2023 (9) TMI 1318 - AT - Income Tax

Appeal Dismissed as Time-Barred due to COVID-19 Delay

Income Tax Officer-1 (3), Kanpur Versus Smt. Rashmi Tiberwal

The Tribunal dismissed the Department's appeal as time-barred, ruling that the delay in filing the appeal could not be adequately explained, despite ... Condonation of delay - present appeal filed by the Department is time barred by 479 days - HELD THAT:- As undisputed that the order appealed against was received by the Department on 11.12.2018 and, therefore, the last date for filing the Departmental Appeal before the ITAT was 09.02.2019. Circular No. 23 of the CBDT is dated 06.09.2019 and the OM is dated 16.09.2019. Therefore, the Circular based on which the Department has filed this appeal was issued almost seven months after the expiry of the limitation period for filing of the appeal. As further seen that even after the issuance of the Circular and OM, the present Departmental appeal was filed on 02.06.2020 i.e. almost more than nine months after the issuance of the said Circular. Even if the Department is given the benefit of relaxation in the limitation in view of the order in suo moto Writ Petition (Civil) [2020 (5) TMI 418 - SC ORDER] the period from date of issue of Circular till March, 2020 is almost six months which could not be suitably explained. Therefore, unable to consider the prayer of the Department to condone the delay and dismiss the appeal as being unadmitted, being barred by limitation. Appeal of the Department stands dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the departmental appeal is maintainable when filed beyond the statutory limitation period without sufficient explanation for delay. 2. Whether a subsequent administrative direction (CBDT Circular and OM) issued after expiry of the statutory limitation can cure prior delay and justify condonation of delay for filing a departmental appeal. 3. Whether exceptional circumstances (public health lockdown due to COVID-19) and administrative policy change together constitute sufficient cause for condonation of delay. 4. Whether the Tribunal should proceed with adjudication on merits (including the Assessing Officer's addition under Section 69A) where the appeal is disallowed on limitation grounds. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of a time-barred departmental appeal Legal framework: Departmental appeals to the Tribunal are subject to prescribed limitation periods; applications for condonation of delay must demonstrate sufficient cause for the period of delay. Precedent treatment: No prior judicial authorities were invoked or relied upon in the judgment for general principles of limitation or condonation; the Tribunal applied established limitation principles to facts. Interpretation and reasoning: The Tribunal compared the date when the impugned order was received (11.12.2018), the statutory last date for filing appeal (09.02.2019), and the actual filing date of the appeal (02.06.2020). The Tribunal found the appeal to be delayed by 479 days and held that the Department's explanation - that appeal was filed pursuant to a later CBDT Circular - did not adequately explain the delay from the expiry of limitation to the date of issuance of the Circular, nor the additional delay after issuance of the Circular. Ratio vs. Obiter: Ratio - a departmental appeal filed beyond limitation must be supported by satisfactory explanation for the entire period of delay; mere administrative policy change after expiry of limitation is not per se sufficient. Obiter - none beyond factual application. Conclusion: The application for condonation of delay was rejected; the departmental appeal is not admitted as it is barred by limitation. Issue 2 - Effect of a post-limitation administrative direction (CBDT Circular and OM) on condonation Legal framework: Administrative directions can mandate filing of appeals in specified categories, but cannot retroactively revive appeals already time-barred unless they furnish a sufficient cause or are temporally connected to the filing with an adequate explanation for delay. Precedent treatment: The Tribunal noted the Circular and OM but treated them as administrative instructions issued after the limitation period had expired; no authority was held to automatically cure previously accrued delay. Interpretation and reasoning: The Tribunal emphasized temporal sequence: the Circular (06.09.2019) and OM (16.09.2019) were issued approximately seven months after the last date for filing (09.02.2019). The Department did not explain why an appeal was not filed within the statutory period or why the Circular should be treated as a cause for delay prior to its issuance. Further, the appeal was filed roughly nine months after the Circular; this post-Circular delay was not satisfactorily accounted for. Thus, the administrative direction could not validate the belated filing. Ratio vs. Obiter: Ratio - issuance of an administrative Circular after the expiry of limitation does not, by itself, constitute sufficient cause for condonation of prior delay; the onus remains on the appellant to explain the entire period of delay. Obiter - administrative priorities or policy reasons alone are insufficient absent temporal nexus and satisfactory explanation. Conclusion: The Circular and OM did not cure the delay; they were not a sufficient ground to condone the 479-day delay in filing the departmental appeal. Issue 3 - Sufficiency of COVID-19 lockdown and other factors as grounds for condonation Legal framework: Extraordinary events occurring within the period of delay may be relevant to condonation if they account for the delay; the adequacy of explanation is assessed on the entirety of the delay period. Precedent treatment: The Tribunal acknowledged general relaxation principles applied during the COVID-19 period by higher forums but required explanation for delay prior to the pandemic and between the Circular and actual filing date. Interpretation and reasoning: The Tribunal allowed that the national lockdown beginning 24.03.2020 could explain some portion of delay after issuance of the Circular. However, the Tribunal found a substantial unexplained period between expiry of limitation (09.02.2019) and issuance of the Circular (06.09.2019), and also between the Circular and the date of filing (02.06.2020) that could not be satisfactorily explained by the Department. The Tribunal therefore concluded that COVID-19 related disruption did not justify condonation of the entire delay. Ratio vs. Obiter: Ratio - pandemic-related restrictions may justify part of a delay but do not excuse unexplained delay prior to the pandemic or delay after issuance of administrative directions without explanation. Obiter - procedural relaxations by higher courts may be relevant but do not displace the duty to explain earlier gaps. Conclusion: COVID-19 lockdown and related factors were insufficient to establish sufficient cause for the total period of delay; condonation was refused. Issue 4 - Adjudication on merits where appeal is dismissed as barred by limitation (treatment of Assessing Officer's addition under Section 69A) Legal framework: When an appeal is dismissed on procedural grounds (limitation), the Tribunal does not adjudicate substantive issues unless the appeal is admitted. Precedent treatment: The Tribunal did not undertake substantive review of the assessing officer's factual and legal conclusions (including the addition under Section 69A) because the appeal was dismissed as unadmitted on limitation grounds. Interpretation and reasoning: The Tribunal observed the assessing officer's findings and the First Appellate Authority's deletion of the addition but held that those merits were immaterial once the appeal could not be admitted. Any factual or legal disputes concerning genuineness of long-term capital gains or collusion allegations remained unresolved by the Tribunal due to dismissal on limitation grounds. Ratio vs. Obiter: Ratio - procedural non-admission precludes adjudication on merits; substantive issues remain undetermined when an appeal is dismissed for want of limitation. Obiter - none beyond application to facts. Conclusion: The Tribunal declined to consider the merits (including the Section 69A addition) and dismissed the departmental appeal as barred by limitation. Cross-references See Issue 2 for treatment of the CBDT Circular/OM as insufficient to cure prior delay; see Issue 3 regarding limited relevance of COVID-19 lockdown to portions of the delay; see Issue 4 for the consequence that dismissal on limitation forecloses merits adjudication.