The Commissioner Of Income Tax-3Room v. M/S Reliance Capital Ltdmittal Chambers, Ground Floornariman Point, Mumbai 400 021

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 3319 OF 2008IN INTEREST TAX APPEAL (LODGING) NO. 10 OF 2007 The Commissioner of Income Tax-3Room No. 612, Aayakar Bhavan, M.K. Road, Mumbai 400 020 VERSUS M/s Reliance Capital LtdMittal Chambers, Ground FloorNariman Point, Mumbai 400 021 ))).. APPELLANT))).. RESPONDENT ALONG WITH NOTICE OF MOTION NO. 3926 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 2807 OF 2008 The Commissioner of Income Tax City-5having his office at Room No. 571 Aayakar Bhavan, Mumbai 400 020 ))).. APPELLANT VERSUS M/s Oriental Pharmaceuticals Inds. Ltd.109, Mt. Unique Peddar RoadMumbai 400 026 ))).. RESPONDENT WITH NOTICE OF MOTION NO. 3928 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 9 OF 2008 The Commissioner of Income Tax, MumbaiCity 5, Aayakar Bhavan, M.K. RoadMumbai 400 020 ))).. APPELLANT VERSUS M/s India Securities Ltd.Essar House, 11, Keshavrao Khadye MargMahalaxmi, Mumbai 400 036 ))).. RESPONDENT WITH NOTICE OF MOTION NO. 3931 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 3216 OF 2008 The Commissioner of Income Tax, City 5Having office at R. No. 571Aayakar Bhavan, Mumbai 400 020APPELLANT ))).. VERSUS M/s Jet Airways (I) Ltd.S.M. Centre, Andheri Kurla RoadAndheri (E), Mumbai 400 059 ))).. RESPONDENT WITH NOTICE OF MOTION NO. 3932 OF 2008 IN INCOME TAX APPEAL (LODGING) NO. 3215 OF 2008 The Commissioner of Income Tax, City 5 ) Having office at R. No. 571Aayakar Bhavan, Mumbai 400 020APPELLANT )).. VERSUS M/s Jet Airways (I) Ltd.S.M. Centre, Andheri Kurla RoadAndheri (E), Mumbai 400 059 ))).. RESPONDENT WITH NOTICE OF MOTION NO. 3933 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 3212 OF 2008 The Commissioner of Income Tax, City 5Having office at R. No. 571Aayakar Bhavan, Mumbai 400 020APPELLANT ))).. VERSUS M/s Jet Airways (I) Ltd.S.M. Centre, Andheri Kurla RoadAndheri (E), Mumbai 400 059 ))).. RESPONDENT WITH NOTICE OF MOTION NO. 3936 OF 2008 IN INCOME TAX APPEAL (LODGING) NO. 2913 OF 2008 The Commissioner of Income Tax, City-5having office at R. No. 571Aayakar Bhavan, Mumbai 400 020APPELLANT ))).. VERSUSM/s Jade Investments and Leasing Pvt. Ltd.)201, Raheja Centre, Free Press Journal Marg )Nariman Point, Mumbai 400 021 )).. RESPONDENT WITH NOTICE OF MOTION NO. 3937 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 3217 OF 2008 The Commissioner of Income Tax, City-5having his office at R. No. 571 Aayakar Bhavan, Mumbai 400 020APPELLANT ))).. VERSUS M/s Jet Airways (I) Ltd.S M Centre, Andheri Kurla RoadAndheri (E), Mumbai 400 059 ))).. RESPONDENT WITH NOTICE OF MOTION NO. 4051 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 2880 OF 2008 Director of Income-Tax (International Taxation), Scindia HouseBallard Pier, Mumbai 38 ))).. APPELLANT VERSUS Citi Bank N.A.“G” Block, C-61, 5[th] FloorBandra Kurla Complex, Bandra (E)Mumbai 400 051 )))).. RESPONDENT WITH NOTICE OF MOTION NO. 4054 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 2879 OF 2008 Director of Income Tax (International Taxation)Scindia House, Ballard PierMumbai 38. )))).. APPELLANT VERSUS Credit Suisse First Boston)C/o Price Waterhouse, 8[th] Floor, Trade World )“C” Wing, Kamala Mills Compound)Senapati Bapat Marg, Lower Parel)Mumbai 400 013).. RESPONDENT AND NOTICE OF MOTION NO. 4056 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 2875 OF 2008 Director of Income-Tax (International )Taxation), Scindia House)Ballard Pier, Mumbai 38).. APPELLANT VERSUS Citi Bank N.A.)“G” Block, C-61, 5[th] Floor)Bandra Kurla Complex, Bandra (E))Mumbai 400 051).. RESPONDENT Mr Vimal Gupta i/b Mr P S Sahadevan for the Appellant inN/M No.3319/08. Director of Income Tax (International Taxation)Scindia House, Ballard PierMumbai 38. )))).. APPELLANT VERSUS Credit Suisse First Boston)C/o Price Waterhouse, 8[th] Floor, Trade World )“C” Wing, Kamala Mills Compound)Senapati Bapat Marg, Lower Parel)Mumbai 400 013).. RESPONDENT AND NOTICE OF MOTION NO. 4056 OF 2008IN INCOME TAX APPEAL (LODGING) NO. 2875 OF 2008 Director of Income-Tax (International )Taxation), Scindia House)Ballard Pier, Mumbai 38).. APPELLANT VERSUS Citi Bank N.A.)