Kantilal. K. Adani vs Second Income-Tax Officer on 24 November, 1987

Income Tax Appellate Tribunal – Mumbai
Kantilal. K. Adani vs Second Income-Tax Officer on 24 November, 1987
Equivalent citations: 1988 25 ITD 57 Mum
Bench: K Dixit, N Prabhu


K.R. Dixit, Judicial Member

1.This appeal has been delayed by a period of about 17 months. Therefore, the first point to consider is regarding the assessee’s application for condonation of delay. In that application, it has been stated, inter alia, as follows :

It seems the said order was served on the petitioner on or around 6th August 1984. However, the petitioner was not aware about that receipt and also what was the action, if any, initiated there-against, since as per practice, the recipient, in his office may have forwarded the same to his tax consultant then.

The assessee had asked his Tax Consultant to pursue the appeal and accordingly an application was made to the Commissioner for an early disposal. On oral inquiries by the Tax Consultant on or before 18th March, 1986, the petitioner came to know that the appeal had been disposed of by the Commissioner. It is the petitioner’s case that he had a bona fide and firm belief till March 1986 that the appeal was pending. He has also submitted in his application that immediately upon coming to know that the appeal had been disposed of by the Commissioner, he has filed this appeal before the Tribunal. Therefore, according to him, delay in filing the appeal should be condoned.

2.Before us, the assessee’s representative has relied upon the decision of the Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471. In that case, the Supreme Court has, inter alia, laid down that the expression ‘sufficient cause’ is adequately elastic to enable the court to apply the law in a meaningful manner which subserves ends of justice. The Court then laid down, inter alia, the following propositions :

2.Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.

3.’Every day’s delay must be explained’ does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay ? The doctrine must be applied in a rational commonsense pragmatic manner.

4.When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.

5.There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.

The Court also held that “making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal”. The assessee’s application shows that although the Commissioner’s order was served on the asses-see, he did not know about this. Such is the kind of management of the assessee regarding the appeal filed before the Commissioner. It does show carelessness regarding the fate of the appeal on the part of the assessee. Ordinarily, an assessee who is having large stakes as in the present case (addition of Rs. 3,37,500) would be anxious to know the result of the appeal and would be making occasional inquiries from the Chartered Accountant and would instruct his subordinates or his family members to inform him about any communication from the Commissioner’s office. For a period of 17 months, assessee did not care to find out about it. Secondly, the ITO had also passed an order under Section 144B and the assessee’s application under Section 146 was dismissed. The Commissioner’s order on that point is as follows :

2.Prom records, I find that in this case several hearings were given to the assessee in the past. In the order of the ITO only one notice under Section 143(2) fixing the hearing on 6-3-1984 is mentioned. It is seen from the record that the hearing was first fixed on 2-5-1983. On the appellant’s request, the same was adjourned. Then on 21-7-1983, the notice under Section s 143(2) and 142(1) were issued fixing the case for hearing on 8-8-1983. The appellant attended and sought adjournment up to 23-8-1983. The signature of Shri V.K. Adani is on the order-sheet. The order sheet dt. 23-8-1983 shows that none attended.The ITO directed that the case should be fixed for hearing again. Again notices under Section 143(2) and 142(1) were issued on 29-2-1984 fixing the case for 6-3-1984. On both the notices, Shri V.K. Adani has signed on behalf of Shri K.K. Adani (decd.). Shri V.K. Adani had signed on earlier notice dated 29-11-1983 as well. It is, therefore, obvious that Shri V.K. Adani is attending and appearing on behalf of Late Shri K.K. Adani. Therefore, the claim of the appellant that there- was no such service of notice is incorrect. As a matter of fact from the records, it is clear that the notices were served on the appellants and they were not complied with. Therefore, on these facts, the appellant did not file any petition under Section 146. The ITO in my opinion was justified in completing the assessment ex parte.

Thus, the attitude of tthe assessee is completely careless regarding his rights. This is not the kind of assessee who can expect that the delay should be condoned. On merits, the facts show that the assessee’s case is governed by the decision of the Gujarat High Court in the case of CIT v. Mohanbhai Pamabhai [1973] 91 ITR 393 which has recently been approved by the Supreme Court in Addl. CIT v. Mohanbhai Pamabhai [1987] 165 ITR 166. However, the Supreme Court in the aforesaid case regarding condonation of delay has stated that there is no presumption that the delay is occasioned deliberately or on account of culpable negligence. This shows that the Supreme Court would have taken a different view if the delay was caused by culpable negligence. In fact the observation of the Supreme Court that the litigant runs a serious risk suggests that the appeal might be dismissed because of the delay. In the present case, there has been culpable negligence by the assessee as pointed above. It cannot be ignored that when an appeal is entertained, the settled state of affairs by the order of the lower authorities and the expiry of the limitation of the time may be disturbed. That cannot done be lightly. The Supreme Court decision cannot be understood to mean that just because there is merit in the assessee’s appeal, any amount of delay, however, negligently caused must be condoned. That would amount to saying that the Supreme Court has held that the law of limitation does not apply at all in a case where there is merit in the assessee’s appeal, however long the delay and however negli-gent the assessee might have been. That is not so. Therefore, the delay cannot be condoned.

3.The appeal is dismissed as time-barred.

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