Where there is sufficient cause shown and the application for condonation of delay has been moved bonafidely, the Court would normally condone the delay but where the delay has not been explained at all and, in fact, there is unexplained and inordinate delay coupled with negligence or sheer carelessness, the discretion of the Court in such cases would normally tilt 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
Ornate Traders Pvt. Ltd. v. ITO [Notice of Motion No.2281 of 2008 in ITA (Lodging) No. 1814 of 2008
There is no dispute to the proposition of law before us that the provisions of section 5 of the Limitation Act are applicable to the appeals filed under section 260A of the Income Tax Act. Once the provisions of section 5 of the Limitation Act are applicable, the entire controversy would revolve on the showing or not 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 bonafidely, the court would normally condone the delay but where the delay has not been explained at all and, in fact, there is unexplained and inordinate delay coupled with negligence or sheer carelessness, the discretion of the court in such cases would normally tilt 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. Of course, as per the settled principles, the 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 a 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. The period of limitation has to be construed somewhat strictly and advantages that accrue to non-applicant would normally not been taken away in a routine manner or for no plausible cause or reason.
Section 5 of the Limitation Act in the recent times has been liberally construed but not so liberally that without any justification or cause an accrued right in favour of the non-applicant would be taken away in most 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. Of course the limitation for the purpose of filing of Appeal under section 260A of the Act commences from the date the copy of the order is received by the parties in terms of Section 260A(27)(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. The Tribunal is supposed to list and pronounce the judgments on a date fixed for pronouncement. Thus, the parties to the proceedings are well aware of the pronouncement of the judgment as well as the contents thereof and whether the Appeal of the Assessee/Department has been accepted or rejected partly or completely accepted or rejected.
The law of limitation is normally to be construed strictly as it has the effect of vesting for one and taking away right from the other. To condone the delays in a mechanical or a routine manner may amount to jeopardizing the legislative intent behind Section 5 of the Limitation Act. Statutes of limitation are designed to effectuate a beneficent public purpose viz. to prevent the taking away from one what he has for long been permitted to consider his own and on the faith of which he plans his life, habits and expenses. Long dormant claims are often more of cruelty than of justice in them. This principle is more based on public policy. Its aim being to secure the quiet of the community and to prevent oppression. These rules have been viewed by some as an infamous power created by positive law to decrease litigation and encourage dishonest defences. This may not be wholly true but still the limitation vests a definite right in a party after a lapse of period prescribed under law. It interpose a statutory bar after a certain period giving quietus to the rights arising from a judgment which is sought to be impugned. In other words, the law of limitation is thus founded on public policy. It is enshrined in the maxim “interest reipublicae ut sit finis litium” (it is for the general welfare that a period be part to litigation). The very scheme of proper administration of justice pre-supposes expediency in disposal of cases and avoidance of frivolous litigation. Where the parties chose to sleep over their rights for prolonged periods without any just cause, can hardly claim equity in justice particularly faced with the statutory provisions of Section 5 of the Act. In construing enactments which provide period of limitation for institution of proceedings, the purpose is to intimate people that after lapse of certain time from a certain event, a proceeding will not be entertained where a strict grammatical construction is normally the safe guide. Law is not an exercise in linguistic discipline but the substance of legislative intention can also not be frustrated merely by uncalled for equity or sympathy. (Reference : U.N. Mitra's L aw of Limitation and Prescription, 12th Edition 2006).
In the case of Banarasi Das vs. Income Tax Officer, AIR 1964 SC 1742, 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 the rule of strict construction. This principle has prevailed may be with some variation relatable to the sufficiency of cause shown by the parties.
Even in the case of J. K. Cotton Spinning & Weaving Mills vs. Collector of Central Excise, AIR 1998 SC 1270, it was held that a limited provision within which steps have been taken for recovery of duties not levied or not paid or short levied or short paid or erroneously refunded, is again subject to the rule of strict construction.
To law of limitation, the argument of hardship or alleged injustice has to be applied with greater care. The argument “ab inconvenienti” said Lord Moulton, “is one which requires to be used with great caution”. (Reference : Principles of Statutory Interpretation by Justice G.P. Singh, 11th Edition 2008).
The essence of the above enunciated principle thus reflects a simple but effective mandate that a provision must be construed on its plain and simple language. The provision of limitation should be construed strictly but at best its application could be liberalised where actual sufficient cause in its true sense is shown by an applicant who has acted bona fide and with due care and caution. An interpretation or application of the statutory provisions which would frustrate its very object necessarily has to be avoided.
