POWER OF HIGH COURT TO CONDONE DELAY INFILING OF APPEALS

[Mr. M. GOVINDARAJAN]

Chapter XX of the Income Tax Act, 1961 ('Act' for short) deals with appeals and revision. Part CC of Chapter XX deals with appeals to High Court. Section 260A of the Act provides that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal if the High Court is satisfied that the case involves a substantial question of law. The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal shall be filed within one hundred and eighty days from the date on which the order appealed against is received by the assessee or the Chief Commissioner or Commissioner in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. Where the High Court is satisfied that a substantial question of law is involved in any case it shall formulate that question.

Sec. 254 of the Act deals with the orders of the Appellate Tribunal. Sec. 256 deals with the filing statement of case to the High Court. It provides that the assessee or the Commissioner may, within sixty days of the date upon which he is served with notice of an order passed under Sec. 254 by application in the prescribed form accompanied where the application is made by the assessee by a fee of Rs.200/- require the Appellate Tribunal to refer to High Court any question of law arising out of such order and, subject to the other provisions contained in this Section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application draw up a statement of the case and refer it to the High Court. The Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period allow it to be presented within a further period not exceeding thirty days.

If the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of such refusals, apply to the High Court and the High Court may, if it is not satisfied with the correctness of the decisions of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any requisition, the Appellate Tribunal shall state the case and refer it accordingly.

The above indicate the provisions relating to filing of appeal before the High Court and the limitation to file the appeal. But in the above said provisions there is no indication of the power of the High Court to condone the delay if the appeal is filed belatedly. Some High Courts, while interpreting provisions of Section 260A held that the High Court has the power to condone delay in filing of appeal.  Some High Courts have held otherwise.

In 'Ornate Traders Private Ltd., V. Income Tax Officer' - [2009 -TMI - 33579] - Bombay High Court. the High Court held that the provisions of Sec. 5 of the Limitation Act, 1963 are applicable to the appeals filed under Sec. 260A of the Income Tax Act, 1961 and thus the High Court is having power to condone the delay in case of appeals filed belatedly.

In 'Asst. Commissioner of Income Tax V. Shubash Traders' (2009) 318 ITR 402 (MP) the Court held that Section 260A of the Income Tax Act, 1961 permits the assessee or the Revenue to prefer an appeal within 120 days from the date on which the order appealed against is received by the assessee or the Revenue. There is no provision for condonation of delay prescribed in Section 260A which stands in contra-distinction to Sections 245 and 253.   There need not be mandatory exclusion of the application of the provisions of the Limitation Act, 1963 by special law and there can be necessary exclusive by the language in which the provision is couched and regard being had to the intendment of the legislature. The applicability of the Code of Civil Procedure, 1908 to appeals to the High Court under Section 35G of Central Excise Act, 1944 and Sec. 260A (7) of Income Tax Act, 1961 is really no assistance inasmuch as that only postulates that the provisions of Code of Civil Procedure, 1908 relating to appeals to High Court shall apply to appeals under the provisions of Section 260A to the High Court.  Section 260A cannot be construed to confer the power on the High Court to condone the delay.

In 'Commissioner of Income Tax V. Mohamed Farooq' - 2009 -TMI - 34498 - Allahabad High Court that the Income Tax Act, 1961 has provided for a limitation period for filing an appeal to High Court and the period of limitation is different from the period prescribed by the schedules to the Limitation Act, 1963.   Sec. 260A of the Income Tax Act prescribes a period of limitation of 120 days whereas Article 116 of the Schedule of Limitation Act provides a period of limitation of 90 days for filing appeals to High Court. For express provision of Section 4 to 24 of Limitation Act 1963 the special law need not provide for its exclusions in the provision providing for appeals itself and expression exclusion can be inferred from the scheme of the Act. In a case where special law does not exclude the provisions of Sec. 4 to 24 of the Limitation Act, 1963 by an express provision, it would nonetheless be open to the Court to examine whether and to what extent the nature of these provisions or the nature of the subject matter and the scheme of the special law excludes their operation. When a special law does not provides for application of Sec. 5 of the Limitation Act it is expressly excluded.  In the absence of any provision in Sec. 260A of the Income Tax Act conferring jurisdiction to condone the delay in filing appeal and in view of the scheme of Income Tax Act, 1961 the provisions of Sec. 4 to 24 of the Limitation Act, 1963 would not be applicable in the case of an appeal preferred under Sec. 260A of the Income Tax Act.  In view of the language used in Order XLI Rule 3A of Code of Civil Procedure, 1908 it does not give any additional right to claim condonation under the provision of Section 260A of the Income Tax Act, 1961.

In 'Asst. Commissioner of Income Tax V. Mahavir Prasad Varma' - 2009 -TMI - 34881 - Chhattisgarh High Court the Court held that the Income Tax Act, 1961 is a special law. The nature of the remedy provided therein are such that the legislature intended it to be a complete code by itself which alone should govern the several matters provided by it. The scheme of the Act supports the conclusion that the time limit prescribed under Sec.260A to file an appeal before the High Court is absolute and the limitation cannot be extended by the court by involving the powers of Section 5 of Limitation Act, 1963.

In the matter of Velingkar Brothers - 2008 -TMI - 13248 - Bombay High Court it was held that Section 260A itself provides that the provisions of Code of Civil Procedure relating to appeals as far as possible are applicable to the appeals under Section 260A. It would mean that Sec. 260A is not exhaustive of all the facts, aspects and matters with reference to the appeals under Sec. 260A. The High Court being the superior court the power to condone the delay in filing the appeal must be read to be existent, more so by virtue of Sec. 29(2) of Limitation Act unless there is clear indication of its exclusion by implication. When the statute is silent the presumption is not drawn automatically about the exclusion of Sec. 29(2) or for that matter Sec.5 of the Limitation Act. There is nothing to indicate that the application of Sec. 29(2) is excluded except providing a special limitation. Section 260A does not necessarily imply the exclusion of Sec.4 to 24 of the Limitation Act. Therefore Sec. 5 of the Limitation Act is applicable in case of appeals filed under Sec. 260A.

In the Finance Bill, 2010 it is proposed to retrospectively insert sub section (2A) in Section 260A of the Income Tax Act to specifically provide that the High Court may admit an appeal after the expiry of the period of one hundred and twenty days, if it is satisfied that there was sufficient cause for not filing the appeal within such period. Consequential amendments on similar lines are proposed to be made in Section 27A of the Wealth Tax Act. These amendments are proposed to take effect retrospectively from 01.10.1998.

The Finance Bill, 2010 further proposes to retrospectively insert sub section (2A) in Section 256 so as to empower the High Court to admit an application after the expiry of the period of six months, if it is satisfied that there was sufficient cause for not filing the same within such period. Consequential amendments on similar lines are proposed to be made in Section 27 of the Wealth Tax Act. These amendments are proposed to take effect retrospectively from 01.06.1981.