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

Vijay Vishin Meghani Versus The Deputy Commissioner of Income Tax Circle – 23 (2),

Vijay Vishin Meghani Versus The Deputy Commissioner of Income Tax Circle – 23 (2), - [2017] 398 ITR 250 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 Limitation

The 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 Delay

The 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.