The law of procedure undisputedly takes in its ambit and scope the need to act expeditiously and not to delay the progress of the legal proceedings. The law of limitation stricto senso is not law of procedure simplicitor but has the effect of creating a legal bar in exercise of a right which otherwise would have been available to a party but for lapse of time. As already noticed, the law of limitation is based on public policy and helps effective and proper administration of justice. It is expected of every litigant and particularly the litigants who have large litigation who have their own legal department and channels, to act within the period of limitation. It is only by way of an exception and upon showing sufficient cause that Appeals, if otherwise permissible, could be entertained beyond the prescribed period of limitation. It also be noticed that in the case of State of West Bengal vs. Administrator, Howrah Municipality, AIR 1972 SC 749, the Supreme Court held that expression “sufficient cause” should receive a liberal construction so as to advance the purpose of justice particularly when there is no motive behind delay. This necessarily implies that parties must act bonafidely, expeditiously and with due care. A casual or a negligent litigant who has acted with utter irresponsible attitude, cannot claim the condonation of delay in law when the right has accrued to the other side.
In performance of their functions, public officers or public servants have the duty to act judiciously, fairly and expeditiously. An officer can hardly justify that a file would lie on his table for months or days together and he would not act on the said file just because he claims to be pre-occupied. Another argument advanced on behalf of the Department was that there are time bar cases and in that rush the officers are not able to act. Firstly, there is no specific averment in this regard with any dates in the affidavit filed in support of the Notice of Motion. Secondly, the time barring cases are completed by 31st March or immediately thereafter, while all these cases relate to the period subsequent to March of the respective assessment year. Pre-occupation of an officer or officials can be a reasonable excuse, but for a short period and nothing justifies the inaction for a pretty 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 act in a channalised manner and 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 before us, particularly where the delay is more than a year, ex facie reflects negligence and callous attitude of shifting responsibilities. If the file was pending with the lawyer, there is not even an averment that the lawyer who retained the file for few months was contacted or any officer of the Department went to the lawyer to either take back the papers or to get the draft ready for filing in the Court of competent jurisdiction. It is too far fetched an excuse to be put forth before the Court of law 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. It is neither expected nor it can be a normal conduct of a public servant or a litigant that they would keep the files unmoved, unprocessed for months together on their tables. Some extent of public accountability and responsibility will have to be the basis for looking into such conduct. The consequences of such inordinate delay can be very fatal besides rendering remedy barred by law also leads to loss of public exchequer. This aspect of the matter introduces larger responsibility and consciousness in the conduct of the affairs of the revenue department. Certain amount of leverage or relaxation for departmental functions would be permissible, but this cannot be extended to the limits protecting negligence and irresponsibility simplicitor. For example, in Notice of Motion No. 2335 of 2008, the copy was received on 6th December 2006. The prescribed period of limitation was permitted to expire. There is nothing in the application to say what steps were taken before 4th April 2007, when the Appeal was alleged to have been sent for drafting. There is no averment as to what steps were taken for getting the draft appeal prepared and filing of the same in Court right from 4th April 2007 till 27th February 2008. Even when the Appeal was ready in February 2008, there is no explanation as to why it was filed on 26th June 2008, after a lapse of more than four months. Similarly, in Notice of Motion No. 2059 of 2008, the copy was received on 23rd June 2004 and no steps whatsoever were taken between 23rd June 2004 till 20th September 2004. Thereafter, various persons claimed to have acted in regard to various aspects of the case, like scrutiny, A.O.'s report, approval and authorisation. The draft Appeal was received in the office of the Appellant on 30th November 2004, but the Appeal has been filed in the High Court on 25th February 2008. No reason whatsoever has been given as to what was being done for the intervening period for more than three months. Apart from the standardised proforma giving chronology of dates and events in the affidavit in support of the Notices of Motion attempting to show sufficient cause for condonation of delay, no event whatsoever during this period has been referred to so as to render the cause sufficient and delay reasonable. These facts clearly show that there was utter negligent and irresponsible attitude on the part of the officers/officials.
In all the applications for condonation of delay, similar tables have been given with more or less similar facts but of course the dates are different in different cases. In fact, even dates in some cases are common. In other words, it is a collective excuse shown for condonation of delays, stages in different cases are the same but the period of delay varies from 18, 190 to 1474 days. In the cases where the delay is of 18 or 190 days or even upto a year, some plausible explanation has been rendered which the Court may, keeping in view the concept of public interest and public revenue, show indulgence and condone the delay. Even in such cases, there is unexplained delay, but as stated in different cases, the Department may not be called upon to explain each day's delay because of their office procedures and competency to take decision in the hierarchy of the Department. All this can be excused, but to a limited extent. Normally, file may take few days or a week on a table, but cannot take months and years. In the cases where the delay is more than 400 days or above 1000 days, there has been no justification, much less a sufficient cause shown, for condonation of delay. In these cases, where inordinate delay is unexplained, explanation given either is fanciful or opposed to normal course of human conduct and official conduct coupled with element of negligence and irresponsible attitude. Vague explanation or in some cases no explanation further adds to the gravity of the situation in the Department of Revenue.
