The Principal Commissioner Of Income Tax (Central), Ahmedabad v. Lavjibhai Swarupchand Mehta

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/CIVIL APPLICATION NO. 1544 of 2021 In R/TAX APPEAL NO. 657 of 2022 ==========================================================THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL),AHMEDABAD VersusLAVJIBHAI SWARUPCHAND MEHTA ========================================================== Appearance: MR. VARUN K. PATEL, ADVOCATE for the Applicant(s) No. 1MR B S SOPARKAR(6851) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMARandHONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI Date : 12/10/2022 ORAL ORDER (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR) 1. This is an application filed by the Revenue seeking condonation of delay of 474 days in preferring the Appealunder section 260A of the Income Tax Act, 1961 in TaxAppeal (F) No. 17463 of 2021 (Tax Appeal No. 657 of 2022). 2.The applicant has contended that order of theIncome Tax Appellate Tribunal (for short ‘ITAT’) was receivedon 30.07.2018 and a rectification application came to be filed on 14.02.2019 which was dismissed by ITAT as time barredby order dated 28.08.2019. Being aggrieved by the same,Revenue had filed Special Civil Application No. 13024 of 2020against the order dated 28.08.2019 passed by ITAT and saidSpecial Civil Application also came to be dismissed on22.10.2020 and as such Tax Appeal No. 657 of 2022 was filedon 17.07.2021 against the order of the ITAT dated08.06.2018. Hence, appellant is seeking for condonation ofdelay. 3.For reasons best known, additional affidavit has beenfiled by Mr. Sandeep Jain, Principal Commissioner of IncomeTax (Central) Ahmedabad narrating the sequential events andalso contending that Department was pursuing the matterand as it was under bona fide reason, Appeal was not filed ontime and seeks for condonation of delay. 4.Respondent on being notified, has filed a replyaffidavit opposing the delay being condoned and denyingeach and every averments made in the application as well asaffidavit opposing the delay being condoned and denyingeach and every averments made in the application as well as in the additional affidavit. It has been contended that there isdelay of more than 900 days in filing the Tax Appeal and toovercome the judgment of this Court, present Appeal hasbeen filed with inordinate delay. It is further contended thatin respect of Mr. Mehul Lavji Mehta, who is son of assessee,there was an order passed by the Tribunal under similarcircumstances on 22.09.2017, against which the Revenue hadfiled an appeal under Section 260A in Tax Appeal No. 208 of2018 on 20.02.2018 and this Court vide order dated18.06.2018 passed in Tax Appeal No. 208 of 2018 havingobserved and directed the Revenue to file application forrectification without bar of limitation, Revenue had filed anapplication before the Tribunal on 16.07.2018 which has beendismissed vide order dated 24.08.2022 and Revenue beingconscious and well aware of the fact that against the order ofthe Tribunal, an Appeal had to be filed under section 260A, itcould not have filed an application for rectification before theITAT in the present case and pursue its grievance afterhaving failed in its attempts therein, the Revenue cannot beallowed to file Appeal belatedly, inasmuch as the Revenue was aware and conscious of the order of the Tribunal not only was aware and conscious of the order of the Tribunal not only passed in the present case but also in respect of the son ofthe present assessee which had resulted in dismissal on22.09.2017, against which an Appeal had been filed in TaxAppeal No. 208 of 2018 and as such Revenue cannot feignignorance. By relying upon the judgment of High Court ofBombay in the case of Commissioner of Income-Tax-4versus Harinagar Sugar Mills Ltd. reported in (2015)276 CTR 473 Bombay, respondent has prayed for theapplication for condonation of delay being dismissed andconsequently, Appeal being dismissed. 5.We have heard the arguments of Mr. Varun K. Patel,learned counsel appearing for Revenue and Mr. BandishSoparkar, learned counsel appearing for respondent. Theyhave reiterated the contentions raised in their respectivepleadings and have sought for grant of the prayers sought fortherein. the respective parties, we are of the considered view that following point would arise for our consideration : “Whether the delay of 474 days in filing theAppeal deserves to be condoned or rejected ?” 7.While considering an application for condonation ofdelay, it is not the length of delay but cause for delay whichwould be of paramount consideration. If the cause shown isjust and sufficient which is falling within four corners of“sufficient cause” as indicated in Section 5 of the LimitationAct, 1963, such delay deserves to be condoned irrespective oflength of delay. However, if the cause shown is not withinthe proximity of truth or contrary to facts or there has beendeliberate suppression of material facts, irrespective oflength of delay, such cause cannot be accepted or delaycannot be condoned. It all depends upon facts andcircumstances of each case. There cannot be any straitjacketformula prescribed for considering the cause for delay. 