2020 (12) TMI 84 - HC - Income Tax

Delay in Tax Appeals Excused Due to Tribunal Error; Lockdown Impact Recognized; Appeals Restored with Costs Imposed.

The HC condoned the delay in filing appeals under Section 260A of the Income Tax Act, 1961, acknowledging the Tribunal's error in dismissing appeals due ... Rectification of mistake u/s 254 - period of limitation prescribed in Section 254(2) - Condonation of delay - Dismissal of appeal by ITAT - Tax Recovery Officer proceeded to attach the immovable properties of the assessee - Limitation for seeking restoration of the proceedings - applications under Section 254(2) of the said Act as well as the applications for condonation of delay in seeking restoration of the appeals -Tribunal has refused to condone this delay by holding that it was not so empowered to do so under Section 254(2) - Whether Tribunal was not justified in dismissing the appeals for absence of any representation on behalf of the assessee and such dismissal in limine was without jurisdiction - HELD THAT:- In view of the provisions of Rule 24 of the Rules of 1963 the Tribunal was not justified in dismissing the appeals filed by the assessee in limine in absence of either the appellant or its authorized representative. This aspect has been examined as it has bearing on the prayer for condonation of delay. Rectification of mistake u/s 254 - Period of limitation would begin to run from the date the assessee got knowledge of the order or from the date of passing of the order - provisions of Section 254(2) of the said Act, it is seen that Tribunal could at any time within four years from the date of its order rectify any mistake that was apparent from the record. As per the statutory position prevalent when the Tribunal dismissed the appeals in default on 01.02.2013 the period prescribed for exercise of such jurisdiction was four years. The period of four years stipulated in Section 254 (2) was substituted by the period of six months by virtue of the Finance Act, 2016 that came into force on 01.06.2016. The statutory position as prevalent on 01.02.2013 thus indicates that within a period of four years from the end of the month in which the order was passed, the Tribunal under Section 254 (2) of the said Act was empowered to rectify its mistake. In the present case, the applicant got knowledge of the order dated 01.02.2013 on 30.12.2019 and thereafter the applicant moved the Tribunal -Tribunal thereafter considered the applications on merits. It is thus found that the period from 01.02.2013 to 30.12.2019 is required to be considered in the light of the law as laid down in Golden Times Services (P) Limited [2020 (1) TMI 971 - DELHI HIGH COURT] by considering the aspect that the applicant got knowledge of the order dated 01.02.2013 only when its assets were sought to be attached in November-2019 Accepting the second the second contention, the period from 01.02.2013 till 19.11.2019 therefore cannot be treated as the period of delay. The period of limitation would thus commence only from 19.11.2019 which is the date of obtaining knowledge of the order dated 01.02.2013. The period spent by the assessee after it got knowledge of the dismissal of its appeals in limine from November 2019 to March-2020 is the period spent in prosecuting the remedy provided under the said Act. From the aforesaid we are satisfied that the time spent from 19.11.2019 till filing of the present appeals has been sufficiently explained by the applicants. To reiterate, the applicants got knowledge of the order dated 01.02.2013 dismissing their appeals in limine by ignoring Rule 24 of the Rules of 1963 only in November 2019 when the Tax Recovery Officer issued the notice of attachment. From December 2019 till March 2020, the applicant had taken various steps in its attempt to have the appeals restored. The present appeals have been filed on 22.06.2020 in the midst of the lockdown. The aforesaid events are thus found sufficient to condone the delay subject to imposing costs on the applicant. Issues Involved:1. Condonation of delay in filing appeals under Section 260A of the Income Tax Act, 1961.2. Justification of the Tribunal's dismissal of appeals due to non-appearance of the assessee.3. Commencement of the period of limitation for seeking restoration of appeals.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing Appeals:The assessee sought condonation of a delay of 3062 days in filing appeals under Section 260A of the Income Tax Act, 1961. The Tribunal had dismissed the appeals on 01.02.2013 due to non-appearance of the assessee, and the assessee argued that the delay should be calculated from 19.11.2019, the date they gained knowledge of the dismissal, not from the date of the Tribunal's order.2. Justification of the Tribunal's Dismissal of Appeals:The Tribunal dismissed the appeals on 01.02.2013 due to the absence of the assessee. The assessee contended that under Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, the Tribunal was required to decide the appeals on merits even if the appellant was absent. The Tribunal’s dismissal in default was argued to be without jurisdiction. The assessee cited the Supreme Court's decision in Commissioner of Income Tax Vs S. Chenniappa Mudaliar (1969) and other relevant cases, asserting that the Tribunal must adjudicate on merits rather than dismiss in default.3. Commencement of the Period of Limitation:The assessee argued that the period of limitation should commence from the date of knowledge of the order, not from the date the order was passed. The Tribunal initially dismissed the appeals on 01.02.2013, but the assessee claimed they only became aware of this on 19.11.2019 when the Tax Recovery Officer issued a notice to attach their immovable properties. The Tribunal rejected the applications for condonation of delay on 20.03.2020, stating there was no provision under Section 254(2) to condone such a delay. However, the assessee cited the Delhi High Court's decision in Golden Times Services Pvt. Ltd. Vs. Deputy Commissioner of Income Tax (2020), which held that the limitation period starts from the date of knowledge of the order.Judgment Analysis:The Court considered the facts and arguments presented by both parties. The Tribunal dismissed the appeals in limine due to the absence of the assessee, which was contested based on Rule 24 of the Rules of 1963, requiring the Tribunal to dispose of appeals on merits. The Court referenced the Supreme Court's decision in S. Chenniappa Mudaliar, which mandated that appeals should be decided on merits, not dismissed in default.Regarding the period of limitation, the Court acknowledged the assessee's argument that the limitation period should commence from the date of knowledge of the order. The Court found that the assessee became aware of the Tribunal's dismissal on 19.11.2019 and subsequently took steps to restore the appeals. The Court accepted that the period from 01.02.2013 to 19.11.2019 should not be treated as delay, and the limitation period should start from the date of knowledge.The Court concluded that the delay from 19.11.2019 to the filing of the appeals was sufficiently explained. The appeals were filed on 22.06.2020 during the lockdown, which further justified the delay. The Court condoned the delay, subject to costs of Rs. Ten thousand per appeal to be paid to the Revenue within three weeks.Conclusion:The Court allowed the applications for condonation of delay, recognizing the Tribunal's error in dismissing the appeals in default and accepting the assessee's argument regarding the commencement of the limitation period from the date of knowledge. The appeals were restored for hearing on merits, subject to the payment of costs.