Condonation of Delay of 7 years in filing Appeal : Assessee’s Lack of Diligence Justifies Refusal

Condonation of Delay: Assessee’s Lack of Diligence, Not Counsel’s Mistake, Justifies Refusal

Issue: Whether a delay of six to seven years in filing an appeal before the Income Tax Appellate Tribunal (Tribunal) should be condoned on the ground of counsel’s alleged failure to take action, when the assessee was aware of the lower appellate orders but failed to inquire about the appeal’s status.

Facts:

• For Assessment Years 2010-11 and 2012-13, the assessee-company filed an appeal before the Tribunal with a significant delay of six to seven years.
• The assessee filed an application for condonation of delay, arguing that it had promptly handed over documents to its counsel and a professional expert, and that the company should not be penalized for their gross failure to take action.
• The Tribunal, however, noted that the assessee was aware of the orders passed by the Commissioner (Appeals) but had not exercised any care to inquire about the status of the second appeal. The Tribunal viewed this as an attempt by the assessee to shift responsibility solely onto its lawyer.
• Consequently, the Tribunal refused to condone the delay and dismissed the appeals as time-barred.

Decision: The court affirmed that there is no general proposition that a mistake of counsel by itself is always a sufficient ground for condonation of delay. Every case must be considered based on its specific facts and circumstances. The court found that the findings recorded by the Tribunal were “just and proper” and there was no infirmity in the impugned order.

Key Takeaways:

• No Absolute Rule for Counsel’s Mistake: While a counsel’s error can sometimes be a ground for condonation of delay, it is not an automatic right. Courts evaluate whether the client (assessee) also demonstrated reasonable diligence.
• Assessee’s Responsibility: The assessee, as the litigant, has a primary responsibility to follow up on their case. Awareness of the lower appellate orders combined with a lack of inquiry about the appeal’s status for a prolonged period indicates a lack of diligence on the part of the assessee.
• Gross Delay: A delay of six to seven years is substantial and requires a very strong and convincing explanation, which was not found to be present in this case.
• Factual Scrutiny by Tribunal: The Tribunal’s finding that the assessee attempted to shift responsibility is a factual finding based on its assessment of the circumstances, and higher courts typically defer to such findings unless they are perverse.
• Balance of Justice: Condonation of delay provisions are meant to do substantial justice, but not to reward negligence. The court aims to strike a balance between the assessee’s right to appeal and the need for finality in proceedings. Condonation of Delay: Assessee’s Non-Diligence Not Excused by Blaming Counsel for 6-7 Year Delay

Issue: Whether a delay of six to seven years in filing an appeal before the Income Tax Appellate Tribunal (ITAT) can be condoned solely on the ground that the assessee-company promptly handed over documents to counsel and a professional expert, who then grossly failed to take action, where the assessee was aware of the orders and did not diligently inquire about the appeal status.

Facts:

• For Assessment Years 2010-11 and 2012-13, the assessee-company filed an appeal before the Tribunal after a significant delay of six to seven years.
• The assessee filed an application for condonation of delay, arguing that it had promptly handed over documents to its counsel and professional expert, and should not be penalized for their gross failure to take action.
• The Tribunal, however, noted that the assessee was aware of the orders passed by the Commissioner (Appeals) but had not exercised any care to inquire about the status of the second appeal. Instead, it tried to shift the responsibility entirely to its lawyer.
• The Tribunal, consequently, refused to condone the substantial delay and dismissed the appeals as time-barred.

Decision: The court held that there is no general proposition that the mistake of counsel by itself is always a sufficient ground for condonation of delay, and every case is required to be considered on the basis of its specific facts and circumstances. The court found the findings recorded by the Tribunal to be just and proper, concluding that there was no infirmity in the impugned order.

Key Takeaways:

• No Universal Rule for Counsel’s Mistake: While errors by legal counsel can sometimes be grounds for condonation of delay, it is not an absolute rule. Each case’s facts and circumstances must be scrutinized to determine if “sufficient cause” exists.
• Assessee’s Own Diligence: Assessees, especially companies, are expected to exercise reasonable diligence in monitoring the progress of their cases. Blindly entrusting matters to counsel without any follow-up for six to seven years demonstrates a lack of reasonable care.
• Responsibility Cannot Be Wholly Shifted: While professionals are expected to act competently, the ultimate responsibility for ensuring compliance with statutory timelines often rests with the litigant. A litigant cannot simply delegate all responsibility and then plead ignorance or professional negligence for inordinate delays without any supervisory oversight.
• “Sufficient Cause” Requirement: For condonation of delay, the applicant must demonstrate “sufficient cause” for the delay. The inordinate length of the delay (six to seven years) coupled with the assessee’s apparent lack of concern or follow-up indicated an absence of sufficient cause.
• Tribunal’s Discretion: The Tribunal has discretionary power to condone delay, and its exercise of this discretion, when based on a proper appreciation of facts and legal principles, is generally upheld by higher courts.