8.It also requires to be noticed that no litigant would stand to benefit in approaching the Court belatedly. However, if the cause shown in the application or the affidavits supporting the application is reasonable cause,which a person of ordinary prudence would plead andaccepted such cause deserves to be accepted. When justiceis at stake, a technical or a pedantic approach would not beadopted by the Court and in order to complete justicebetween the parties and to avoid miscarriage of justice, thedelay, if any, when explained with sufficient cause, deservesto be condoned. The Hon’ble Apex Court in the case ofCollector Land Acquisition, Anantnag & Anr. Versus Mst. Katiji and others, reported in AIR 1987 SC 1353, hasheld that the Courts should adopt liberal approach andreiterated the reasons for adopting such approach. It hasbeen held : “3. "Every day's delay must be explained" doesnot mean that a pedantic approach should bemade. Why not every hour's delay, every second'sdelay? The doctrine must be applied in a rationalcommon sense pragmatic manner. 4. When substantial justice and technicalconsiderations are pitted against each other,cause of substantial justice deserves to bepreferred for the other side cannot claim to havevested right in injustice being done because of anon-deliberate delay. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice ontechnical grounds but because it is capable ofremoving injustice and is expected to do so.” 9.In the case of State of Nagaland versus Lipok AO & Others reported in (2005) 3 SCC 752, the Hon’ble ApexCourt has held that peculiar characteristic of functioning of aGovernmental functionaries requires adoption of pragmaticapproach and certain amount of latitude is not impermissible. It has been further held : 4. When substantial justice and technicalconsiderations are pitted against each other,cause of substantial justice deserves to bepreferred for the other side cannot claim to havevested right in injustice being done because of anon-deliberate delay. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice ontechnical grounds but because it is capable ofremoving injustice and is expected to do so.” 9.In the case of State of Nagaland versus Lipok AO & Others reported in (2005) 3 SCC 752, the Hon’ble ApexCourt has held that peculiar characteristic of functioning of aGovernmental functionaries requires adoption of pragmaticapproach and certain amount of latitude is not impermissible. It has been further held : “10. In Concord of India Insurance Co. Ltd. v. NirmalaDevi, (1979 (4) SCC 365) which is a case of negligence ofthe counsel which misled a litigant into delayed pursuit ofhis remedy, the default in delay was condoned. In LalaMatu Din v. A. Narayanan, (1969 (2) SCC 770), this Courthad held that there is no general proposition that mistakeof counsel by itself is always sufficient cause forcondonation of delay. It is always a question whether themistake was bona fide or was merely a device to cover anulterior purpose. In that case it was held that the mistakecommitted by the counsel was bona fide and it was nottainted by any mala fide motive. 11. In State of Kerala v. E.K. Kuriyipe, (1981 Supp SCC72), it was held that whether or not there is sufficientcause for condonation of delay is a question of factdependant upon the facts and circumstances of theparticular case. In Milavi Devi v. Dina Nath, (1982 (3)SCC 366), it was held that the appellant had sufficientcause for not filing the appeal within the period oflimitation. This Court under Article 136 can reassess theground and in appropriate case set aside the order madeby the High Court or the Tribunal and remit the matterfor hearing on merits. It was accordingly allowed, delaywas condoned and the case was remitted for decision onmerits. 11. In State of Kerala v. E.K. Kuriyipe, (1981 Supp SCC72), it was held that whether or not there is sufficientcause for condonation of delay is a question of factdependant upon the facts and circumstances of theparticular case. In Milavi Devi v. Dina Nath, (1982 (3)SCC 366), it was held that the appellant had sufficientcause for not filing the appeal within the period oflimitation. This Court under Article 136 can reassess theground and in appropriate case set aside the order madeby the High Court or the Tribunal and remit the matterfor hearing on merits. It was accordingly allowed, delaywas condoned and the case was remitted for decision onmerits. 15. It is axiomatic that decisions are taken byofficers/agencies proverbially at slow pace andencumbered process of pushing the files from table totable and keeping it on table for considerable timecausing delay - intentional or otherwise - is a routine.Considerable delay of procedural red-tape in the processof their making decision is a common feature. Therefore,certain amount of latitude is not impermissible. If theappeals brought by the State are lost for such default noperson is individually affected but what in the ultimateanalysis suffers, is public interest. The expression"sufficient cause" should, therefore, be considered withpragmatism in justice-oriented approach rather than thetechnical detection of sufficient cause for explaining everyday's delay. The factors which are peculiar to andcharacteristic of the functioning of the governmentalconditions would be cognizant to and requires adoption ofpragmatic approach in justice- oriented process. Thecourt should decide the matters on merits unless