Court corrects Tribunal's error, emphasizes procedural rules, grants relief for unusual delay.

The High Court found that the Tribunal erred in rejecting the appeal as time-barred. The Court emphasized the importance of procedural rules facilitating justice and held that the Tribunal should have exercised discretion to condone the delay caused by unusual postal delay. Referencing relevant case law, the Court concluded that the Tribunal's order was incorrect in law and awarded costs to the assessee.

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Issues Involved:
1. Whether the order of the Appellate Tribunal rejecting the appeal as time-barred is proper and correct in law.

Issue-wise Detailed Analysis:

1. Proper and Correctness of Tribunal's Order on Time-Barred Appeal:

The case revolves around the rejection of an appeal by the Income-tax Appellate Tribunal as time-barred. The assessee, a firm, received the appellate order on November 23, 1970, and sent the second appeal memorandum along with the money order receipt for the requisite fee by registered post on January 13, 1971. The memorandum was received by the Tribunal on January 15, 1971, but the money order was received on January 27, 1971. The Tribunal dismissed the appeal as being barred by limitation.

The manner of filing a second appeal is provided under section 253 of the Income-tax Act, 1961, specifically sub-sections (3) and (6). Sub-section (3) mandates the appeal to be filed within sixty days from the date the order is communicated to the assessee. Sub-section (6) requires the appeal to be in the prescribed form, verified in the prescribed manner, and accompanied by a fee of one hundred rupees.

Rule 6 of the Income-tax (Appellate Tribunal) Rules, 1963, stipulates that a memorandum of appeal can be presented in person or by an agent or sent by registered post to the Registrar or an authorized officer. A memorandum sent by post is deemed presented on the day it is received in the Tribunal's office.

The Tribunal refused to exercise its power under sub-section (5) of section 253, which allows admitting an appeal after the expiry of the prescribed period if there is sufficient cause for the delay. The Tribunal argued that the appeal fee must be received within the prescribed time and that the post office acts as the agent of the sender, not the Tribunal.

The Orissa High Court in Brajabandhu Nanda v. Commissioner of Income-tax [1962] 44 ITR 668 (Orissa) [FB] held that postal delay cannot be a sufficient cause for condoning the delay in filing the appeal. However, the High Court clarified that the Tribunal misinterpreted the Full Bench decision, which was specific to the facts of that case. The High Court emphasized that the Tribunal has the discretion to condone delay if sufficient cause is shown.

The High Court noted that Jeypore and Cuttack are not distant, and normal postal transit does not take more than two days. The memorandum of appeal was received within two days, but the money order was delayed unusually. The High Court found that the assessee acted reasonably and bona fide by transmitting the appeal and fee nine days before the limitation period ended. The Tribunal should have considered this unusual postal delay as sufficient cause for condoning the delay.

Additionally, the High Court referenced a decision by the Madhya Pradesh High Court in J. K. Agents Pvt. Ltd. v. Commissioner of Income-tax [1972] 86 ITR 793 (MP), which held that payment by money order is not prohibited and should be considered a reasonable method of fee payment. The High Court agreed with this approach, emphasizing that procedural rules should facilitate justice, not obstruct it.

The High Court concluded that the Tribunal failed to exercise its jurisdiction under section 253(5) properly and that the appeal should not have been dismissed as time-barred. The High Court answered the referred question by stating that the Tribunal's order rejecting the appeal as barred by time is incorrect in law and awarded costs to the assessee.

Conclusion:
The High Court determined that the Tribunal erred in rejecting the appeal as time-barred and emphasized the importance of procedural rules serving the administration of justice. The Tribunal should have exercised its discretion to condone the delay due to the unusual postal delay. The Tribunal's order was found to be incorrect in law.

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