Shri Harish Kumar Chhabra V. Commissioner of Income Tax, Ludhiana

ITA/38/2012

AI Insights

The case involves an appeal by Shri Harish Kumar Chhabra against the Commissioner of Income Tax, Ludhiana, concerning the assessment year 2005-06. The primary issue was the dismissal of Chhabra's appeal by the Income Tax Appellate Tribunal (ITAT) due to a delay of 251 days in filing the appeal, which was attributed to the negligence of his counsel. The High Court examined whether the ITAT was justified in not condoning the delay, considering the circumstances presented by Chhabra's counsel, who admitted to the oversight due to a heavy workload during the tax return filing season. The court referenced several precedents on the principles of condonation of delay and concluded that the delay should be condoned, allowing the appeal and remitting the case back to the ITAT for a decision on the merits.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 796250 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 28-08-2012
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX, KOLKATA-II VS. WEST BENGAL INFRASTRUCTURE DEVELOPMENT FINANCE CORPORATION LIMITED, M/s Hansaflon Plasto Chem. Ltd v. State of Haryana and others, Oriental Aroma Chemical Industries Ltd. v. Gujarat Industrial Development Corporation and another, R.B. Ramlingam v. R.B. Bhavaneshwari
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH
• Assessee Lawyers: S K MUKHI
• Keywords: Assessment Year 2005-06; Condonation of delay; Income from undisclosed sources
• Section: 143(1); 260A

