Rectification plea under s.254(2) held time-barred; no power to condone delay beyond six months for assessee

HC dismissed the assessee's writ petition challenging rejection of its rectification application under s.254(2) of the IT Act by ITAT as time-barred. The Court held that, even on the assessee's own showing, the six-month limitation expired on 31 May 2022, which fell outside the period covered by the SC's COVID-19 limitation extension orders. The contention that limitation commenced only from 01 March 2022 was rejected. Relying on its coordinate bench ruling and the Karnataka HC decision in Karuturi Global, HC affirmed that ITAT has no statutory power to condone delay beyond six months under s.254(2).

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1. ISSUES PRESENTED and CONSIDERED

• Whether the Miscellaneous Application filed under Section 254(2) of the Income Tax Act, 1961, was barred by limitation.
• Whether the petitioner is entitled to the benefit of the Supreme Court's order dated 10 January 2022, which excluded the period from 15 March 2020 to 28 February 2022 from limitation calculations due to the COVID-19 pandemic.
• Whether the Income Tax Appellate Tribunal (ITAT) has jurisdiction or power to condone delay beyond the prescribed six-month limitation period under Section 254(2) of the Income Tax Act.
• Whether sufficient cause was shown for condonation of delay in filing the Miscellaneous Application.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Limitation for filing Miscellaneous Application under Section 254(2) of the Income Tax Act

- Legal Framework and Precedents: Section 254(2) of the Income Tax Act mandates that an application for rectification must be filed within six months from the date of knowledge of the order sought to be rectified. The limitation period is strict and non-extendable.

- Court's Interpretation and Reasoning: The ITAT order dated 21 September 2021 was communicated on 17 November 2021. Therefore, the six-month limitation expired on 31 May 2022. The Miscellaneous Application was filed on 26 August 2022, approximately three months beyond the limitation period.

- Application of Law to Facts: The delay in filing the Miscellaneous Application is clear and undisputed. The ITAT held it had no jurisdiction to condone this delay.

- Conclusions: The application was barred by limitation as per the statutory timeline under Section 254(2).

Issue 2: Applicability of Supreme Court's order dated 10 January 2022 (COVID-19 limitation extension)

- Legal Framework: The Supreme Court's order excluded the period from 15 March 2020 to 28 February 2022 for limitation calculations in judicial and quasi-judicial proceedings, allowing the balance limitation period to commence from 1 March 2022.

- Court's Reasoning: The petitioner argued that this order extended the limitation period, justifying the delay. However, the limitation in this case expired on 31 May 2022, which is beyond the excluded period. The petitioner's claim that limitation should commence only from 1 March 2022 was rejected as inconsistent with the Supreme Court's order.

- Treatment of Competing Arguments: The Court noted that this plea was not raised before the ITAT and was introduced for the first time before the High Court. Even after consideration, it was found inapplicable.

- Conclusions: The petitioner cannot claim benefit of the COVID-19 limitation extension order as the limitation expired after the excluded period, and the order does not support the petitioner's interpretation.

Issue 3: Power of ITAT to condone delay beyond six months under Section 254(2)

- Legal Framework and Precedents: Section 254(2) does not expressly empower the ITAT to condone delay beyond six months. The coordinate bench decision in Ram Baburao Salve (2024) and the Karnataka High Court decision in Re. Karuturi Global Ltd. (2020) held that ITAT lacks jurisdiction to condone delay in such applications.

- Court's Interpretation and Reasoning: The ITAT's impugned order correctly held that it had no power to condone delay beyond the statutory period. The Court found no reason to differ from these precedents.

- Application of Law to Facts: Since the delay exceeded six months, the ITAT was correct in dismissing the Miscellaneous Application as barred by limitation.

- Conclusions: ITAT has no jurisdiction to condone delay beyond six months under Section 254(2); hence, the impugned order stands valid.

Issue 4: Relevance of sufficient cause for condonation of delay under Section 254(2)

- Legal Framework: While sufficient cause is generally relevant for condonation of delay, Section 254(2) does not provide for condonation beyond six months.

- Court's Reasoning: The ITAT did not examine sufficient cause as it found no jurisdiction to condone delay. The Court agreed that even if sufficient cause existed, it would be irrelevant in the absence of statutory power to condone delay.

- Conclusions: Sufficient cause is immaterial where the limitation period is statutorily fixed and non-extendable.

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