M/S.eswaran & Sons Engineersltd., Chennai-35 v. The Assistant Commissioner Of Income Tax, Corporate Ward 2(1),Chennai-34

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:14.12.2017Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mr.Justice K.RAVICHANDRABAABU Tax Case Appeal No.604 of 2017 M/s.Eswaran & Sons EngineersLtd., Chennai-35. ...Appellant Vs The Assistant Commissioner of Income Tax, Corporate Ward 2(1),Chennai-34....Respondent APPEAL under Section 260A of the Income Tax Act, 1961against the order dated 04.1.2017 made in MP.No.238/Mds/2016 inITA.No.1627/Mds/ 2015 on the file of the Income Tax AppellateTribunal, 'D' Bench, Chennai for the assessment year 2006-07against the orderr of the Commissioner of Income Tax(A)-IVChennai dated 1/10/2014 in ITA.938/13-14 against the orderdt.31.12.2008 in PAN/GIR No. of the DeputyCommissioner of Income Tax Company Circle II(1), Chennai 34. For Appellant : Mr.R.Venkatanarayanan for M/s.Subbaraya Aiyar PadmanabhanFor Respondent: Mr.Karthik Ranganathan Judgment was delivered by T.S.SIVAGNANAM,J Mr.Karthik Ranganathan, learned Standing Counsel acceptsnotice for the respondent. Heard both. 2. This appeal has been filed by the assessee raising thefollowing substantial questions of law : "i. Whether, on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal is correct in law inholding that the appellant had not shownsufficient cause for the delay of 173 daysin filing the appeal and dismissing theappeal as not maintainable ? andii. Whether the finding of the IncomeTax Appellate Tribunal that the appellanthad not shown sufficient cause for the delayof 173 days in filing the appeal issupported by materials and evidence onrecord and is not perverse ?" https://hcservices.ecourts.gov.in/hcservices/ 3. The Tribunal, by the impugned order dated 04.1.2017,dismissed the miscellaneous petition filed by the assessee inMP.No.238/Mds/2016 praying for condonation of the delay of 173days in filing the appeal. 4. In fact, on the earlier occasion, an appeal was filedbefore the Tribunal. The Tribunal considered the affidavit filedby the assessee for condonation of delay in filing the appeal,found that there were no reasons given in the affidavit and heldthat sufficient cause was not shown for condonation of delay.Accordingly, the earlier appeal was dismissed on 10.5.2016.After the dismissal of the earlier appeal, the assessee filedthe present miscellaneous petition wherein they have set out thereasons for the delay. 5. In the affidavit filed in support of the presentmiscellaneous petition, the assessee stated that they stoppedoperations for six years, that most of the employees had leftthe company and that the copy of the order passed by theCommissioner of Income Tax (Appeals) was received only on24.11.2014. It was further stated in the affidavit that theManaging Director, who was aged about 77 years and who wastaking care of the affairs of the company, met with an accidenton 05.12.2014 and suffered grievous injuries, that three ribswere fractured apart from other severe injuries and that thisled to his hospitalization and he was immobilized for a fewmonths. It was also stated in the affidavit that he sufferedheart attack and that therefore, he could not attend office. Insupport of such a stand, the assessee produced the dischargesummary to establish that the Managing Director had sufferedinjuries in an accident and subsequently had a massive heartattack. 6. The Tribunal, on going through the same, opined that theunsigned medical discharge summary cannot be held to be a validmedical certificate. 6. The Tribunal, on going through the same, opined that theunsigned medical discharge summary cannot be held to be a validmedical certificate. 7. However, we find that the bona fides of the claim made bythe assessee were not disputed by the Revenue by producing anyother material to show that the stand taken by the assessee wasfalse. The settled legal principle is that law of limitation hasbeen founded as a public policy and not intended to defeat therights of the parties. Courts have been very strict incondonation of delay regardless of the number of days where ithas been established that the party, who approached the Court,belatedly had done so for certain mala fide reasons or withulterior motive. No such allegation has been attributed to theassessee in this case. 8. We are inspired by the earlier decisions of the Hon'bleSupreme Court in the cases of (i) N.Balakrishnan Vs. M.Krishnamurthy [reported in (2008)228 ELT 162] wherein the relevant portions read as follows :""9. It is axiomatic that condonationof delay is a matter of discretion of thecourt. Section 5 of the Limitation Act doesnot say that such discretion can beexercised only if the delay is within ahttps://hcservices.ecourts.gov.in/hcservices/ certain limit. Length of delay is no matter,acceptability of the explanation is the onlycriterion. Sometimes delay of the shortestrange may be uncondonable due to a want ofacceptable explanation whereas in certainother cases, delay of a very long range canbe condoned as the explanation thereof issatisfactory. Once the court accepts theexplanation as sufficient, it is the resultof positive exercise of discretion andnormally the superior court should notdisturb such finding, much less inrevisional jurisdiction, unless the exerciseof discretion was on wholly untenablegrounds or arbitrary or perverse. But it isa different matter when the first courtrefuses to condone the delay. In such cases,the superior court would be free to considerthe cause shown for the delay afresh and itis open to such superior court to come toits own finding even untrammelled by theconclusion of the lower court. "10. ......The primary function of acourt is to adjudicate the dispute betweenthe parties and to advance substantialjustice.... Rules of limitation are notmeant to destroy the rights of parties. Theyare meant to see that parties do not resortto dilatory tactics, but seek their remedypromptly.... 12. A court knows that refusal tocondone delay would result in foreclosing asuitor from putting forth his cause. Thereis no presumption that delay in approachingthe court is always deliberate. This Courthas held that the words "sufficient cause"under Section 5 of the Limitation Act shouldreceive a liberal construction so as toadvance substantial justice..... 