Judgement Text

"ITA No. 38 of 2012 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 38 of 2012 (O&M) Date of Decision: 28.8.2012 Shri Harish Kumar Chhabra ....Appellant. Versus Commissioner of Income Tax, Ludhiana ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE G.S. SANDHAWALIA. PRESENT: Mr. S.K. Mukhi, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1. Delay in refiling the appeal is condoned. 2. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 30.8.2011 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 720/CHD/2011, for the assessment year 2005-06, claiming the following substantial question of law:- “A. Whether ITAT was justified in dismissing the appeal of the appellant ignoring well settled law of Condonation of Delay and that too delay having caused on the part of the counsel of the appellant ITA No. 38 of 2012 -2- and also not considering the fact that CIT(A) having not considered the merits of the case especially when huge stake of appellant was involved which was devoid of merits and against the ratio of judgment laid down by Hon'ble Supreme Court of India in the case of COMMISSIONER OF INCOME TAX, KOLKATA-II VS. WEST BENGAL INFRASTRUCTURE DEVELOPMENT FINANCE CORPORATION LIMITED 56 DTR 351 (SC)? B. That the order of the Tribunal is legally unsustainable and bad in law and perverse?” 3. Put shortly, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee filed his return of income on 31.10.2005 for the assessment year 2005-06 declaring an income of ` 3,14,240/-. The said return was processed under Section 143(1) of the Act. The Assessing Officer vide order dated 26.12.2007 (Annexure A-1) treated the amount of ` 17,00,000/-, which the assessee projected as gift from his close friend, as income from undisclosed sources and made the additions. Feeling aggrieved against the assessment order, the assessee filed an appeal before the CIT(A). The CIT(A) vide order dated 10.8.2010 (Annexure A-2) confirmed the addition made by the Assessing Officer and dismissed the appeal. Still dissatisfied, the assessee approached the Tribunal by way of an appeal. As the appeal was barred by time, the assessee filed an application for condonation of 251 days' delay in filing the appeal. The Tribunal vide order dated 30.8.2011 (Annexure A-3) dismissed the appeal. Hence, ITA No. 38 of 2012 -3- the present appeal. 4. We have heard learned counsel for the parties. 5. The primary dispute which arises for consideration in this appeal is whether the Tribunal had erred in not condoning the delay of 251 days in filing the appeal against the order of the CIT(A). 6. The order passed by the CIT(A) was received by the assessee on 22.8.2010 and the appeal was to be filed before the Tribunal up to 21.10.2010. However, the appeal was filed on 5.7.2011 resulting in delay of 251 days. According to the learned counsel for the appellant, the papers were handed over to the counsel Shri Vijay Vohra in September, 2010 for filing the appeal and since the counsel was busy in filing the income tax returns which are normally due in September/ October of each year and the counsel thereafter having inadvertently placed the said papers in other file which had resulted in delay in filing the appeal. Thus, there was sufficient cause for not filing the appeal within time. Affidavit of Shri Vijay Vohra, Advocate was also filed which was to the following effect:- “I Vijay Vohra S/o Shri Madan Lal Vohra R/o 26-A, New Lajpat Nagar, Ludhiana do hereby solemnly declare as under:- 1. That I am practicing Advocate and I have been dealing with the income tax case for the past many years. 2. That brief of Shri Harish Kumar Chhabra S/o Shri Gokal Chand Chhabra resident of 805, Ram Nagar, Baghkhazanchi, Ludhiana, is with me and I had ITA No. 38 of 2012 -4- made representation before the AO for the assessment year 2005-06 in the case of Shri Harish Kumar Chhabra. 3. That I had filed an appeal before the CIT(A)-II Ludhiana in case of Shri Harish Chhabra for the assessment year 2005-06. 4. That the CIT(A)-II Ludhiana has dismissed the said appeal of the assessee and order was received by the party around 22nd of August, 2010 and the said order was handed over to me in the last week of September, 2010 by the party concerned for filing of appeal before the Hon'ble ITAT Chandigarh Bench, Chandigarh. 5. That the appeal order as given to me by the party was inadvertently placed in some other file because during that time there was heavy rush filing the income tax returns for the assessment year 2010-11 in my office as such I forget about the filing of appeal against the above order to the Hon'ble ITAT Chandigarh. 6. That it was only when the penalty notice dt. 11.5.2011 on 23.5.2011 was received by the assessee from the AO that the party enquired about the filing of appeal from my office to the Hon'ble ITAT , Chandigarh. 7. That due to great efforts, the said order to the CIT(A)- II Ludhiana was traced from my office in the second ITA No. 38 of 2012 -5- week of June, 2011 and therefore, the appeal is now being filed. 8. That the above lapse occurred only on account of the lapse in my office by me and my office staff and which is highly regretted.” 7. This Court in VAT Appeal No. 47 of 2012 (M/s Hansaflon Plasto Chem. Ltd v. State of Haryana and others) decided on 5.7.2012 following the decisions of the Hon'ble Supreme Court in Oriental Aroma Chemical Industries Ltd. v. Gujarat Industrial Development Corporation and another, (2010) 5 SCC 459 and R.B. Ramlingam v. R.B. Bhavaneshwari 2009(1) RCR (Civil) 892 had analyzed the broad principles for condonation of delay under Section 5 of the Limitation Act, 1963 as under:- “6. From the above, it emerges that the law of limitation has been enacted which is based on public policy so as to prescribe time limit for availing legal remedy for redressal of the injury caused. The purpose behind enacting law of limitation is not to destroy the rights of the parties but to see that the uncertainty should not prevail for unlimited period. Under Section 5 of the 1963 Act, the courts are empowered to condone the delay where a party approaching the court belatedly shows sufficient cause for not availing the remedy within the prescribed period. The meaning to be assigned to ITA No. 38 of 2012 -6- the expression “sufficient cause” occurring in Section 5 of the 1963 Act should be such so as to do substantial justice between the parties. The existence of sufficient cause depends upon facts of each case and no hard and fast rule can be applied in deciding such cases. 7. The Hon'ble Apex Court in Oriental Aroma Chemical Industries Ltd. and R.B. Ramlingam's cases (supra) noticed that the courts should adopt liberal approach where delay is of short period whereas the proof required should be strict where the delay is inordinate. Further, it was also observed that judgments dealing with the condonation of delay may not lay down any standard or objective test but is purely an individualistic test. The court is required to examine while adjudicating the matter relating to condonation of delay on exercising judicial discretion on individual facts involved therein. There does not exist any exhaustive list constituting sufficient cause. The applicant/petitioner is required to establish that inspite of acting with due care and caution, the delay had occurred due to circumstances beyond his control and was inevitable.” 8. The question regarding whether there is sufficient cause or not, depends upon each case and primarily is a question of fact to be considered taking into totality of events which had taken place in a ITA No. 38 of 2012 -7- particular case. The counsel who had filed the appeal before the Tribunal having furnished his affidavit accepting the cause of delay and the explanation being plausible leads to the conclusion that there was sufficient cause for delay in filing the appeal. Once that was so, the application for condonation of delay ought to have been allowed. 9. In view of the above, it is held that the Tribunal was not right in refusing to condone the delay in filing the appeal. Accordingly, the substantial question of law is answered by holding that there was sufficient cause for condonation of delay in filing the appeal before the Tribunal. As a sequel, the appeal is allowed and the matter is remitted to the Tribunal to adjudicate the dispute on merits in accordance with law. (AJAY KUMAR MITTAL) JUDGE August 28, 2012 (G.S. SANDHAWALIA) gbs JUDGE "