The question of what is “sufficient cause” for condonation of delay was considered in STERLITE INDUSTRIES (INDIA) LTD. vs. ADDITIONAL COMMISSIONER OF INCOME TAX by the ITAT, MUMBAI ‘D’ BENCH.
The Judges were Rajpal Yadav, J.M. & A.K. Garodia, A.M.
The Counsel who argued the condonation of delay application were S.K. Tulsiyan & Ms. Sapana Verdia, for the Assessee and Ajoy Kumar Singh, for the Revenue.
The cross-objections of the assessee were time-barred by 3 yrs., 101 days and 2 yrs., 217 days, respectively.
The Tribunal, therefore, first dealt with the petition for condonation of delay in filing the cross objections.
In order to explain the delay, the assessee submitted that the grounds set out in the memorandum of cross-objections are similar to the issues involved in earlier years forming part of the consolidated appeals pending before the Tribunal, i.e., whether interest expenditure incurred on the borrowed funds for financing of expansion of existing business is allowable or not.
In these assessment years learned CIT(A) had allowed such expenses partly for some of the units, however disallowed with regard to aluminium smelter projects at Orissa and paper project at Vyara.
It was also been pleaded that assessee was under bona fide belief that such a relief can be claimed by invoking r. 27 of the ITAT Rules and, therefore, cross-objections were not filed when memorandum of Departmental appeal was received by the assessee.
In support of its contention, the assessee filed the affidavit of Mr. Tarun Jain, director of the company.
On the strength of such explanation learned counsel for the assessee prayed that the delay in filing the cross-objection be condoned.
The Departmental Representative on the other hand, opposed the prayer of assessee and contended that assessee failed to give any plausible explanation for not filing the cross-objection in time.
The Tribunal held that Courts and quasi judicial bodies are empowered to condone the delay if a litigant satisfies the Court that there were sufficient reasons for availing the remedy after expiry of the limitation.
Such reasoning should be to the satisfaction of the Court.
It was noted that The expression “sufficient cause or reason” as provided in sub-s. (5) of s. 253 of the IT Act is used in identical position in the Limitation Act and the CPC.
Such expression has also been used in other sections of the IT Act, such as, ss. 274, 273, etc. The expression “sufficient cause” within the meaning of s. 5 of the Limitation Act as well as similar other provisions, the ambit of exercise of powers thereunder has been subject-matter of consideration before the Hon’ble Supreme Court on various occasions.
In the case of State of West Bengal vs. The Administrator, Howrah Municipality AIR 1972 SC 749, the Hon’ble Supreme Court while considering the scope of expression “sufficient cause” for condonation of delay has held that the said expression should receive a liberal construction so as to advance the substantial justice when no negligence or inaction or want of bona fide is imputable to party.
In the case of N. Balakrishnan vs. M. Krishnamurthy , AIR 1998 SC 3222, there was a delay of 883 days in filing an application for setting aside the ex parte decree for which application for condonation of delay was filed.
The trial Court having found that sufficient cause was made out for condonation of delay condoned the delay. However, the Hon’ble High Court reversed the order of the trial Court. The Hon’ble Supreme Court while restoring the order of the trial Court has observed in paras 8, 9 and 10 as under :
“8. The appellant’s conduct does not on the whole warrant to castigate him as an irresponsible litigant. What he did in defending the suit was not very much far from what a litigant would broadly do. Of course, it may be said that he should have been more vigilant by visiting his advocate at short intervals to check up the progress of the litigation. But during these days when everybody is fully occupied with his own avocation of life, an omission to adopt such extra vigilance need not be used as ground to depict him as a litigant not aware of his responsibilities, and to visit him with drastic consequences.
9. It is axiomatic that condonation of delay is a matter of discretion of the Court. Sec. 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes, delay of the shortest range may be uncondonable due to a want of acceptable explanation, whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory.
Once the Court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior Court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first Court refuses to condone the delay.
In such cases, the superior Court would be free to consider the cause shown for the delay afresh and in its own finding even untrammeled by the conclusion of the lower Court.
10 ……….. The primary function of a Court is to adjudicate the dispute between the parties and to advance substantial justice. The time-limit fixed for approaching the Court in different situations is not because on the expiry of such time a bad cause would transform into a good cause.” (Emphasis, italicised in print, added)
The Hon’ble Supreme Court further observed that rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics, but seek the remedy promptly. The Hon’ble Court further observed that refusal to condone the delay would result in foreclosing a suitor from putting forth his cause.
There is no presumption that delay in approaching the Court is always deliberate. The Hon’ble Supreme Court in SLP [Civil No. 12980 of 1986, decided on 19th Feb., 1987, in the case of Collector, Land Acquisition & Ors. vs. Mst. Katiji & Ors. (1987) 62 CTR (SC)(Syn) 23] has laid down the following guidelines :
1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
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 on 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.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Making a justice-oriented approach from this perspective; there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the “State” which was seeking condonation and not a private party was altogether irrelevant.
In the case of Nand Kishore vs. State of Punjab (1995) 6 SCC 614, the Hon’ble Supreme Court has condoned the delay of 31 years almost under the similar circumstances. There the petitioner has joined service in the erstwhile Patiala State in May, 1941. On the formation of Pepsu State, he was taken as an assistant w.e.f. 1st Sept., 1956.
Subsequently, Pepsu State was merged with State of Punjab. He was integrated as an assistant in the Punjab Civil Secretariat at Chandigarh in the food distribution branch. He completed 10 years qualifying service. However, he was compulsorily retired on 6th Jan., 1961.
He challenged this order of retirement by way of writ petition in the Punjab & Haryana High Court. The writ petition was dismissed on 2nd Feb., 1962. In the writ petition the petitioner had not challenged validity of r. 5.32 of the Punjab Civil Service Rules, Vol. II.
Subsequently, this rule was challenged by some other employees and the Hon’ble Supreme Court has taken the view that it was not permissible for a State while reserving to itself the power of compulsory retirement by framing rules prescribing a proper age of superannuation to form another one giving it the power to compulsorily retire a Government servant at the end of 10 years’ service. According to the Hon’ble Supreme Court that rule cannot fall outside Art. 311(2) of the Constitution.
After this decision, the petitioner, Nand Kishore, filed a civil suit which travelled upto the Hon’ble Supreme Court and while hearing the appeal, the Hon’ble Court had advised the petitioner to challenge the order of the High Court passed on the writ petition in 1962. Taking into consideration the injustice to the employee the Hon’ble Court has condoned the long delay of 31 years and decided the appeal on merit.
Keeping in mind the above authoritative pronouncement of the Hon’ble Supreme Court, it is an admitted position that the words “sufficient cause” appearing in sub-s. (5) of s. 253 of the Act should receive a liberal construction so as to advance substantial justice.
Thus, if we advert towards the facts of the present case then it would reveal that circumstances are very close to the situation considered by the Hon’ble Supreme Court in the case of Nand Kishore (supra). It must be remembered that in every case of delay there can be some lapse of the litigant concerned. That alone is not enough to turn down the pleas and to shut the doors against him.
If explanation does not smack mala fide or does not put forth as a dilatory strategy, the Court must show utmost consideration of such litigant. As observed by the Hon’ble Supreme Court in the case of N. Balakrishnan (supra), the length of delay is immaterial, it is the acceptability of the explanation and that is the only criteria for condoning the delay.
Therefore, taking into consideration the overall facts and circumstances the Tribunal condoned the delay in filing the cross objection and proceed to decide the controversy on merit.