Condonation of Delay in Filing Application or Appeal

Introduction

The concerned authority and the courts can condone delay in filing of appeal or application within the statutory period, if the appellant or the applicant is able to show that there was ‘sufficient cause’ in such delay. The Courts have laid down that the delay cannot be condoned merely on sympathy or compassion but needs to be condoned if sufficient cause for delay is shown. There should be no mala fides, and cause should not be put forth as part of a dilatory strategy.

1. About

1.1. What is condonation of delay?

There are numerous occasions when a taxpayer is unable to exercise his rights to file applications/preferring appeals within the period prescribed by the Act. The concerned Authority/Court, before whom the application/appeal is to be filed, is generally provided with the power to condone the delay in filing the application/preferring the appeal, if a sufficient cause is shown in not exercising this right within the statutory period.

As per Section 5 of the Limitation Act, any appeal or any application may be admitted after the prescribed period, if the applicant/appellant satisfies the Court that he had sufficient cause for not preferring an appeal, or making an application, within such period. The Courts held that the Income-tax Act, being a special enactment, is a complete, self-contained code and is not governed by the Limitation Act, 1963, in respect of limitation or condonation of delay. The Limitation Act applies only to civil courts and not to quasi-judicial Tribunals

1.2. Power to condone the delay

A delay in making an application or filing an appeal for which a period of limitation is prescribed under the Income-tax Act is condoned only if there is a specific provision in the relevant section itself enabling such condonation. The following list enumerates whether the Income-tax Act contains provisions for condonation of delay in filing of various appeals or applications:

(a) There is no provision for condonation of delay in filing of an application for rectification of an order under Section 287.

(b) There is no power for condonation of delay, if a rectification application is filed before the Tribunal under Section 363 beyond the statutory period

(c) DRP has no power to condone the delay in filing of objection beyond the stipulated period from the date of receipt of the draft assessment order

(d) The Commissioner has the power to condone the delay in filing of revision applications under Section 378.

(e) The Joint Commissioner (Appeals) or the Commissioner (Appeals) may admit an appeal after the expiry of the period provided in Section 358 if he is satisfied that the appellant had sufficient cause for not presenting the appeal within that period.

(f) The Tribunal may admit an appeal or cross-objection, under Section 362, after the expiry of the prescribed period, if it is satisfied that there was sufficient cause for not presenting it within that period.

(g) The High Court may admit an appeal under Section 365, after the expiry of the prescribed period, if it is satisfied that there was sufficient cause for not presenting it within that period.

(h) The High Court may admit an appeal under Section 389 against an order passed by the Board for Advance Rulings, after the expiry of the prescribed period, if it is satisfied that there was sufficient cause for not presenting it within that period.

(i) The Principal Commissioner or Commissioner can condone the delay in filing an application for registration under Section 332 by an NPO.

1.3. When can a delay be condoned?

Delay in filing of appeal or application within the statutory period can be condoned by the concerned authority and the Courts, if the appellant or the applicant is able to show (and prove) that there was ‘sufficient cause’ in such delay. The meaning of the expression ‘sufficient cause’ can be understood with the assistance of the legal ratio laid down by the Courts, which have been enumerated below.

1.3-1. Delay should not be attributed to negligence

The words "sufficient cause" must receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fides is imputable to the appellant

1.3-2. A justice-oriented approach should be taken

The expression should be considered with pragmatism, in a justice-oriented rather than a technical approach, to explain everyday delay

1.3-3. No undue advantage to the party at fault

By not taking steps within the time prescribed, a valuable right has accrued to the other party, which should not be lightly defeated by condoning delay in a routine manner. However, where no undue advantage has been derived by the assessee by filing the appeal late, and no vested right of the revenue can be said to have been disturbed, the delay should be condoned.

1.3-4. Cause should be sufficient

The Chandigarh Tribunal

(a) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

(b) Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. In contrast, when delay is condoned, the most that can happen is that a cause is decided on the merits after hearing the parties.

(c) ‘Every day"s delay must be explained’ does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational, common-sense, pragmatic manner.

(d) When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim a vested right in the injustice caused by a non-deliberate delay.