“G” Block, C-61, 5[th] Floor)Bandra Kurla Complex, Bandra (E))Mumbai 400 051).. RESPONDENT Mr Vimal Gupta i/b Mr P S Sahadevan for the Appellant inN/M No.3319/08. Mr R Ashokan a/w Mr P S Sahadevan for the Appellant inN/M Nos.3926/08, 3931/08, 3932/08, 3933/08, 3936/08and 3937/08. Mr J S Saluja for the Appellant in N/M No.3928/08. Mr Parag Vyas for the Appellant in N/M Nos.4051/08, 4054/08 and 4056/08. Mr R Murlidharan i/b Rajesh Shah & Co. for the Respondentin N/M No.3319/08. Mr B V Jhaveri for the Respondent in N/M No.3926/08. Mr P C Tripathi a/w Mr A K Jasani for the Respondent inN/M Nos.3928/08, 3931/08, 3932/08, 3933/08, 3936/08,3937/08 and 4054/08. Mr B Damodar i/b Kanga & Co. for the Respondent inN/M Nos.4051/08 and 4056/08. CORAM:SWATANTER KUMAR, C.J.AND DR. D.Y. CHANDRACHUD, J.. JUDGMENT RESERVED ON : 6TH JANUARY 2009 JUDGMENT PRONOUNCED ON : 15TH JANUARY 2009 JUDGMENT: (PER SWATANTER KUMAR, C.J.) By this order, we will dispose of the above referred 11 Notice of Motions taken out by the Commissioner of Income Tax ,Mumbai for condonation of delay in filing Interest Tax Appeal No.10/2007 and Income Tax Appeals being Income Tax Appeals(Lodging) Nos.2807/2008, 9/2008, 3216/2008, 3215/2008, 3212/2008, 2913/2008, 3217/2008, 2880/2008, 2879/2008 and2875/2008. In all these cases, the delay in filing the Appeals isbetween 411 days to 883 days. 2.In Notices of Motion Nos.3926/2008, 3928/2008,3931/2008, 3932/2008, 3933/2008, 3936/2008 and 3937 of 2008,in support of the respective Notices of Motion, identical affidavitshave been filed giving the alleged reasons for condonation ofdelay. Similarly, in Notices of Motion Nos.4051/2008, 4054/2008and 4056/2008, identical affidavits have been filed, of course theyare somewhat different than the ones filed in the 7 cases referredto by us above. In Notice of Motion No.3319/2008, where there isa delay of 815 days, an affidavit has been filed without giving anydetails whatsoever. The data given in other affidavits has not beenprovided in this other affidavit. It is an affidavit of few paragraphswhich says that the Appeal should have been filed on 4[th] August2005 with a delay of 815 days and the papers were given to theCounsel on 1[st] October 2007, who drafted the Appeal on 15[th]October 2007 and thereafter some more time was taken to preparethe Appeal which was filed on 29[th] October 2007. This applicationfor condonation of delay was seriously opposed by the learned Counsel appearing for the Non-Applicant. There is no doubt thatnot even an attempt has been made by the Department to explainthe delay of 815 days. The affidavit besides being vague,practically contains no averments. This affidavit further shows thecallous approach adopted by the Department in pursuing thematter. Admittedly, the order of the Tribunal was dated 10[th]February 2005 and it has not even been stated as to when the saidorder was received by the Department. In fact, the Appeal appearsto have been filed after a lapse of more than two years as it wasfiled on 29[th] October 2007 in the registry of this Court. Thisaffidavit does not give any reasons much less shows a sufficientcause for condonation of such huge delay in filing the Appeal. Adefinite right has accrued in favour of the Non-Applicant whichcannot be taken in face of such vague averments and where theaffidavit in support of the Motion does not provide any details. 3. 3. Coming back to the affidavit filed in support of Notices of Motion Nos.3926/2008, 3928/2008, 3931/2008, 3932/2008,3933/2008, 3936/2008 and 3937 of 2008, the affidavits filed arealmost identical in terms in all these cases. In Notices of Motion Nos.3931/2008, 3932/2008 and 3933/2008, the order was passedby the Income Tax Appellate Tribunal on 30[th] May 2006 and isstated to have been received by the Office of the Commissioner ofIncome Tax on 14[th] June 2006. The scrutiny report was called forwhich was sent on 10[th] October 2006. It has no where beenexplained as to what steps were taken by the Department forpreparing the so-called scrutiny report during the intervening periodof four months. This report, however, was received in the Office ofthe Commissioner of Income