High Court corrects Tribunal's error on delay condonation, directs appeal to proceed as per law

Commissioner Of Income-Tax Versus Agarwal Hardware Works Pvt. Ltd.

Commissioner Of Income-Tax Versus Agarwal Hardware Works Pvt. Ltd. - [2001] 248 ITR 155, 166 CTR 558, 117 TAXMANN 249 Issues:
1. Delay in filing the appeal by the Department.
2. Interpretation of section 260A(1) of the Income-tax Act.
3. Consideration of perversity in the Tribunal's decision.
4. Admissibility of appeal under section 253(5) of the Income-tax Act.
5. Application of law on condonation of delay.

Delay in filing the appeal by the Department:
The High Court of CALCUTTA considered an application for leave to appeal under section 260A(1) of the Income-tax Act, 1961, filed by the Department against the Tribunal's order refusing to condone an eight-day delay in preferring the appeal. The Department argued that there was no delay as service of the order on the appropriate Commissioner was not made as required by section 253(3) of the Act. However, the Court did not permit this argument as the Tribunal did not have the chance to consider it.

Interpretation of section 260A(1) of the Income-tax Act:
The Court analyzed whether the Tribunal's order was an order in appeal as per section 260A(1). The assessee's counsel referred to a Supreme Court case to establish that a refusal to condone delay effectively confirms the Commissioner of Income-tax (Appeals)'s order. The Court also noted similarities between section 260A(1) and section 100 of the Code of Civil Procedure, emphasizing the importance of correctly applying the law of condonation of delay.

Consideration of perversity in the Tribunal's decision:
The Court discussed the concept of perversity in the Tribunal's decision regarding the delay in filing the appeal. It was observed that if the Tribunal's satisfaction under section 253(5) is based on law and facts, the High Court cannot interfere. However, if the Tribunal's appreciation of facts or application of the law is deemed perverse, the High Court can intervene. The Court decided that points of perversity can be raised in a section 260A(1) application.

Admissibility of appeal under section 253(5) of the Income-tax Act:
Section 253(5) allows the Appellate Tribunal to admit an appeal after the relevant period if there was sufficient cause for the delay. The Court clarified that the satisfaction must be of the Appellate Tribunal, and interference by the High Court is warranted only in cases of patent perversity in the Tribunal's decision.

Application of law on condonation of delay:
The Court determined that the Tribunal failed to correctly apply the law on condonation of delay, leading to points of perversity in its decision. Despite acknowledging the law that each day's delay need not be explained strictly, the Tribunal did not consider the Department's explanation for the delay. The Court entertained the appeal, answered the question in favor of the Department, and directed the Tribunal to proceed with the appeal in accordance with the law.