Pay and Accounts Officer vs Income Tax Officer

K. Raviraja Pandian, J.—These appeals are filed against the order of the Tribunal, Madras ''C'' Bench dt. 4th April, 2007 in ITA Nos. 17 to 20/Mad/2004. The relevant assessment year is 2000-01. The common substantial questions of law formulated in these appeals are as follows:

Whether in the facts and circumstances of the case, the Tribunal has ascertained its discretion in refusing to condone the delay in filing appeal in a proper legal perspective?

Whether in the facts and circumstances of the case, the Tribunal has committed a legal error in not appreciating and applying the decision of the Supreme Court in State of Nagaland Vs. Lipok AO and Others, rendered in identical circumstance?

Whether in the facts and circumstances of the case, the Tribunal has rightly applied the test of liberal and pragmatic approach as to the sufficiency of cause involving red tapism in the matter of condonation of delay u/s 5 of Limitation Act?

As the issue involved in these appeals is one and the same, these appeals are taken together and are disposed of by this common order. Tax Case (Appeal) No. 745 of 2008 is taken as a typical case, the facts of which are as follows:

The ITO issued a show-cause notice dt. 29th Dec., 2000 calling upon the appellant as to why interest of Rs. 1,16,614 should not be charged u/s 201(1A) of the Act in respect of the employees shown in the list annexed for failure to deduct tax out of their salary disbursement and consequently resulting in short deduction in tax by way of TDS under Sections 192, 201(1) and 201(1A) of the Act. The ITO passed an order on 12th Feb., 2001 u/s 201(1A) raising a demand of Rs. 1,16,614 as interest for failure to deduct tax fully as source in the case of 98 individuals even though those individuals remitted the balance of tax by self assessment. While so, by G.O. Ms. No. 114 dt. 27th March, 2002, the Government accorded sanction for payment of demand raised by the IT Department under protest even while pursuing the remedy of further appeal to the Tribunal and accordingly a sum of Rs. 1,16,614 was remitted to the IT Department. Being aggrieved by the order passed by the ITO, an appeal was preferred before the CIT(A), who upheld the levy of interest u/s 201(1A) of the Act and dismissed the appeal by order dt. 28th Nov., 2001 on the finding that the disbursing authority ought to have deducted the tax on the basis of the previous year''s account and other facts which would normally provide an idea of the tax amount payable by an employee during a financial year and that therefore it is not the concerned employee but the disbursing authority who should decide the amount of monthly TDS for the employees concerned. A further appeal was filed by the appellant to the Tribunal with a delay of 708 days. Similarly appeals had been filed by the other appellants with petition to condone the delay in filing the appeal. The Tribunal by a common order dt. 4th April, 2007 dismissed all the appeals on the ground of delay without going into the merits involved in the appeals.

Learned Counsel appearing for the appellant submits that there is no deliberate inaction, lack of bona fides or guilt of laches or negligence on the part of the appellants. The Tribunal ought to have adopted a liberal approach in exercising the discretion as the entire demand had been remitted thereby causing no prejudice to the Revenue. The Tribunal failed to appreciate the case of the appellants in the light of the ratio laid down by the Supreme Court in the case of State of Nagaland Vs. Lipok AO and Others, .

Learned Counsel appearing for the IT Department argued for sustaining the order impugned.

We heard the arguments of the learned Counsel on either side.

The law of limitation has been enacted only to give a finality to a proceeding and not destroy the statutory appellate remedy. The Court can condone the delay in spite of the fact the delay is very enormous, if the Court is satisfied, with the reason stated in the affidavit. At the same time, even a short spell of delay may stare at the appellant if the appellant is not able to give a cogent acceptable reason for the delay. It is also equally well settled that when technicalities and substantial justice are pitted against each other, the Court will always lean in favour of substantial justice. Hence, we are of the view that the delay can be condoned as the appellant has already remitted the entire demand.

Further, in the case of Collector, Land Acquisition, Anantnag and Another Vs. Mst. Katiji and Others, , the Supreme Court held that the legislature has conferred the power to condone delay by enacting Section 5 of the Indian Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on merits. The expresson "sufficient cause" employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub-serves the ends of justice that being the life-purpose for the existence of the institution of Courts.

In the case of State of Haryana Vs. Chandra Mani and others, , the Supreme Court held thus:

When the State is an applicant, praying for condonation of delay, it is common knowledge that on account of impersonal machinery and the inherited bureaucratic methodology imbued with the note-marking, file-pushing, and passing-on-the buck ethos, delay on the part of the State is less difficult to understand though more difficult to approve, but the State represents collective cause of the community. It is axiomatic that decisions are taken by offices/agencies proverbially at slow pace and encumbered process of pushing the files from table to table and keeping it on table for considerable time causing delay intentional or otherwise is a routine. Considerable delay of procedural red tape in the process of their making decision is a common feature. Therefore, certain amount of latitude is not impermissible. If the appeals brought by the State are lost for such default no person is individually affected but what in the ultimate analysis suffers, is public interest. The expression "sufficient cause" should, therefore, be considered with pragmatism in justice-oriented approach rather than the technical detection of sufficient cause for explaining every day''s delay. The factors which are peculiar to and characteristic of the functioning of the Governmental conditions would be cognizant to and requires adoption of pragmatic approach in justice-oriented process....

Further, the law of limitation is enshrined in the maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time [vide Bharat Auto Center Vs. Commissioner of Income Tax, ]

In the case of Vedabai alis Vaijayanatabai Baburao Patil Vs. Shantaram Baburao Patil and Others, . the Court held thus:

In exercising discretion u/s 5 of the Limitation Act, 1963, to condone delay for sufficient cause in not preferring an appeal or other application within the period prescribed, Courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former consideration of prejudice to the other side will be a relevant factor and calls for a more cautious approach, in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The Court has to exercise its discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principles of advancing substantial justice is of prime importance. The expression "sufficient cause" should receive a liberal construction.

Further, some sort of latitude must be given wherever the petitions are filed by the Governmental organisation, as the Government being impersonal taking longer time in moving judicial forum, vide, Union of India v. Tata Yodogawava Ltd. 1988 (88) ELT 739.

In the present appeals, the appellant i.e., the Pay and Accounts Officer is representing the Government of Tamil Nadu. It is an admitted fact that interest imposed on the appellant u/s 201(1A) has been paid by the appellant on protest and pursued the appellate remedy by obtaining necessary sanction from the Government in G.O.Ms. No. 114, dt. 27th March, 2002. Thus there is a delay of 701 days, which is explained as administrative delay. The said reason cannot be rejected as it is not sufficient cause.

In the facts of the present case, every days delay cannot be explained and as such the pedantic approach should not be made. The doctrine must be applied in a rational commonsense pragmatic manner. The delay in this case cannot be regarded as occasioned deliberately or on account of negligence or on account of mala fides. A litigant does not stand to benefit by resorting to delay, but he runs a serious risk. Courts are not respected on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so, [see State of Nagaland Vs. Lipok AO and Others, ]. Making a justice-oriented approach from this perspective, there is sufficient cause for condoning the delay.

For the foregoing reasons and in the light of the above judgments, the order dt. 4th April, 2007 made by the Tribunal, Chennai Bench ''C'' in ITA Nos. 17 to 20/Mad/2004 is set aside and the matter is remitted back to the Tribunal for fresh consideration on merits.