2023 (3) TMI 1451 - HC - Income Tax

Income Tax Appellate Tribunal's rejection of 380-day delay condonation overturned using liberal justice-oriented approach

M/s. Rarefield Engineers Private Limited Versus The Assistant Commissioner of Income Tax, Company Circle – V (3), Income Tax Department Chennai

HC set aside Income Tax Appellate Tribunal's rejection of condonation petition for 380-day delay. Court applied liberal, justice-oriented approach citing ... Condonation of Delay of 380 days - The Tribunal rejected the condonation of delay petition, finding the reasons for the delay not to be bona fide - HELD THAT:- The court referred to several decisions, including N. Balakrishnan v. M. Krishnamurthy [1998 (9) TMI 602 - SUPREME COURT] and Esha Bhattacharjee v. Raghunathpur Nafar Academy [2015 (1) TMI 1053 - SUPREME COURT], emphasizing the importance of a liberal, justice-oriented approach in dealing with applications for condonation of delay. The legal position discernible from the aforesaid decisions is that the question of limitation is not based on technical consideration, but is on the principles of public policy and equity; and the substantial justice is paramount consideration and pivotal. The court set aside the order of the Income Tax Appellate Tribunal and condoned the delay in filing the appeal. The matter was remanded to the Tribunal for a decision on merits, in accordance with the law. Issues: The issues involved in the judgment are the assessment of unsecured loans under section 68 of the Income Tax Act, 1961 and the condonation of delay in filing the appeal before the Income Tax Appellate Tribunal.Assessment of Unsecured Loans: The appellant challenged the addition of Rs. 23,40,000 towards unsecured loans due to non-furnishing of confirmation letters. The appellant failed to provide necessary documentary evidence to substantiate their claim before the authorities. The appellant belatedly filed an appeal before the Tribunal, seeking to challenge the assessment of unsecured loans. The appellant produced evidence in the penalty proceedings supporting the claim of unsecured loans, resulting in the deletion of the penalty imposed under section 271(1)(c) of the Act. The Tribunal rejected the plea to condone the delay in filing the appeal, stating the reasons were not bona fide, and dismissed the appeal as time-barred.Condonation of Delay: The appellant sought to condone the delay in filing the appeal, arguing they now possess the necessary materials to prove their claim and have a fair chance of success. The Tribunal rejected the condonation of delay petition, stating the appellant did not furnish necessary documents in support of their claim within the limitation period. The Tribunal's decision was based on the belief that the reasons offered by the appellant were not bona fide. The High Court referred to legal precedents emphasizing the importance of substantial justice, public policy, and equity in matters of condonation of delay. The Court set aside the Tribunal's order, condoned the delay, and remanded the matter to the Tribunal for a decision on merits and in accordance with the law.Conclusion: In conclusion, the High Court of Madras set aside the Tribunal's order, condoned the delay in filing the appeal, and remanded the matter to the Tribunal for further consideration. The appellant was directed to provide all materials within a specified period, failing which the Tribunal would decide based on available materials. The tax case appeal was disposed of with no costs incurred.