Tax on 11[th] October 2006 and thenthe file was sent to the Panel Counsel for drafting the Memo ofAppeal, which according to the Department, was received on 14[th]August 2008. Thereafter some time was taken in finalising theAppeal and the Appeal was filed on 29[th] August 2008 whereas thelast date for filing the Appeal was 12[th] October 2006. Theapplication for condonation of delay was opposed by the Non-Applicants as the delay in each of these cases is 411, 687, 656and 883 days. In our view, no explanation has been rendered inthe affidavits which would constitute sufficient cause forcondonation of such large delay in filing the Appeals. 4054/2008 and 4056/2008, where again identical affidavit insupport of the Notice of Motion have been filed, the delay in filingthese three Appeals is 450 days. The affidavit filed by the DeputyDirector of Income Tax again are vague, uncertain and provide noproper explanation for the delay caused. The order of the IncomeTax Appellate Tribunal was passed on 19[th] December 2006 and18[th] January 2007; the copies are stated to have been received bythe Department on 2[nd] February 2007 and the Appeal was to befiled on or before 2[nd] June 2007 as per the own case of theApplicant. However, the same were filed on 28[th] August 2008.The copioes were received on 2[nd] February 2007 and till 14[th] July2007, no action whatsoever was taken by the Department and asnothing has been stated in the affidavit. The affidavits open withthe words that the deponent joined the concerned Branch on 14[th]July 2007 and he found a huge back log left by his predecessorand he was holding the additional charge. It is nowhere stated thatwhat steps were taken even thereafter to file the Appealexpeditiously though it had admittedly become barred by time on14[th] July 2007. It is stated that the Officer went to Delhi forattending cases and for meetings with the Law Officers. Theseaffidavits are void of any proper explanation which would constitute a sufficient cause in the eyes of law. It is obligatory upon the Applicant to properly explain the delay, may be not each day'sdelay, but the cumulative explanation for condoning the delay ofthis kind has to necessarily be stated in the affidavits. A valuableright accrues to the other side when the remedy is permitted tobecome barred by time. 5.In a recent judgment of a Division Bench of this Court in thecase of Ornate Traders Private Limited vs The Income Tax Officer,Mumbai, (Notice of Motion No.2281 of 2008 in Income TaxAppeal (Lodging) No.1814 of 2008 and other connected matters decided on 29[th] August 2008), while dealing with Notices ofMotion for condonation of delay of the similar kind, where the delaywas of more than a year and there was no proper explanation, theCourt declined to condone the delay and held as under :- “6..... It is expected that the GovernmentDepartments should function in a properlymechanized manner and not to act so casuallythat because of its inaction or misdeeds, thepublic exchequer is made to suffer. Xxxxx xxxxxxxxxx 20.The law of procedure undisputedlytakes in its ambit and scope the need to actexpeditiously and not to delay the progress of the decided on 29[th] August 2008), while dealing with Notices ofMotion for condonation of delay of the similar kind, where the delaywas of more than a year and there was no proper explanation, theCourt declined to condone the delay and held as under :- “6..... It is expected that the GovernmentDepartments should function in a properlymechanized manner and not to act so casuallythat because of its inaction or misdeeds, thepublic exchequer is made to suffer. Xxxxx xxxxxxxxxx 20.The law of procedure undisputedlytakes in its ambit and scope the need to actexpeditiously and not to delay the progress of the legal proceedings. The law of limitation strictosenso is not law of procedure simplicitor but hasthe effect of creating a legal bar in exercise of aright which otherwise would have been availableto a party but for lapse of time. As alreadynoticed, the law of limitation is based on publicpolicy and helps effective and properadministration of justice. It is expected of everylitigant and particularly the litigants who