the caseis hopelessly without merit. No separate standards todetermine the cause laid by the State vis-a-vis privatelitigant could be laid to prove strict standards of sufficientcause. The Government at appropriate level shouldconstitute legal cells to examine the cases whether anylegal principles are involved for decision by the courts orwhether cases require adjustment and should authorisethe officers to take a decision or give appropriatepermission for settlement. In the event of decision to fileappeal needed prompt action should be pursued by theofficer responsible to file the appeal and he should bemade personally responsible for lapses, if any. Equally,the State cannot be put on the same footing as anindividual. The individual would always be quick in takingthe decision whether he would pursue the remedy by wayof an appeal or application since he is a person legallyinjured while State is an impersonal machinery workingthrough its officers or servants. 10.The Hon’ble Apex Court in the case of Sesh Nath Singh and Another versus Baidyabati Sheoraphuli Co-operative Bank Limited and Another reported in (2021) 7 SCC 313, has held that period of pursuing the remedy in awrong forum is not essential for claiming exclusion of timeunder section 14 of the Limitation Act, and such exclusioncan be claimed even while the proceedings in the wrong Forum is pending. It has been further held : “60. It is true that a valuable right may accrue to the otherparty by the law of limitation, which should not lightly bedefeated by condoning delay in a routine manner. At thesame time, when stakes are high, the explanation shouldnot be rejected by taking a pedantic and hyper technicalview of the matter, causing thereby irreparable loss andinjury to the party against whom the lis terminates. Thecourts are required to strike a balance between thelegitimate rights and interests of the respective parties. 7 SCC 313, has held that period of pursuing the remedy in awrong forum is not essential for claiming exclusion of timeunder section 14 of the Limitation Act, and such exclusioncan be claimed even while the proceedings in the wrong Forum is pending. It has been further held : “60. It is true that a valuable right may accrue to the otherparty by the law of limitation, which should not lightly bedefeated by condoning delay in a routine manner. At thesame time, when stakes are high, the explanation shouldnot be rejected by taking a pedantic and hyper technicalview of the matter, causing thereby irreparable loss andinjury to the party against whom the lis terminates. Thecourts are required to strike a balance between thelegitimate rights and interests of the respective parties. 61.Section 5 of the Limitation Act, 1963 does notspeak of any application. The Section enables the Court toadmit an application or appeal if the applicant or theappellant, as the case may be, satisfies the Court that hehad sufficient cause for not making the application and/orpreferring the appeal, within the time prescribed.Although, it is the general practice to make a formalapplication under Section 5 of the Limitation Act, 1963, inorder to enable the Court or Tribunal to weigh thesufficiency of the cause for the inability of theappellant/applicant to approach the Court/Tribunal withinthe time prescribed by limitation, there is no bar toexercise by the Court/Tribunal of its discretion to condonedelay, in the absence of a formal application. 65. As observed above, Section 238A of the IBC makes theprovisions of the Limitation Act, as far as may be,applicable to proceedings before the NCLT and theNCLAT. The IBC does not exclude the application ofSection 6or 14 or 18 or any other provision of theLimitation Act to proceedings under the IBC in theNCLT/NCLAT. All the provisions of the Limitation Act areapplicable to proceedings in the NCLT/NCLAT, to theextent feasible. 68. Section 14 (2) of the Limitation Act provides that incomputing the period of limitation for any application, thetime during which the petitioner had been prosecuting,with due diligence, another civil proceeding, whether in acourt of first instance, or of appeal or revision, against thesame party, for the same relief, shall be excluded, wheresuch proceeding is prosecuted in good faith in a Courtwhich, from defect of jurisdiction or other cause of likenature, is unable to entertain it. The conditions forexclusion are that the earlier proceedings should havebeen for the same relief, the proceedings should have beenprosecuted diligently and in good faith and theproceedings should have been prosecuted in a forumwhich, from defect of jurisdiction or other cause of a likenature, was unable to entertain it.” 11.We are also conscious of the fact that concepts such as “liberal approach”, “justice oriented approach”,“substantial justice” cannot be employed to jettison thesubstantial law of limitation. However, to apply thisprinciple, the Court will have to arrive at a conclusion thatthere is no justification given for the cause for delay. Theexpression or word “sufficient cause” occurring in section 5of the Limitation Act, 1963, cannot be construed in a staticform, it requires to be examined on the basis of the factspleaded and it has to be read in the background of the terrainit travels. When technicalities are pitted against substantialjustice, naturally such