Writ petition against 2010 and 2013 tax orders dismissed after 9-year delay when statutory remedies available

Karnataka HC allowed Revenue's writ appeal challenging Single Judge's order that had permitted assessee's writ petition filed in 2022 against 2010 and 2013 orders. The assessee's appeals were dismissed by ITAT for non-appearance and non-payment of taxes. HC held that writ jurisdiction could not be invoked after 9 years when statutory remedy under IT Act was available but not pursued. The court noted that allowing such delayed challenges merely upon payment of tax liability would set dangerous precedent, making every assessment order susceptible to reopening after long delays at assessee's convenience.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

- Whether the learned Single Judge was justified in allowing the writ petition filed in 2022 challenging orders dated 16.08.2010 (Commissioner of Income Tax (Appeals)) and 22.02.2013 (Income Tax Appellate Tribunal) that dismissed the respondent's appeals for Assessment Years 2006-07 and 2007-08 on grounds of non-payment of admitted tax and non-prosecution.

- Whether sufficient cause and bona fide reasons were established by the respondent for the delay in prosecuting the appeals and for non-payment of admitted tax at the time of filing the appeals.

- Whether the writ jurisdiction under Article 226 of the Constitution of India could be invoked after a lapse of approximately nine years, despite the availability of statutory remedies under the Income Tax Act, 1961.

- The applicability and relevance of the precedent set in Komalakshi's case regarding condonation of delay and reopening of appeals upon payment of admitted tax.

- The effect of delay and laches on the maintainability of the writ petition.

- The reasonableness of the learned Single Judge's discretion in remitting the matter for fresh consideration in light of the respondent's subsequent payment of tax and alleged bona fide circumstances.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification for Allowing the Writ Petition Challenging Orders of 2010 and 2013

The legal framework governing appeals under the Income Tax Act, 1961 requires that taxes due on the returned income be paid before an appeal under Section 246A can be admitted, as per Section 249(4)(a). The Commissioner (Appeals) and the ITAT dismissed the respondent's appeals primarily on the ground of non-payment of admitted tax and non-appearance, leading to non-maintainability.

The Court noted that the appeals were dismissed for non-prosecution on 12.04.2012, restored on 30.11.2012, but the respondent failed to appear on the listed hearing dates (12.02.2013 and 13.02.2013), culminating in dismissal on 22.02.2013. The respondent did not challenge these orders for approximately nine years.

The learned Single Judge allowed the writ petition on the basis that the respondent had bona fide reasons and sufficient cause for non-prosecution and non-payment of tax, and that the admitted tax was subsequently paid in 2022. The Single Judge relied on the justice-oriented approach and the precedent in Komalakshi's case to grant a further opportunity to the respondent.

The appellate Court analyzed the factual matrix and found that the respondent had not given any explanation for non-appearance at the hearings fixed soon after restoration, nor had it made efforts to ascertain the status of the appeals for nine years. The respondent's claim of ignorance about the dismissal was not supported by any evidence disputing the hearing dates or the notices issued. The Court emphasized that the appeals had attained finality due to inaction and delay.

Issue 2: Sufficiency of Cause and Bona Fides for Delay and Non-Payment of Admitted Tax

The respondent contended that due to search and seizure operations, attachments on bank accounts and properties, and consequent business disruption, it was unable to pay the admitted tax at the time of filing the appeals. It argued that these were extenuating circumstances amounting to sufficient cause and bona fide reasons.

The respondent further contended that after the attachments were lifted in 2022, it promptly paid the admitted tax and filed the writ petition at the earliest opportunity upon discovering the dismissal of appeals.

The Court noted that while such circumstances might explain difficulties in payment, the respondent failed to explain the prolonged delay of nearly nine years in pursuing the appeals or seeking relief. The Court observed that the respondent's financial statements annexed to the writ petition did not sufficiently justify the delay in prosecuting the appeals or inquiring about their status.