havelarge litigation who have their own legaldepartment and channels, to act within the periodof limitation. It is only by way of an exception andupon showing sufficient cause that Appeals, ifotherwise permissible, could be entertainedbeyond the prescribed period of limitation. It alsobe noticed that in the case of State of West Bengalvs. Administrator, Howrah Municipality, AIR 1972SC 749, the Supreme Court held that expression“sufficient cause” should receive a liberalconstruction so as to advance the purpose ofjustice particularly when there is no motive behinddelay. This necessarily implies that parties mustact bonafidely, expeditiously and with due care. Acasual or a negligent litigant who has acted withutter irresponsible attitude, cannot claim thecondonation of delay in law when the right hasaccrued to the other side. xxxxxxxxxxxxxxx 23.In performance of their functions,public officers or public servants have the duty toact judiciously, fairly and expeditiously. An officercan hardly justify that a file would lie on his tablefor months or days together and he would not acton the said file just because he claims to be pre-occupied. Another argument advanced on behalfof the Department was that there are time barcases and in that rush the officers are not able to xxxxxxxxxxxxxxx 23.In performance of their functions,public officers or public servants have the duty toact judiciously, fairly and expeditiously. An officercan hardly justify that a file would lie on his tablefor months or days together and he would not acton the said file just because he claims to be pre-occupied. Another argument advanced on behalfof the Department was that there are time barcases and in that rush the officers are not able to act. Firstly, there is no specific averment in thisregard with any dates in the affidavit filed insupport of the Notice of Motion. Secondly, the timebarring cases are completed by 31[st] March orimmediately thereafter, while all these cases relateto the period subsequent to March of therespective assessment year. Pre-occupation of anofficer or officials can be a reasonable excuse, butfor a short period and nothing justifies the inactionfor a pretty long period running into months. Ifsuch an excuse is to be permitted in law, then theCourts would have to completely ignore the law oflimitation. Public interest imposes an obligationupon the Department as a whole to act in achannalised manner and to ensure that everyappeal which is sought to be preferred by theDepartment is not rendered barred by time that tooby inordinate and unexplained delays. In fact,some of the cases before us, particularly wherethe delay is more than a year, ex facie reflectsnegligence and callous attitude of shiftingresponsibilities. If the file was pending with thelawyer, there is not even an averment that thelawyer who retained the file for few months wascontacted or any officer of the Department went tothe lawyer to either take back the papers or to getthe draft ready for filing in the Court of competentjurisdiction. It is too far fetched an excuse to beput forth before the Court of law that the lawyersretained the files for months together and theDepartment was so helpless that it could take nosteps to file its appeals within a reasonable time.The expression “sufficient cause” will always haverelevancy to reasonableness. The actions whichcan be condoned by the Court should fall withinthe realm of normal human conduct or normalconduct of a litigant. It is neither expected nor itcan be a normal conduct of a public servant or alitigant that they would keep the files unmoved,unprocessed for months together on their tables.Some extent of public accountability and responsibility will have to be the basis for lookinginto such conduct. The consequences of suchinordinate delay can be very fatal besidesrendering remedy barred by law also leads to lossof public exchequer. This aspect of the matterintroduces larger responsibility and consciousnessin the conduct of the affairs of the revenuedepartment. Certain amount of leverage orrelaxation for departmental functions would bepermissible, but this cannot be extended to thelimits protecting negligence and irresponsibilitysimplicitor. For