In the Appeals preferred by the Department, obviously before the Appellant approaches the High Court, they have exhibited three different levels under the Act, i.e. order of Assessing Officer, order of the Commissioner of Appeals and then the order of Tribunal. Recourse to special remedy under Section 260A of the Income Tax Act which specifies the period of limitation, the Appellants are expected to act with responsibility and vigilance. In all these cases, the distinction in the case to be founded on the extent of the delay, unexplained and inordinate delay and the negligence and casual attitude of the officers/officials dealing with the matter. Where all these three elements are collectively present and the delay is beyond the period of 400 days i.e. more than a year, there would be no justification with the Court to divest the non-applicant of a right which has accrued to him in law and in fact because of the unreasonable conduct of the applicant.
From the copies of the orders of the Tribunal placed on record, it is obvious that the orders were pronounced in accordance with law much prior to the dates when the copies were received by the Department. In other words, the Department was fully aware of the fate of the case before the Tribunal and its responsibilities arising from such a judgment and order. The plea of time barring cases, over-load work are hardly of any consequence in the present case. We have already noticed that majority of the cases where the delay is large, they all are stated to be in process only after the expiry of 31st March of the respective year. The question of public revenue cannot be used as an excuse. It in fact adds to the responsibility and liability of the Department. Wherever there is higher public revenue, greater is the responsibility to act with utmost expeditiousness. It cannot justify the conduct that you sleep over and ignore your statutory rights for years and then take up the plea of public revenue. The Court can also not completely ignore the interest of the assessee who might have succeeded in the previous proceedings leading to the filing of the Appeal.
The learned Counsel appearing for the Assessee in these cases have also relied upon the judgment of the Supreme Court in the case of Tata Yodogawa Ltd. (supra) to contend that inter-departmental correspondence and processing is not a sufficient cause for condonation of delay as well as in the case of Union of India and others vs Visveswaraya Iron & Steel Ltd., (1987) (166) ITR 64 (SC) to further contend that without giving detailed circumstances and merely referring to list of dates and stating that it was a government procedure responsible for delay of the action not be a sufficient cause for condonation of delay. The sufficient cause would take in its ambit reasonable acts, reasonable conduct and reasonable delay. Where there is unreasonable delay and where hardly any reasons are given to explain the delay and the conduct of the officers/officials is negligent, irresponsible or callous to the extent of rendering the remedy of the Department hopelessly barred by time, the equitable relief from the Court can hardly be granted to the Applicants.
Having given our considered attention to the various aspects of these cases, in our opinion, interest of justice would be better served if some latitude and relaxation is given to the Applicants (Commissioners of Income Tax). We would condone the delay in all the Appeals where the delay is less than a year and which has been reasonably explained. But in the case where the delay is beyond one year and upto 1474 days, we would reject the applications for condonation of delay as there is no proper explanation and no sufficient cause shown for condonation of delay and there is apparent negligence and callousness on the part of the officer/officials of the Department to the extent that even correct statements have not been made in those cases.
Having dealt with all these Notices of Motion on merits and having allowed some or disallowed the others, we consider it as the duty of the Court to ensure due compliance of law. It is also a settled principle of law that Court should pass such directions which would help in avoiding unnecessary litigation or where the root cause of litigation can be so managed as to reduce the burden of justice delivery system. Boni judicis est causes litium dirimere.
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. Furthermore, the case where the law is in favour of the Department or where departmental appeal makes out a good case as understood in common parlance, because of inordinate and unexplained delay if it is dismissed as barred by time as Courts decline to hear the matters on merits, it will have adverse consequences. These adverse consequences can certainly be avoided by timely and coordinated action. It is expected of the authorities concerned to adopt a more practical and pragmatic approach and handle the judicial matters with utmost efficiency and expeditiousness. It will also be desirable to fix responsibility of the officers while introducing the mandate of public accountability for default in performance of duties. The doctrine of public accountability would require the authorities to act timely and be responsible for their acts. Thus, before parting with these cases finally, we consider it necessary and in the interest of justice, to issue following directions for compliance by the authorities concerned :-
The concerned authority, highest in the hierarchy of the Department, is hereby directed to issue Circular to all the concerned officer/officials to file the Appeals arising from the Income Tax Act particularly Section 260A of the Income Tax Act, within the period of limitation provided under law.
The said Circular shall also introduce the concept of public accountability and responsibility in discharge of its official duties. Applying this principle, the concerned authority shall 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 this Court.
The directives in the Circular shall also specify the time within which the authorities are expected to take action and have due cooperation and co-ordination between the concerned Departments.
It should be the responsibility of the senior officer in the hierarchy of the Department to ensure compliance of the directives contained in the said Circular as due compliance to the directives would help in achieving greater public purpose and help in saving huge public revenue.
It may be useful for the said authority even to provide directives in relation to engagement of Counsel, preparation of Appeal and its 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 rendered barred by time nor they are dismissed for default of appearance of the Advocate for the Department when listed before the Court for hearing.