The Court also remarked that the principle of delay and laches is well-settled in writ jurisdiction and that mere payment of admitted tax after a long lapse does not justify reopening final orders.

Issue 3: Invoking Writ Jurisdiction Despite Availability of Alternative Remedies

The respondent argued that the writ petition was maintainable notwithstanding the existence of statutory remedies under the Income Tax Act, relying on precedents that maintainability and entertainability are distinct and that writ jurisdiction can be exercised in cases of violation of natural justice or ex-parte orders.

The Court acknowledged that writ jurisdiction is discretionary and may be exercised in exceptional cases, but emphasized that such discretion should not be exercised to reopen final orders after an inordinate delay, especially when statutory remedies exist and were not availed of promptly.

The Court found that the respondent's delay and failure to challenge the orders within prescribed time frames or to file condonation applications before the ITAT undermined the invocation of writ jurisdiction in this case.

Issue 4: Applicability of Komalakshi's Case

The learned Single Judge relied on Komalakshi's case to justify condonation of delay and reopening of appeals upon payment of admitted tax. However, the appellate Court distinguished the present facts from Komalakshi's case, noting that in that case the appeals were filed in a timely manner and the delay was not as protracted as in the present case.

The Court observed that Komalakshi's case involved a scenario where the Commissioner (Appeals) and Tribunal rejected appeals for non-payment of admitted tax, but the delay in approaching the High Court was not excessive. In contrast, the present case involved a delay of nine years in challenging orders and no timely attempts to prosecute the appeals.

The Court held that allowing the writ petition on the basis of late payment of tax after such a long interval would set a precedent encouraging the reopening of final assessments long after the statutory period, which is contrary to the intent of the law.

Issue 5: Effect of Delay and Laches on Maintainability

The Court reiterated the principle that delay and laches are relevant considerations in the exercise of writ jurisdiction. The respondent's failure to act promptly, failure to appear at hearings, and failure to challenge dismissal orders for nine years weighed heavily against the maintainability of the writ petition.

The Court noted that the respondent did not dispute the hearing dates or the notices, nor did it explain why it did not ascertain the status of the appeals for such a prolonged period. The Court emphasized that the remedy under the Income Tax Act should not be rendered futile by allowing reopening of final orders on the basis of belated tax payment and unexplained delay.

Issue 6: Discretion of the Learned Single Judge

The respondent contended that the learned Single Judge exercised discretion judiciously and that the appellate Court should not interfere unless the discretion was arbitrary or perverse.

The Court held that the discretion exercised by the Single Judge was based on incomplete consideration of the facts, particularly the inordinate delay, non-appearance at hearings, and failure to challenge the orders for nine years. The appellate Court found the exercise of discretion to be erroneous and unsustainable in law.

3. SIGNIFICANT HOLDINGS

- "The appeals were rightly dismissed by the Tribunal on the ground that the appeals were not admitted by the Commissioner (Appeals) due to non-payment of admitted tax, and the respondent's failure to appear at the hearings justified dismissal."

- "The plea that the respondent came to know about the dismissal of the appeals only after nine years cannot be accepted in absence of any explanation for non-appearance or inquiry during this period."

- "The learned Single Judge erred in allowing the writ petition after such a long delay, relying on the judgment in Komalakshi's case, which is distinguishable on facts and does not support condonation of delay after nine years."

- "The writ jurisdiction under Article 226 cannot be invoked to reopen final orders after inordinate delay and when statutory remedies exist and were not availed of promptly."

- "The principle of delay and laches governs maintainability of writ petitions, and unexplained delay coupled with failure to prosecute appeals disentitles the respondent to relief."

- "Payment of admitted tax after a long lapse of time does not justify reopening of appeals or setting aside orders of the Commissioner (Appeals) and ITAT."

- "The discretion exercised by the learned Single Judge in allowing the writ petition is set aside as it was based on incomplete appreciation of facts and law."

- "The impugned order dated 09.09.2022 is set aside and the appeals dismissed by the Commissioner (Appeals) and ITAT are restored to finality."

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