example, in Notice of Motion No.2335 of 2008, the copy was received on 6thDecember 2006. The prescribed period oflimitation was permitted to expire. There isnothing in the application to say what steps weretaken before 4[th] April 2007, when the Appeal wasalleged to have been sent for drafting. There is noaverment as to what steps were taken for gettingthe draft appeal prepared and filing of the same inCourt right from 4[th] April 2007 till 27[th] February2008. Even when the Appeal was ready inFebruary 2008, there is no explanation as to why itwas filed on 26th June 2008, after a lapse of morethan four months. Similarly, in Notice of MotionNo. 2059 of 2008, the copy was received on 23[rd]June 2004 and no steps whatsoever were takenbetween 23[rd] June 2004 till 20[th] September 2004.Thereafter, various persons claimed to have actedin regard to various aspects of the case, likescrutiny, A.O.'s report, approval and authorisation.The draft Appeal was received in the office of theAppellant on 30[th] November 2004, but the Appealhas been filed in the High Court on 25[th] February2008. No reason whatsoever has been given asto what was being done for the intervening periodfor more than three months. Apart from thestandardised proforma giving chronology of datesand events in the affidavit in support of the Noticesof Motion attempting to show sufficient cause forcondonation of delay, no event whatsoever during this period has been referred to so as to renderthe cause sufficient and delay reasonable. Thesefacts clearly show that there was utter negligentand irresponsible attitude on the part of theofficers/officials. 24.In all the applications for condonationof delay, similar tables have been given with moreor less similar facts but of course the dates aredifferent in different cases. In fact, even dates insome cases are common. In other words, it is acollective excuse shown for condonation of delays,stages in different cases are the same but theperiod of delay varies from 18, 190 to 1474 days.In the cases where the delay is of 18 or 190 daysor even upto a year, some plausible explanationhas been rendered which the Court may, keepingin view the concept of public interest and publicrevenue, show indulgence and condone the delay.Even in such cases, there is unexplained delay,but as stated in different cases, the Departmentmay not be called upon to explain each day'sdelay because of their office procedures andcompetency to take decision in the hierarchy ofthe Department. All this can be excused, but to alimited extent. Normally, file may take few days ora week on a table, but cannot take months andyears. In the cases where the delay is more than400 days or above 1000 days, there has been nojustification, much less a sufficient cause shown,for condonation of delay. In these cases, whereinordinate delay is unexplained, explanation giveneither is fanciful or opposed to normal course ofhuman conduct and official conduct coupled withelement of negligence and irresponsible attitude.Vague explanation or in some cases noexplanation further adds to the gravity of thesituation in the Department of Revenue. 25.In the Appeals preferred by the Department,obviously before the Appellant approaches the 25.In the Appeals preferred by the Department,obviously before the Appellant approaches the High Court, they have exhibited three differentlevels under the Act, i.e. order of AssessingOfficer, order of the Commissioner of Appeals andthen the order of Tribunal. Recourse to specialremedy under Section 260A of the Income Tax Actwhich specifies the period of limitation, theAppellants are expected to act with responsibilityand vigilance. In all these cases, the distinction inthe case to be founded on the extent of the delay,unexplained and inordinate delay and thenegligence and casual attitude of theofficers/officials dealing with the matter. Where allthese three elements are collectively present andthe delay is beyond the period of 400 days i.e.more than a year, there would be no justificationwith the Court to divest the non-applicant of a rightwhich has accrued to him in law and in factbecause of the unreasonable conduct of theapplicant. 