2016 (9) TMI 1358 - HC - Income Tax

Appellant's Tax Case Appeal Dismissed for Delay, Emphasizing Timely Action and Due Diligence

S.P. Balasubrahmanyam Versus Assistant Commissioner of Income Tax

The court dismissed the appellant's Tax Case Appeal, upholding the Tribunal's decision to dismiss the petition to recall the ex-parte order as ... Rectification of mistake - period of limitation - time barred application - reference to date of passing of the order - Held that:- As per Section 253 of the Act, appeal has to be filed within the prescribed time limit of 60 days, and such appeal has to be heard and disposed of within four years from the end of the financial year in which such appeal is filed under sub section (1) or sub section (2) of Section 253 of the Income Tax Act. That being the case, miscellaneous application filed beyond the period of four years, is time barred. Order of the Tribunal has been passed on 18.7.2011, whereas, the appellant has filed the petition on 24.7.2015, which is beyond four years from the date of passing of the order by the Tribunal on 18.7.2011. Though Mr.J.Balachander, learned counsel for the appellant, submitted that in the normal course, service of order, on the party would take some time, and therefore the miscellaneous application filed on 24.7.2015 was just six days exceeding the four years period from the date of passing the order and therefore, the Tribunal ought to have considered the time taken for service of the impugned order and allowed the application for rectification, we are not inclined to accept the said contention, for the reason that, there are no averments in the miscellaneous petition, as to when the order was served on the appellant. - Decided against assessee. Issues Involved:1. Whether the Tribunal erred in dismissing the petition to recall the ex-parte order as time-barred.2. Whether the Tribunal should have excluded the time taken for the actual service of the ex-parte order while computing the limitation period.Issue-wise Detailed Analysis:1. Whether the Tribunal erred in dismissing the petition to recall the ex-parte order as time-barred:The appellant challenged the Tribunal's order dismissing the petition to recall the ex-parte order dated 18.07.2011. The Tribunal dismissed the petition filed in MA No.96/Mds/2015 on the grounds that it was time-barred. The Tribunal held that the time limit of four years for rectification under Section 254(2) of the Income Tax Act, 1961, applies to both suo motu actions of the Tribunal and actions taken by the parties on request. The Tribunal cited the decision of the Special Bench in Arvindbhai H. Shah v. ACIT (91 ITD 101)(Ahd.), emphasizing that the petition was filed beyond the four-year limit and was therefore not maintainable.2. Whether the Tribunal should have excluded the time taken for the actual service of the ex-parte order while computing the limitation period:The appellant argued that the Tribunal erred in not excluding the time taken for the actual service of the order while computing the four-year limitation period. The appellant's counsel referred to Section 254 of the Income Tax Act, 1961, and Rule 25 of the Income Tax Appellate Tribunal Rules, 1963, asserting that the application to set aside an ex-parte order can be filed within four years from the date of the order. The appellant relied on the decisions of the Hon'ble Apex Court in Madan Lal vs. State of UP (1975) 2 SCC 779 and India House vs. Kishan Lal Vani (2003) 9 SCC 393, which highlighted the importance of considering the time taken for service of the order.The respondent's counsel, however, contended that the Tribunal's power to rectify its order under Section 254(2) is limited to four years from the date of the order, as emphasized in the Bombay High Court's decision in Bharat Petroleum Corporation Ltd vs. Income Tax Appellate Tribunal (2013) 359 ITR 371 Bom. The Tribunal can only rectify its order within this period, and the appellant's petition was filed beyond this time frame.The court examined the relevant provisions and precedents. Section 254(2) of the Income Tax Act, 1961, allows the Tribunal to rectify any mistake apparent from the record within six months from the end of the month in which the order was passed. Rule 24 and Rule 25 of the Income Tax Appellate Tribunal Rules, 1963, provide for setting aside ex-parte orders if sufficient cause for non-appearance is shown, but do not specify an outer time limit for filing such applications.The court noted that the appellant's petition was filed on 24.07.2015, beyond the four-year period from the date of the Tribunal's order on 18.07.2011. The appellant failed to provide specific details regarding the date of service of the order. The court highlighted the importance of due diligence and the need for timely action in legal proceedings. The court also referred to various decisions emphasizing the significance of laches and delay in seeking judicial relief.The court concluded that the appellant's delay in filing the petition was apparent and not satisfactorily explained. The court upheld the Tribunal's decision to dismiss the petition as time-barred, emphasizing that the appellant's laches and lack of due diligence disentitled them to the discretionary relief sought.Conclusion:The court found no merit in the appeal and dismissed the instant Tax Case Appeal. The substantial question of law raised by the appellant was answered against them, and the Tribunal's order dismissing the petition to recall the ex-parte order as time-barred was upheld. The court emphasized the importance of timely action and due diligence in legal proceedings, particularly in the context of seeking discretionary relief.