Under the Income-tax Act, 1961, a specific period of limitation is provided for filing an appeal before an appellate authority. Under section 260-A of the Act, a period of 120 days is provided for filing an appeal to the High Court from the order of the Income-tax Appellant Tribunal.
However, time and again the tax department has been delaying the filing of appeals much beyond this period of limitation. Thereafter, application for condonation of delay has been made before the High Court. While the court has taking a lenient view and has condoned the delay in several cases, undue delays which cannot be justified have not been condoned and the appeals which are filed late have been dismissed.
The provisions of section 5 of the Limitation Act are applicable to appeals filed under section 260-A of the Act. Once the provisions of section 5 of the Limitation Act are applicable, the entire controversy would revolve on the showing of sufficient cause while praying for condonation of delay. In other words, where there is sufficient cause shown and the application for condonation of delay has been moved for bona fide reasons, the court would normally condone the delay but where the delay has not been explained at all and, in fact, there is inordinate delay coupled with negligence or sheer carelessness, the discretion of the court in such cases would normally go against the applicant.
It really would not make much difference whether the applicant before the court is a government department or is a private individual. As per well settled principles, Courts are inclined to show greater indulgence to the departments of the government because of inter and intra departmental steps to be taken before initiation of legal proceedings by the department, but this indulgence has its own limitations and cannot be extended without any reasonable cause and that too beyond the permissible time.
Section 5 of the Limitation Act has been liberally constructed but not so liberally that without any justification or cause an accrued right in favour of the non-applicant would be taken away in a casual manner. Another aspect of the case is that the Revenue and/or even the assessees are expected to act with care and expeditiousness and not to let things lie unprocessed for months together.
The limitation for the purpose of filing of appeal under section 260-A of the Act commences from the date the copy of the order is received by the parties in terms of section 260-A(2)(a) of the Act. However, the knowledge of the proceedings and the judgment and its contents is known to the parties the moment the judgment is pronounced.
In the case of Banarsi Debi v. ITO (53 I.T.R. 100; AIR (S.C.)), the Supreme Court clearly stated the principle that the provisions introduced to open up liability which had become barred by lapse of time will be subject to rule of strict construction.In Ornate Traders Pvt. Ltd. v. Income-tax Officer (312 I.T.R. 193), the Bombay High Court has come down heavily on the Tax Department for delays in filing appeals under section 260-A.
One argument generally advanced on behalf of the department is that there are time barring cases and in that rush the officers are not able to act. The Court held that pre-occupation of an officer can be a reasonable excuse, but for a short period and nothing justified the inaction for a long period running into months. If such an excuse is to be permitted in law, then the courts would have to completely ignore the law of limitation.
Public interest imposes an obligation upon the department as a whole to ensure that every appeal which is sought to be preferred by the department is not rendered barred by time that too by inordinate and unexplained delays. In fact, some of the cases particularly where the delay is more than a year, ex facie reflects negligence and callous attitude of shifting responsibilities.
Further, it is far fetched an excuse to be put before the court that the lawyers retained the files for months together and the department was so helpless that it could take no steps to file its appeals within a reasonable time.
The expression, ‘sufficient cause’ will always have relevancy to reasonableness. The actions which can be condoned by the court should fall within the realm of normal human conduct or normal conduct of a litigant. Some extent of public accountability and responsibility will have to be the basis for looking into such conduct.
The Bombay High Court concluded that where there is unreasonable and unexplained delay on the part of the authorities concerned in instituting the appeals within the period of limitation it is detrimental to the public revenue, it is also opposed to public policy and good governance of the department.
Finally, the High Court has issued the following directions for compliance by the Tax Department:
a) The concerned authority, highest in the hierarchy of the department, has been directed to issue a circular to all concerned officer/officials to file the appeals arising from the Income-tax Act particularly section 260-A of the Income-tax Act, within the period of limitation provided under law.
b) The circular should introduce the concept of public accountability and responsibility in discharge of its official duties. Applying this principle, the concerned authority should provide for a mechanism which will fix responsibility and consequences thereof in relation to the officer/official dealing with the approval, preparation and filing of income-tax appeals in a court.
c) The directives in the circular should specify the time within which the authorities are expected to take action and have due co-operation and co-ordination between the concerned departments.
d) It should be the responsibility of a senior officer in the hierarchy of the department to ensure compliance of the directives contained in the circular as due compliance to the directives would help in achieving greater public purpose and help in saving huge public revenue.
e) It may be useful for the authority even to provide directives in relation to engagement of counsel, preparation of appeal and filing. It may be desirous to have more advocates working on the panel of the department so as to ensure that neither the appeals are barred by time nor are they dismissed for default of appearance of the advocate for the department when listed before the court for hearing.
—The author is a Supreme Court advocate