technicalities will have to yield orkneel before the substantial justice, or in other words, 11.We are also conscious of the fact that concepts such as “liberal approach”, “justice oriented approach”,“substantial justice” cannot be employed to jettison thesubstantial law of limitation. However, to apply thisprinciple, the Court will have to arrive at a conclusion thatthere is no justification given for the cause for delay. Theexpression or word “sufficient cause” occurring in section 5of the Limitation Act, 1963, cannot be construed in a staticform, it requires to be examined on the basis of the factspleaded and it has to be read in the background of the terrainit travels. When technicalities are pitted against substantialjustice, naturally such technicalities will have to yield orkneel before the substantial justice, or in other words, technicalities will have to make way for substantial justice.On the ground of delay, the larger relief to which the litigantmay be entitled to, cannot be deprived of on suchtechnicalities. However, at the same-time, this Court alsocannot loose sight of the fact that delay disentitles such reliefto a litigant who is indolent, negligent or careless, since delaydefeats equity. The contours of sufficient cause requires to beconsidered as explained by the Hon’ble Apex Court in thecase of Collector Land Acquisition, Anantnag & Anr.Versus Mst. Katiji and others (supra), which areillustrative and keeping in mind the observations madetherein, facts on hand is being examined. 12.The order of the ITAT - Tribunal came to be passedon 08.06.2018. The application for rectification was filedbefore the Tribunal by the Revenue on 14.02.2019. Duringthis interregnum period, steps taken by the Revenue will alsohave to be noticed, namely in the case of Mehul Lavji Mehta,the son of the assessee herein who was also visited with anorder of Tribunal on 22.09.2017 resulted in Revenue filing an Appeal in Tax Appeal No. 208 of 2018 on 20.02.2018. On18.06.2018, this Court in Tax Appeal No. 208 of 2018directed the Revenue to file an rectification applicationbefore ITAT without bar of limitation and as such anapplication for rectification was filed in the case of MehulLavji Mehta (son of assessee herein) on 16.07.2018 by theRevenue. In view of this development which had taken place,obviously wisdom prevailed upon the Department to file anrectification application before the Tribunal in respect of thisassessee namely the respondent in Tax Appeal No. 657 of2022 on 14.02.2019 and on its dismissal on 28.08.2019 whichwas confirmed in Special Civil Application No. 13024 of 2020on 22.10.2020, the present Appeal was filed belatedly. Thedelay that has occasioned has to be necessarily accepted as asufficient cause for the reasons more than one; firstly – theRevenue was prosecuting its cause before the Tribunal byfiling rectification application and as such it would bejustified in requesting this Court to exclude the timeconsumed in prosecuting aforesaid proceedings as it wasprosecuting right cause before different Forum; secondly – in the light of the development that had taken place duringinterregnum period i.e. after the order of Tribunal passed on08.06.2018 and before filing of the Application forrectification before ITAT on 14.02.2019, in the connectedmatter i.e. in the Appeal of Mr. Mehul Lavji Mehta (son ofpresent assessee), an observation has been made by thisCourt to file such application which had perforced theRevenue to file the rectification application in the instant casealso was the reason for such delay. However, therectification application which was filed in the instant casewas dismissed on 28.08.2019 by the Tribunal which wascarried before this Court by the Revenue in Special CivilApplication No. 13024 of 2020 and this Court by order dated20.10.2020 dismissed the Special Civil Application filed byRevenue and confirmed the order dated 28.08.2019 passedby ITAT. It is this order which gave cause of action ortriggered the Revenue to resort to filing an appeal undersection 260A of the Act namely the Tax Appeal No. 657 of2022, which was belated. According to the Registry, thenumber of days delay calculated it is 474 days. However,Mr. Bandish Soparkar, learned Advocate would contend thatthere is 900 days delay in filing the Appeal. Registry hasrightly taken note of the fact that from the date of receipt ofthe order of the Tribunal by the Revenue being 30.07.2018and Appeal having been filed on 17.07.2021, delay would be1083 days delay and excluding the limitation prescribednamely 120 days delay, it would be 963. Delay which hadoccasioned due to lock-down namely 489 days, the benefithas also been extended to the Revenue and as such theRegistry has arrived at a conclusion that there is delay of 474days (963 – 489 days). In that view of the matter, contentionof Mr. Bandish Soparkar that there is delay of more than 900days, cannot be accepted and it stands rejected. 13.The cause for delay of 474 in filing the Appeal havingbeen explained by the Revenue not only in affidavit but alsoin the additional affidavit (referred to herein supra) by givingsufficient cause, we are of the considered view that delaydeserves to be condoned and accordingly it stands condoned. 14.ALLOWED. Civil Application No. 1544 of 2021 is hereby (ARAVIND KUMAR,CJ) AMAR SINGH (ASHUTOSH J. SHASTRI, J)