M/S E-Governance Society v. Ita

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA M/s E-Governance Society Versus ITA No.119 of 2018 Decided on: 08.01.2019 ...Appellant Commissioner of Income Tax (Exemption) Coram The Hon'ble Mr. Justice Surya Kant, Chief JusticeThe Hon’ble Mr. Justice Ajay Mohan Goel, JudgeWhether approved for reporting? For the appellant:Mr.Ajay Vaidya, Advocate. ...Respondent For the respondent:Mr.Vinay Kuthiala, Senior Advocate, withMr.Diwan Singh Negi, Advocate. Surya Kant, Chief Justice(Oral) Heard. 2.Admit on thefollowing substantial question of law: Whether the Tribunal was justified in not condoning the delay in filing the appeal on the grounds pleaded before it on behalf of the appellant? 3. On the joint request of learned Counsel for the parties,the appeal is taken on Board for final hearing. 4.This Income Tax Appeal is directed against order dated 7[th] September, 2018, passed by the Income Tax AppellateTribunal Division Bench, ‘A’, Chandigarh, (for short, ‘the Tribunal’)whereby the appellant's appeal against the order dated 30[th]September, 2016 of the Commissioner of Income Tax (Exemptions), Chandigarh {hereinafter referred to as ‘CIT(E)’},rejecting the appellant’s application, seeking approval underSection 10(23)(iv) of the Income Tax Act, 1961, has beendismissed being barred by limitation. 5.Though, the appellant has formulated threesubstantial questions of law, but in our considered view, the onlyquestion which merits consideration is- “whether the Tribunal wasjustified in not condoning the delay in filing the appeal on thegrounds pleaded before it on behalf of the appellant?” 6.The facts may be noticed very briefly. The appellantis a Society, duly registered under the Himachal PradeshSocieties Registration Act, 2006. It has been formed by theGovernment of Himachal Pradesh with an object of assisting theDepartment of Food, Civil Supplies and Consumer Affairs of theGovernment of Himachal Pradesh in formulating andimplementing policies, procedures and guidelines for the adoptionof Information Technology and governance for improvement ofcitizen services. 7.The appellant society filed an application on 7[th]September, 2015, in Form No.56, seeking approval under Section10(23C)(vi) of the Income Tax Act, 1961 alongwith copies ofrelevant documents. It appears that when the application was taken up for hearing by CIT(E), neither any one attended onbehalf of the appellant society nor any reply to certain querieswas filed. CIT(E) noticed that the appellant assessee had not putforth its view despite sufficient opportunities having been afforded.The application was, thus, declined, observing that the assesseehas failed to discharge its onus to avail the benefit of beneficialclause. 8.Aggrieved by the order dated 30[th] September, 2016of the CIT(E), the appellant preferred an appeal before theTribunal, which was found to be prima faice time barred. Hence,the Registry of the Tribunal issued a show cause notice dated 21[st]August, 2017, in response whereto the appellant filed anapplication on 12[th] September, 2017 seeking condonation ofdelay. 9.The solitary plea taken by the appellant was that it isa State instrumentality of the Government of Himachal Pradesh;that the assessee society made an application before CIT(E); onrejection of the application the documents were mailed “to thecounsel in the case”; the Management of the Society was underthe impression that the appeal before the ITAT had been filed butsubsequently on receipt of notice of demand from the Income TaxDepartment during the month of July 2017, it was realized that no appeal had been filed in the case. Thereafter new arrangement tofile the appeal was made. The appeal was accordingly filed. Theapplication was duly supported by an affidavit. 10.The Tribunal vide order under appeal viewed that 9.The solitary plea taken by the appellant was that it isa State instrumentality of the Government of Himachal Pradesh;that the assessee society made an application before CIT(E); onrejection of the application the documents were mailed “to thecounsel in the case”; the Management of the Society was underthe impression that the appeal before the ITAT had been filed butsubsequently on receipt of notice of demand from the Income TaxDepartment during the month of July 2017, it was realized that no appeal had been filed in the case. Thereafter new arrangement tofile the appeal was made. The appeal was accordingly filed. Theapplication was duly supported by an affidavit. 10.The Tribunal vide order under appeal viewed that from the contents of the application, it was evident that theappellant was negligent in filing the appeal. The reasons fordelay are general in nature and vague. The particulars of thecounsel to whom the documents were mailed, were not disclosedand the application for condonation of delay was moved only afterthe Registry issued the show cause notice as to why the appealbe not treated as time barred. The Tribunal thereafter referred tothe case law and held that there were no justifiable reasons tocondone the delay. The appeal was accordingly dismissed beingtime barred. 11.We have heard learned counsel for the parties at aconsiderable length and gone through the record. It appears to usthat though there was some negligence on the part ofManagement of the Society in not pursuing the filing of appealafter entrustment of the documents to its counsel through mail butthe negligence was not such of a degree that the Tribunal oughtto have dismissed the appeal being barred by limitation. It hasbeen noticed by the Tribunal that the application was duly supported by an affidavit. The necessity to disclose the name ofthe counsel alone would have embarrassed the Advocateconcerned and amounted to casting aspersion on a Member ofBar. The fact that the application for condonation of delay wasmoved after receiving show cause notice from the Registry of theTribunal gives credence to the appellant’s plea that it was under abonafide impression that the appeal had been filed and it wasonly when the show cause notice was received that the appellantcame to know that the counsel to whom documents were mailedhad taken no steps to file the appeal. 12.The aforesaid fact was suggestive of the bonafide onthe part of the appellant in not filing the application forcondonation of delay alongwith appeal. The aforesaid fact was suggestive of the bonafide on 13.It is true, that in catena of judgments, some of whichhave been relied upon by the Tribunal also, it has beenauthoritatively ruled that Bureaucratic Methodology in making thedecision is no longer acceptable as sufficient cause forcondonation of delay, nonetheless it is equally true that when acounsel is engaged and the brief is entrusted to him, the litigantwould legitimately expect such counsel to take timely steps. Asnoticed earlier, the only negligence on the part of the appellantsociety was that it failed to pursue the matter with the counsel to It is true, that in catena of judgments, some of which whom the documents were mailed. In the case of such type ofnegligence, equities can be well balanced by imposing costs onthe party negligent. We are thus of the view that the Tribunal’sendeavour ought to have been to decide the appeal on meritsinstead of rejecting the same on technical ground of being barredby limitation. It is true, that in catena of judgments, some of which whom the documents were mailed. In the case of such type ofnegligence, equities can be well balanced by imposing costs onthe party negligent. We are thus of the view that the Tribunal’sendeavour ought to have been to decide the appeal on meritsinstead of rejecting the same on technical ground of being barredby limitation. 14.For the reasons afore-stated, the instant appeal isallowed in part. The impugned order dated 7[th] September, 2018passed by the Tribunal is set aside and the application filed by theappellant in response to show cause notice issued by theRegistry of the Tribunal on 21[st] August, 2017, is accepted and thedelay in filing the appeal is condoned, subject to payment of costsof Rs.25,000/- to be paid by the appellant society to the HighCourt Legal Services Committee. The cost shall be depositedwithin a period of one week. Parties are directed to appear beforethe Tribunal at Chandigarh on 4[th] February, 2019. It is clarifiedthat we have not expressed any views on merits. ( Surya Kant ), Chief Justice January 8, 2019 ( vt ) ( Ajay Mohan Goel ),JudgeJudge