2024 (1) TMI 1494 - HC - Income Tax

Petition dismissed for delay: challenge filed after suspension of limitation and 90-day revival window expired; no explanation.

Bihar State Hydroelectric Power Corporation Ltd. Versus National e-Assessment Centre Delhi, Union of India

HC held that the petitioner failed to challenge the assessment within the period prescribed by the SC's suspension of limitation and its 90-day revival ... Ex-parte order passed when the entire country was reeling under COVID-19 - HELD THAT:- Time granted by the Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 [2022 (1) TMI 385 - SC ORDER] The Hon’ble Supreme Court had suspended the limitation in all cases during the COVID-19 period and finally had passed an order dated 10.01.2022 directing that limitation would revive and any order passed in the meanwhile can be challenged within 90 days from 28.02.2022. Hence, the petitioner could have filed an appeal from the assessment order on or before 28.05.2022 i.e., three months, even without a delay condonation application. Though, the Hon’ble Supreme Court had provided 90 days across the board, to all proceedings, the petitioner did not take up the challenge even then. Petitioner has filed the above writ petition itself on 02.11.2022 almost 5 months after the time granted by the Hon’ble Supreme Court expired. There is also no explanation as to why, the petitioner did not approach the Appellate Authority within the time provided by the Hon’ble Supreme Court. In the above circumstances, we find absolutely no reason to interfere with the assessment order in the writ petition filed. ISSUES PRESENTED AND CONSIDERED 1. Whether an ex parte assessment order passed during the COVID-19 pandemic warrants interference in exercise of writ jurisdiction where the petitioner alleges inability to file appeal due to the pandemic without specifying particulars of causation. 2. Whether delay in instituting statutory appeals against an assessment and consequential penalty can be excused in light of the suspension and subsequent revival of limitation by the Supreme Court during the COVID-19 period, and what relief (if any) should be granted where no appeal was filed within the period allowed by that order. 3. Whether penalty orders impugned can be interfered with in writ jurisdiction where alternative statutory remedies of appeal exist and were not availed within the time permitted. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Interference with ex parte assessment passed during COVID-19 Legal framework: The challenge to an assessment order is ordinarily remedied by the appellate provisions of the Income Tax Act, 1961; writ jurisdiction is discretionary and not a substitute for statutory appeal where effective alternative remedy exists. Precedent Treatment: The Court considered the Supreme Court's Suo Motu order suspending limitation during COVID-19 and later fixing revival timelines; no other precedent was invoked or overruled by the Court in its reasoning. Interpretation and reasoning: The petitioner's pleadings merely averred inability to act 'due to certain reasons beyond its control' and asserted the pandemic generally without specifying how lockdowns or restrictions actually prevented pursuit of statutory remedies. The Court noted that nationwide complete lockdown was largely confined to 2020 and subsequent restrictions were localized; no documentary particulars were placed before the Court to show causation between the pandemic/lockdown and the failure to file appeal. Ratio vs. Obiter: Ratio - Where a statutory remedy exists and the petitioner fails to particularize how the pandemic prevented resort to that remedy, the Court will not set aside an assessment on the ground of COVID-19 alone. Obiter - Observations on the temporal scope of lockdowns and localized orders. Conclusions: The Court declined to interfere with the assessment order on the basis of the pandemic, finding no sufficient explanation in the record to justify writ relief in lieu of statutory appeal. Issue 2 - Effect of Supreme Court suspension and revival of limitation; condonation of delay Legal framework: The Income Tax Act prescribes time-limits for filing appeals before Commissioner (Appeals) and the Income Tax Appellate Tribunal, with statutory provision for condonation of delay by the Commissioner (Appeals) on satisfactory explanation. The Supreme Court's Suo Motu order suspended limitation during COVID-19 and later directed revival with a 90-day window from 28.02.2022 for actions in the interim. Precedent Treatment: The Court followed the operative effect of the Supreme Court's Suo Motu order and applied its timelines to the present facts; no precedent was distinguished or overruled. Interpretation and reasoning: Applying the Supreme Court's direction, the petitioner could have filed an appeal against the assessment on or before 28.05.2022 (three months from 28.02.2022) without a condonation application. The petitioner did not file an appeal within that period and filed the writ petition only on 02.11.2022, about five months after the expiry of the Supreme Court-extended period. No explanation was offered for failure to file an appeal within the Supreme Court's time limit. Ratio vs. Obiter: Ratio - Where the Supreme Court has provided a specific revival period and the petitioner fails to avail the extended period or offer a satisfactory explanation for further delay, writ relief will not be granted to bypass statutory appeal/condonation mechanisms. Obiter - Clarification that the power to condone delay under the statute rests with the Commissioner (Appeals). Conclusions: The Court refused to set aside the assessment on grounds of delay attributable to the pandemic but directed that the petitioner be permitted to file a statutory appeal accompanied by a delay-condonation application explaining delay only up to 28.05.2022; delay after institution of the writ petition (01/02.11.2022 as relevant) need not be explained because it was occasioned by the pendency of the writ. Issue 3 - Interference with penalty order where statutory appellate remedy not exhausted Legal framework: Penalty orders under the Income Tax Act are amenable to challenge by statutory appeal before the Commissioner (Appeals) and thereafter the Tribunal; statutory regime contemplates condonation of delay by the Commissioner (Appeals). Precedent Treatment: The Court treated penalty orders consistently with the approach to assessment orders and applied the same procedural preclusion principles; no distinct precedent was cited to treat penalty differently. Interpretation and reasoning: The petitioner did not pursue the statutory appeal against the penalty within the time permitted by the Supreme Court's order. The Court observed that questions of quantum and validity of penalty are appropriate for adjudication in the appellate fora which have jurisdiction to consider both merits and delayed filing (subject to condonation). Accordingly, the same refusal to entertain writ relief was applied to the penalty matters. Ratio vs. Obiter: Ratio - Writ relief is inappropriate to challenge penalty orders where efficacious statutory remedies exist and were not availed within the time granted; the Commissioner (Appeals) retains exclusive authority to condone delay and decide appeals on merits. Obiter - None material beyond the procedural direction provided. Conclusions: The Court declined to interfere with the penalty order in writ jurisdiction and directed the petitioner to pursue the statutory appeal route with a delay-condonation application explaining delay only up to 28.05.2022. Ancillary Directions and Dispositive Conclusion Legal framework applied: The Court applied the Supreme Court's Suo Motu suspension/revival of limitation and the statutory scheme for appeals and condonation under the Income Tax Act. Interpretation and reasoning: Given absence of particularized averments showing COVID-19 causation for non-action and the availability of an extended revival window which the petitioner did not use, the Court found no basis for writ interference and instead directed statutory course be pursued. Ratio vs. Obiter: Ratio - Where statutory appeal remedies exist and petitioner has not availed the revival period afforded by higher authority, the appropriate remedy is to file an appeal with the Commissioner (Appeals) with a condonation application; the writ court will not substitute its function for the statutory appellate authority. Obiter - Clarification that the petitioner need not explain delay caused by pendency of the writ petition itself. Conclusions: The writ petitions were dismissed with directions: petitioner to file statutory appeals within three weeks and to seek condonation of delay only for the period up to 28.05.2022; no expression was made on merits or on the Commissioner (Appeals)'s eventual satisfaction regarding delay, which remains exclusively for that authority to determine.