2021 (3) TMI 255 - AT - Income Tax

Tribunal allows appeal delay condonation, stresses merit adjudication, and addresses procedural delays for justice

The Tribunal directed the CIT(A) to condone the 84-day delay in filing the appeal and adjudicate the issue on merits, emphasizing the importance of ... Condonation of delay of 84 days - explanation offered by the assessee for condoning the delay of 84 days in filing of the appeal before the ld. CIT(A) is that the delay had occurred on account of the change of counsel - HELD THAT:- No doubt the appellant had not furnished the details as to, who was the original counsel etc. But, it is also clear that the ld. CIT(A) had not doubted the veracity of the explanation offered by the appellant in support of condoning the delay of 84 days in filing the appeal before him. If the ld. CIT(A) wanted more details, he should have asked the appellant to furnish the same. Obviously, the ld. CIT(A) had chosen not to seek any further details. Furthermore, though the ld. CIT(A) had referred to certain judicial precedents and culled out the ratio laid down therein, we, without going into the applicability of the ratio laid down therein to the facts of the present case, it would suffice to say that the CIT(A) had ignored the fundamental principle governing the condonation of delay under the income-tax proceedings i.e. the income-tax proceedings are only civil proceedings and the main object of the Income Tax Act is only to determine the correct tax liability in the hands of the assessee. By mere non-condonation of delay of 84 days, the very object of the Act would be defeated. The ratio laid down by the Hon'ble Telangana High Court in the case of Thunuguntla Jagan Mohan Rao [2020 (8) TMI 368 - TELANGANA HIGH COURT] is squarely applicable to the facts of the present case. Accordingly, we direct the ld. CIT(A) to condone the delay of 84 days and adjudicate the issue in appeal on merits in accordance with law. Issues Involved:1. Whether the delay in filing the appeal should be condoned.2. Whether the CIT(A) erred in not deciding the issue on merits due to the delay.3. Whether the CIT(A) erred in characterizing the delay as sheer lethargy.4. Whether the CIT(A) failed to consider the appellant's ignorance of tax laws as a sufficient cause for the delay.5. Whether the CIT(A) erred in rejecting the reasons for delay without further inquiry.Issue-wise Detailed Analysis:1. Whether the delay in filing the appeal should be condoned:The appellant argued that the delay of 84 days in filing the appeal was due to a change in counsel and a lack of proper advice from their tax consultant. The CIT(A) did not find this explanation sufficient and dismissed the appeal. However, the Tribunal noted that the CIT(A) did not doubt the veracity of the appellant's explanation and failed to seek further details if needed. The Tribunal emphasized that income-tax proceedings are civil in nature, aiming to determine the correct tax liability, and referred to several judicial precedents stressing the importance of adjudicating disputes on merits rather than procedural delays. The Tribunal cited the Hon'ble Telangana High Court's decision in Thunuguntla Jagan Mohan Rao vs. DCIT, which underscored that delays should be condoned if the explanation does not indicate mala fides or dilatory tactics.2. Whether the CIT(A) erred in not deciding the issue on merits due to the delay:The Tribunal found that by not condoning the delay, the CIT(A) effectively denied the appellant an adjudication on merits, which goes against the principles of natural justice. The Tribunal referenced the Hon'ble Supreme Court's judgment in N. Balakrishnan vs. M. Krishnamurthy, which held that rules of limitation are not meant to destroy the rights of parties but to ensure timely pursuit of remedies. The Tribunal concluded that the CIT(A) should have condoned the delay and proceeded to decide the issue on merits.3. Whether the CIT(A) erred in characterizing the delay as sheer lethargy:The appellant contended that the delay was not due to lethargy but a genuine mistake and a lack of proper legal advice. The Tribunal noted that the CIT(A) did not provide any basis for characterizing the delay as sheer lethargy and did not consider the appellant's dependence on their tax consultant. The Tribunal found that the CIT(A) should have taken a more liberal approach in line with judicial precedents that advocate for substantial justice.4. Whether the CIT(A) failed to consider the appellant's ignorance of tax laws as a sufficient cause for the delay:The appellant argued that their ignorance of tax laws and reliance on their consultant should be considered a sufficient cause for the delay. The Tribunal agreed, noting that the CIT(A) did not properly address this argument and failed to appreciate the appellant's lack of legal expertise. The Tribunal emphasized that courts should show utmost consideration to litigants who are not well-versed in law and whose explanations do not indicate bad faith.5. Whether the CIT(A) erred in rejecting the reasons for delay without further inquiry:The Tribunal observed that the CIT(A) did not conduct any further inquiry into the reasons provided by the appellant for the delay. The Tribunal held that if the CIT(A) required more details, they should have asked the appellant to furnish them instead of outright rejecting the explanation. The Tribunal reiterated that the primary function of the court is to advance substantial justice and that procedural delays should not obstruct this objective.Conclusion:The Tribunal directed the CIT(A) to condone the delay of 84 days and adjudicate the issue on merits, granting the appellant a reasonable opportunity to be heard. The Tribunal's decision applied to all the assessment years involved in the appeals, thereby allowing the appeals partly for statistical purposes. The order emphasized the importance of addressing disputes on merits and ensuring that procedural delays do not impede justice.