Income Tax Appeal Delay Due to Lottery Business Closure and Counsel’s Death during COVID-19: Madras HC Condones 544 Days [Read Order]

The Madras High Court has condoned a 544-day delay in filing an income tax appeal citing the petitioner’s genuine reasons for the delay which included business closure, the death of their counsel during the COVID-19 pandemic, and administrative difficulties. 

The petitioner, M/s Limras Lottery & Trading Company Pvt Ltd filed a Tax Case Appeal under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal. The Tribunal had dismissed the petitioner’s appeal due to a delay of 1260 days, which, after excluding the COVID-19 pandemic period, amounted to 544 days.

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The assessment order was passed by the Income Tax Officer on 14.11.2019 and served on the petitioner on 18.11.2019. The petitioner submitted that the order was misplaced during office renovations and did not reach the petitioner.

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The petitioner was engaged in the lottery business which had ceased operations, and their deposits were frozen, further complicating their ability to respond. Additionally, the petitioner’s counsel, who handled all income tax matters, passed away during the COVID-19 pandemic.

The petitioner argued that these circumstances and their inability to trace relevant documents after receiving a penalty order, prevented timely filing of the appeal. The Income Tax Appellate Tribunal dismissed the appeal, stating that the petitioner failed to establish sufficient cause for the delay and that the appeal lacked merit.

The bench comprising Justice S.S. Sundar and Justice C. Saravanan observed that the petitioner had made a bona fide attempt to explain the delay. The court observed that the reasons provided for delay in filing appeal including misplacement of the assessment order, the counsel’s death, the business closure, and administrative challenges could not be discarded.

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The court observed the tribunal’s observation for dismissing the appeal as devoid of merits as irregularity. The court set aside the Tribunal’s order and condoned the 544-day delay. The court observed that there was no reason to doubt the petitioner’s bona fides.

The matter was remanded to the Income Tax Officer for de novo consideration. The court directed the Income tax officer to adjudicate the appeal on its merits.

The appeal of the petitioner was allowed.

To Read the full text of the Order CLICK HERE

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