failure to act diligently and the absence of any effort to remedy the delay after the CIT(A) order weighed heavily against condonation. The Tribunal rejected the plea that the delay was due to inadvertence or bonafide mistake, as the law requires more than mere inadvertence.

The Tribunal also rejected the contention that substantial justice should prevail over technicalities, clarifying that this principle does not permit condonation of delay without sufficient cause, especially when the delay is inordinate and unexplained.

4. Conclusions

The Tribunal concluded that no 'sufficient cause' was shown to condone the delay of 819 days in filing the appeal. The delay was substantial, unexplained for the entire period, and indicated negligence on the part of the assessee. The Tribunal held that condonation of such delay would undermine the legislative intent behind limitation provisions and the principle of finality in litigation.

Accordingly, the application for condonation of delay was rejected, and the appeal was dismissed solely on the ground of delay without adjudicating on the merits of the appeal.

Significant Holdings:

"Sufficient cause does not include the negligent manner in which the applicant had acted or/ and there was a want of bona fide, on his/her part. If a party does not act diligently or remains inactive, it cannot qualify as sufficient ground allowing the court to exercise discretion in favour of such a party."

"The law of Limitation is enshrined in the legal maxim 'Interest Reipublicae Ut Sit Finis Litium' (It is for the general welfare that a period be put to litigation)."

"The period of limitation has to be construed somewhat strictly as it has the effect of vesting for one and taking away right from the other."

"Delay cannot be condoned on sympathetic grounds alone when mandatory provisions are not complied with and delay is not properly, satisfactorily and convincingly explained."

"The courts do not enjoy unlimited and unbridled discretionary powers under Section 5 of the Limitation Act; discretion has to be exercised within reasonable bounds and informed by reasons."

"The assessee must show that he was diligent in taking proper steps and the delay was caused notwithstanding his due diligence."

"Inordinate delay without justifiable reason cannot be condoned as it would defeat the legislative intent and the principle of finality in litigation."

In sum, the Tribunal reaffirmed the strict approach towards condonation of delay in tax appeals, especially where the delay is prolonged and the explanation is inadequate. The assessee's failure to provide a convincing explanation for the entire period of delay, coupled with negligent conduct, led to rejection of the condonation application and dismissal of the appeal on delay grounds.