26.From the copies of the orders of theTribunal placed on record, it is obvious that theorders were pronounced in accordance with lawmuch prior to the dates when the copies werereceived by the Department. In other words, theDepartment was fully aware of the fate of the casebefore the Tribunal and its responsibilities arisingfrom such a judgment and order. The plea of timebarring cases, over-load work are hardly of anyconsequence in the present case. We havealready noticed that majority of the cases wherethe delay is large, they all are stated to be inprocess only after the expiry of 31[st] March of therespective year. The question of public revenuecannot be used as an excuse. It in fact adds tothe responsibility and liability of the Department.Wherever there is higher public revenue, greater isthe responsibility to act with utmostexpeditiousness. It cannot justify the conductthat you sleep over and ignore your statutoryrights for years and then take up the plea of public revenue. The Court can also not completelyignore the interest of the assessee who mighthave succeeded in the previous proceedingsleading to the filing of the Appeal. 28.Having given our considered attentionto the various aspects of these cases, in ouropinion, interest of justice would be better served ifsome latitude and relaxation is given to theApplicants (Commissioners of Income Tax). Wewould condone the delay in all the Appeals wherethe delay is less thana year and which has beenreasonably explained. But in the case where thedelay is beyond one year and upto 1474 days, wewould reject the applications for condonation ofdelay as there is no proper explanation and nosufficient cause shown for condonation of delayand there is apparent negligence and callousnesson the part of the officer/officials of the Departmentto the extent that even correct statements havenot been made in those cases.” 6. We may notice here that in that judgment, even certain directions were issued to the Department to ensure filing ofAppeals within time in future and to fix the responsibility of thedefaulting officers as the Appeals cannot be permitted to becometime barred as a matter of routine since it involved the question ofGovernment revenue. Thus, all these cases have been filed afterthe pronouncement of the order in that case, still no care has beentaken to comply with the directions of the Court. The affidavits filedrender no proper explanation. It is not even referred to in the 6. We may notice here that in that judgment, even certain directions were issued to the Department to ensure filing ofAppeals within time in future and to fix the responsibility of thedefaulting officers as the Appeals cannot be permitted to becometime barred as a matter of routine since it involved the question ofGovernment revenue. Thus, all these cases have been filed afterthe pronouncement of the order in that case, still no care has beentaken to comply with the directions of the Court. The affidavits filedrender no proper explanation. It is not even referred to in the affidavits whether the Department has cared to fix the responsibilityof the erring officers who have permitted the Appeals to becomebar by time as a result of sheer negligence and carelessness. Ifthe officers would have acted timely, the Appeals would not havebecome barred by time. The officer claims to have taken over thepost in July 2007, and as already noticed that knowing fully awarethat the Appeals have become barred by time, still it took morethan one year for the Department to file these Appeals. Thisinordinate delay in filing the Appeals have remained unexplained.The only apparent cause for such serious delay is callous,irresponsible style of functioning in the Department. The principleof public accountability makes the concerned officers responsibleand liable for such omission. We do hope that the Departmentwould look into the matter in its proper perspective. 7.While declining to condone such inordinate delay infiling the Appeals, all the Notice of Motions are dismissed.Consequently, the Appeals do not survive for consideration whichare also dismissed. No order as to costs. july08/judgment/nm3319-08final.sxw CHIEF JUSTICE DR. D.Y. CHANDRACHUD, J.