Inordinate Delay and Law of Limitation

Rule of limitation also contains a rule of justice, especially where a person chooses not to take up requisite legal remedies for an inordinate length of time without reasonable cause, the Tribunal should apply the rule of limitation.

CASE LAW DETAILS

Decided by: ITAT, DELHI BENCH `C’, DELHI,  In The case of: Foramer France  v. DCIT,  Appeal No.: ITA Nos. 3369 & 3370/Del/.2007,
Decided on: October 17, 2008

RELEVANT PARAGRAPH

4.3 Coming to the general proposition regarding condonation of delay, the learned counsel relied on a number of cases, which have already been summarized. In the case of Shakuntala Devi (supra), the Hon’ble Supreme Court held that liberal construction should be placed on the words “sufficient cause” provided that no negligence, inaction or lack of bona fide is imputable to the assessee. In this case, negligence is apparent when after taking the relevant plea before the lower authorities, the assessee chose not to file appeal before the Tribunal after filing appeal for assessment year 1998-99. In the case of O.P. Kathpalia (supra), the facts were quite different as there were interpolations in the order sought to be appealed against, which required correction or clarification. In the case of Kuppuswamy Gownder (super), the Hon’ble Court held that a liberal approach should be adopted and a pedantic approach should not be applied in examination of every day’s delay. Inthe case of Ram Nath Sao (supra), the Hon’ble Court held that there will be a lapse whenever there is a delay, but that alone is not enough to turn down the plea unless the explanation smacks of mala-fide or it is not put forth as a part of dilatory strategy.The facts of this case are that the assessment was made u/s 44BB after discussion with it and which was accepted by the assessee. Thereafter, there was bona fide dispute as to whether various deductions in respect of computation of business income stood allowed or not. The view of the lower authorities was that in view of non-obstante clause in section 44BB, such deductions stood allowed by implication and, therefore, the assessee was liable to deduct tax at source. The view may or may not be correct, but certainly the stand of the assessee for non-deduction of tax was disputable. We are willing to accept that delay up to rendering of judgment nthe case of Soulier Jean Louis or at best up to filing appeal for assessment year 1998-99 may be taken as explained, but we do not see any reason thereafter as to why the assessee did not fileappeal against the order of the learned CIT(A). The decision in the case of Collector, Land Acquisition Vs. Msst. Katiji & Others (supra) was similar to the decision in the case of Kuppuswamy Gownder, in which the Hon’ble Court also pointed out that the assessee and the revenue should be treated at par in this respect and a few days delay in filing theappeal by the State should be condoned. In the case of Lipok A.O & Others (supra), the Hon’ble Court pointed out that while length of delay may be one of the circumstances to be taken into account in using the discretion, but what ultimately counts is the sufficiency of cause and not the length of the delay. We have already weighed the sufficiency of cause advanced by the assessee for the delay, which is found to be untenable after the decision inthe case of Soulier Jean Louis. On the other hand, in the case of Vedabai (supra), the Hon’ble Court pointed out that a distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. The former case will involve consideration of prejudice to the other side and, therefore, such a case will call for a more cautious approach. In this case, the delay after 19.1.1996 is without anyreasonable cause. The delay from 1996 to 19.7.2007 is of more than 10 years. In absence of the appeal, the revenue would have come to the conclusion that the order of the learned CIT(A) has been accepted by the assessee. Admission of appeal after 10 years without reasonable cause would frustrate this legitimate expectation of the revenue. Therefore, on the facts of this case, we hold that the rule of limitation also contains a rule of justice, especially where a person chooses not to take up requisite legal remedies for an inordinate length of time and without reasonable cause, the Tribunal should apply the rule of limitation. Accordingly, we refuse to admit the inordinately late appeals. Such conclusion finds support from the decision in the case of Vinay Extraction Pvt Ltd. (supra). In view thereof, it is not necessary for us to go into the merits of the appeals.