(e) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk, and

(f) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

1.4. Sufficient cause to be explained through an affidavit

Explanation of sufficient cause should be explained through an affidavit, with all the relevant materials to be filed along with that affidavit. The affidavit should be in proper legal format and contain proper verification. The affidavit should be duly sworn as required under Rule 9 of the ITAT Rules, 1963. It should be properly endorsed by the notary regarding the oath of affirmation before him by the executant of the affidavit

1.5. Circumstances held as sufficient cause

1.5-1. Delay due to the advice of counsel

The courts view applications involving lawyers" lapses more leniently than those involving litigants" lapses. If the appeals could not be filed in time due to counsel"s failure to attend the case, the appellants could not be faulted

1.5-2. Bonafide delay by CA

Where the Chartered Accountant filed an affidavit stating that he had received instructions to file the appeal well in time but the delay of one month was caused due to some staff problem in his office and the assessee was in no way responsible for the delay, it was held that there was no vagueness in the averments made by the CA, insofar as the reason for late filing of the appeal was concerned

1.5-3. Other circumstances constitute sufficient cause

(a) Death of husband

(b) Personal problems of counsel of the appellant

(c) Financial hardship to pay tax due at the relevant time

(d) Confusion on the jurisdiction of the Assessing Officer

(e) Change of Managing Director of the Government Company

(f) Where the return could not be filed within the stipulated time due to an interim stay on the audit report

(g) Delay in filing of appeal as a result of curfew in the city at the relevant time

(h) A difference of opinion between two officers

1.6. Circumstances not held as sufficient cause

1.6-1. Negligence of employees

In one case, it was explained that the papers were kept in the assistant"s drawer and went unnoticed for 4 months. No affidavit of the assessee as well as of the concerned employee was filed, there was no authentication of the facts why the issue was not taken care of for 4 months. It was held that there was gross negligence on the part of the assessee and the AR

1.6-2. No evidence of illness

The Court denied any relief on grounds of illness, as other partners could take steps to file appeals on time when the Managing Partner was ill

1.6-3. Other circumstances that do not constitute sufficient cause

(a) Time taken in discussions with CA to decide whether to file an appeal to the High Court

(b) Waiting for a certified copy of the impugned order

(c) Paucity of time

(d) Family disputes

References

B. Subba Rao v. CIT [1987] 32 Taxman 117 (AP)

Ms. Shamsunissa Begum v. Dy. CIT [2017] 83 taxmann.com 96 (Bang. - Trib.)

Inno Estates (P.) Ltd. v. DRP [2018] 96 taxmann.com 646 (Mad.)

UOI v. Suresh N. Shetty [1986] 26 Taxman 398 (Kar.)

State of Nagaland v. Lipok Ao, AIR 2005 SC 2191

Ram Nath Sao v. Gobardhan Sao, AIR 2002 SC 1201

Vijay Kumar Sood v. Dy. CIT [2019] 106 taxmann.com 3 (Chandigarh - Trib.)

Land Acquisition v. Katiji, AIR 1987 SC 1353

Kunal Surana v. ITO [2013] 144 ITD 195/36 taxmann.com 319 (Mum. - Trib.)

Perumon Bhagvathy Devaswom v. Bhargavi Amma [2008] 8 SCC 321

Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507 (SC)

C.G. Paul & Co. v. ITO [1995] 52 ITD 276 (Cochin)

Smt. Seema De Sarkar v. ITO [2011] 15 taxmann.com 256 (Kol.)

G.M. Geri & Sons v. Fifth ITO [1998] 96 Taxman 19 (Mag.) (Mum.)

Aakash Lavlesh Leisure (P.) Ltd. v. ITO [2019] 103 taxmann.com 248 (SC)

CIT v. Williamson Tea (Assam) Ltd. [2013] 30 taxmann.com 70 (Gauhati)

CIT v. S. Duraipandi [2014] 52 taxmann.com 90 (Mad.)

CIT v. Safari Bikes Ltd. (East) [2014] 41 taxmann.com 282 (Punj. & Har.)

Karnataka Forest Development Corpn. Ltd. v. Asstt. CIT [2010] 8 taxmann.com 255 (Karn.)

Arecanut Processing & Sale Co-operative Society Ltd. v. CIT [2013] 34 taxmann.com 217 (Karnataka)

CIT v. Ram Kishan Gupta [2007] 295 ITR 578 (All.)

CIT v. Progressive Education Society [2019] 102 taxmann.com 402 (SC)

Kunal Surana v. ITO [2013] 36 taxmann.com 319 (Mumbai - Trib.)

Ajmeer Sherrif & Co. v. ITO [2015] 61 taxmann.com 301 (Mad.)

B.U. Bhandari Nandgude Patil Associates v. CBDT [2018] 91 taxmann.com 241 (Delhi)

Chopal Plywood v. CIT [2013] 37 taxmann.com 393 (Punj. & Har.)

ITO v. Nikhil Chandra Dey [1998] 97 Taxman 33 (Gauhati) (Mag.)

Pr. CIT v. Usha International Ltd. [2017] 88 taxmann.com 668 (Delhi)

Subodh Parkash v. Jt. CIT [2017] 88 taxmann.com 601 (Punj. & Har.)

This article is general information and not tax advice. Provisions change. Confirm your position with a qualified professional before acting.