13. It must be remembered that in everycase of delay, there can be some lapse onthe part of the litigant concerned. Thatalone is not enough to turn down his pleaand to shut the door against him. If theexplanation does not smack of mala fides orit is not put forth as part of a dilatorystrategy, the court must show utmostconsideration to the suitor. But when thereis reasonable ground to think that the delaywas occasioned by the party deliberately togain time, then the court should leanagainst acceptance of the explanation......" https://hcservices.ecourts.gov.in/hcservices/ 13. It must be remembered that in everycase of delay, there can be some lapse onthe part of the litigant concerned. Thatalone is not enough to turn down his pleaand to shut the door against him. If theexplanation does not smack of mala fides orit is not put forth as part of a dilatorystrategy, the court must show utmostconsideration to the suitor. But when thereis reasonable ground to think that the delaywas occasioned by the party deliberately togain time, then the court should leanagainst acceptance of the explanation......" https://hcservices.ecourts.gov.in/hcservices/ (ii) Maniben Devraj Shah Vs. Municipal Corporation ofBrihan Mumbai (2012)5 SCC 157 wherein the Apex Court dealt withSection 5 of the Limitation Act and more particularly theexpression 'sufficient cause', clarified and discussed withreference to object of the Limitation Act and extent of leniencyto be shown in public interest in condonation of delay by theState machinery. Though the High Court's order to condone thedelay was set-aside by the Apex Court, it was held thatexpression sufficient cause should be construed liberally onfacts without any hard and fast rules. It has been furtherobserved that substantive right of parties should not be ignoredbecause of delay, but a distinction must be made between thedelay of few days and inordinate delay causing prejudice to theother side and that no premium can be given to total lethargy orutter negligence. It has also been observed that condonation ofdelay cannot be held as a matter of course by accepting the pleathat dismissal of the matter on the ground of limitation willcause injury to public interest. In this reported case, therewas delay of seven years and therefore, the Apex Court observedas such and refused to condone the delay, more particularly whenexplanation for such delay was prima facie found as concoctedand causing prejudice to private appellant when the issue waspertaining to demolition. It was further observed thatexplanation regarding advocate's transfer has no bearing on theissue and that explanation offered was silent about the eventsand persons involved and credible causes for such delay.Therefore also, though in this reported judgment, delay has notbeen condoned, it cannot be the rule of law that delay cannot becondoned even if sufficient cause is shown, since, in thepresent case, condonation of delay was practically refusedbecause of the particular facts on record delay of seven yearswith absence of proper explanation and concocted explanation forcondonation of delay. Therefore, unless there is such reason inthe case on hand, such decision cannot be applied to every casesblindly without verifying as to whether cause for delay issufficient or not; and (iii) State of Rajasthan Vs. Bal Kishan Mathur [reported in2014 (1) SCC 592] wherein it has been held that in a situationwhere there has been no gross negligence or deliberate inactionor lack of bonafides, this Court has always taken a broad andliberal view so as to advance substantial justice instead ofterminating a proceeding on a technical ground like limitationand that unless the explanation furnished for the delay iswholly unacceptable or if no explanation whatsoever is offeredor if the delay is inordinate and third party rights had becomeembedded during the interregnum, the Courts should lean infavour of condonation. 9. Therefore, we are of the opinion that ends of justicewould be met if the delay in filing of the appeal is condoned,as we find that the delay of 173 days cannot be stated to be aninordinate delay. We can take judicial notice of the fact thatseveral appeals filed by the Revenue themselves are presentedwith delay. But, the Courts, considering the question of lawhttps://hcservices.ecourts.gov.in/hcservices/ 9. Therefore, we are of the opinion that ends of justicewould be met if the delay in filing of the appeal is condoned,as we find that the delay of 173 days cannot be stated to be aninordinate delay. We can take judicial notice of the fact thatseveral appeals filed by the Revenue themselves are presentedwith delay. But, the Courts, considering the question of lawhttps://hcservices.ecourts.gov.in/hcservices/ raised, are gracious enough to condone the delay and not to nonsuit the Revenue on a technical ground. 10. The learned Standing Counsel for the Revenue contendedthat the order passed by the Tribunal dated 10.5.2016 dismissingthe appeal got merged with the order passed in the miscellaneouspetition, which is impugned in this appeal and that therefore,the Tribunal was fully justified in rejecting the claim of theassessee. 11. We are informed that as against the order passed by theTribunal dated 10.5.2016, the assessee filed an appeal inTCA.SR.No.14641 of 2017 and it is yet to be numbered. Havingsatisfied that the delay has been explained, that the delay notbeing inordinate and that there being no mala fides attributedagainst the assessee, we are of the opinion that the delayshould be condoned. Since the order dated 10.5.2016 is stated tobe merged with the present impugned order, the necessity toentertain a separate appeal against the order dated 10.5.2016does not arise. 12. Therefore, the questions of law as framed are answeredin favour of the assessee and against the Revenue. The above taxcase appeal is allowed, the delay of 173 days in filing theappeal is condoned and the Tribunal is directed to entertain theappeal and decide the matter on merits. No costs. Sd/- Assistant Registrar(CCC) Sub Assistant Registrar //True Copy// To1.The Income Tax Appellate Tribunal, 'D' Bench, Chennai.2.The Assistant Commissioner of Income Tax, Corporate Ward 2(1), Chennai-34. 3.The Deputy Commissioner of Income Tax Company Circle II (1), Chennai -34 4.The Commissioner of Income Tax (Appeals IV), Chennai +1cc to M/s.Karthik Ranganathan, Advocate SR.No.89803 +1cc to M/s.Subbaraya Iyyer Padmanabhan, Advocate Sr.No.89796 TCA.No.604 of 2017GMI(CO)sm:9.1.2018