2017 (10) TMI 248 - HC - Income Tax

Appeals allowed after 2984-day delay condoned due to reliance on Chartered Accountant advice deemed reasonable explanation

The Bombay HC allowed appeals challenging the Tribunal's refusal to condone a 2984-day delay in filing appeals. The assessee had relied on advice from ... Condonation of delay - reason of delay - delay of 2984 days - legal advice tendered by a professionals - Chartered Accountants - Reasonableness and adherence to legal principles by the Tribunal in exercising discretion for condonation of delay - comprehension of human conduct and probabilities - Held that:- In the circumstances and a perusal of the whole order does not indicate that the Tribunal terms the conduct of the assessee to be the sole factor responsible for the delay. The conduct is not termed as negligent, callous and lacking in bonafides either. In para 12 of the order under challenge, we find that the Tribunal holds that the assessee failed to show that there was sufficient cause. How that cause is not sufficient has been explained by the Tribunal in the earlier paragraphs. However, the explanation which the assessee provided was an advise from his Chartered Accountant. That is why the paragraphs are devoted to the conduct of the professional. The advice given is not only termed as wrong/absurd but the assessee is faulted for blindly accepting such an advice. He is termed as an imprudent man and who failed to verify the correctness of the advice given or apply his mind to it. Thus, the behaviour of the assessee, according to the Tribunal, is beyond the comprehension of human conduct and probabilities. The Tribunal though aware of these principles but possibly carried away by the fact that the delay of 2984 days is incapable of condonation. That is not how a matter of this nature should be approached. In the process the Tribunal went about blaming the assessee and the professionals and equally the Department. To our mind, therefore, the Tribunal's order does not meet the requirement set out in law. The Tribunal has completely misdirected itself and has taken into account factors, tests and considerations which have no bearing or nexus with the issue at hand. The Tribunal, therefore, has erred in law and on facts in refusing to condone the delay. The explanation placed on affidavit was not contested nor we find that from such explanation can we arrive at the conclusion that the assessee was at fault, he intentionally and deliberately delayed the matter and has no bona fide or reasonable explanation for the delay in filing the proceedings. The position is quite otherwise. In the light of the above discussion, we allow both the appeals. We condone the delay of 2984 days in filing the appeals but on the condition of payment of costs, quantified totally at ₹ 50,000/­. Meaning thereby, ₹ 25,000/­ plus ₹ 25,000/­ in both appeals. The costs to be paid in one set to the respondents within a period of eight weeks from today. On proof of payment of costs, the Tribunal shall restore the appeals of the assessee to its file for adjudication and disposal on merits. We clarify that all contentions as far as merits of the claim are kept open. We have not expressed any opinion on the same. Issues Involved:1. Justification of Tribunal's dismissal of appeals as barred by limitation.2. Reasonableness and adherence to legal principles by the Tribunal in exercising discretion for condonation of delay.Detailed Analysis:Issue 1: Justification of Tribunal's Dismissal of Appeals as Barred by LimitationThe primary issue was whether the Tribunal was justified in dismissing the appeals due to a delay of 2984 days. The Tribunal's refusal to condone the delay was based on the assertion that the delay was enormous and the explanation provided by the appellant was insufficient. The appellant, however, argued that the delay was due to reliance on erroneous legal advice from Chartered Accountants, which should be considered a bona fide reason for the delay.The Tribunal's order was criticized for its harsh language towards the Chartered Accountants and for not maintaining judicial decorum. The Tribunal's failure to express itself with restraint and sobriety was highlighted, noting that such conduct was inappropriate for a judicial body. Furthermore, the Tribunal's decision to dismiss the appeals was seen as not considering the appellant's bona fide reliance on professional advice, which is a recognized ground for condonation of delay as per numerous Supreme Court decisions.Issue 2: Reasonableness and Adherence to Legal Principles by the Tribunal in Exercising Discretion for Condonation of DelayThe Tribunal's discretion in condoning the delay was questioned on the grounds of whether it was exercised reasonably and in accordance with settled legal principles. The appellant's counsel argued that the Tribunal should have applied well-settled principles that allow for condonation of delay if the cause shown is reasonable and bona fide. The appellant had provided a detailed affidavit explaining the reasons for the delay, supported by an affidavit from the Chartered Accountant who had advised the appellant.The Tribunal's order was found to be lacking in its consideration of these legal principles. It was noted that the Tribunal's focus on criticizing the Chartered Accountants and the appellant's reliance on their advice was misplaced. The Tribunal failed to appreciate that legal advice, even if mistaken, can be a sufficient cause for condonation of delay if acted upon bona fide. The Tribunal's approach was seen as overly rigid and not in line with the liberal principles that should guide such decisions.The High Court emphasized the importance of taking an overall view in the larger interest of justice, noting that none should be deprived of an adjudication on merits unless there is clear evidence of deliberate and intentional delay. The Tribunal's order was found to be misdirected, taking into account irrelevant factors and failing to apply the correct legal principles.Conclusion:The High Court allowed the appeals, condoning the delay of 2984 days on the condition of payment of costs. The Tribunal was directed to restore the appeals for adjudication on merits, with all contentions on the merits of the claim kept open. The High Court's decision underscored the importance of a liberal and just approach in considering applications for condonation of delay, especially when the delay is due to bona fide reliance on professional advice.