Bombay HC Condones 447-Day Delay by Income Tax Dept in Filing Appeal Against Acquittal in Tax Evasion Case {Read Order]

In a recent ruling, the Bombay High Court condoned a delay of 447 days by the Income Tax Department in filing an appeal against the acquittal of an accused in a tax evasion case, observing that the delay was caused by a bona fide mistake and disruptions during the COVID-19 pandemic.

The case arose from a criminal complaint filed by the Income Tax Department against Gregory Lewis under Sections 276C(1) and 277 of the Income Tax Act, 1961, alleging wilful attempt to evade tax and making false statements in verification. The Chief Judicial Magistrate, Panaji, had acquitted the accused on 29 April 2019. The Department filed an application seeking condonation of delay in filing its appeal against the acquittal.

The Department’s counsel argued that the delay occurred because the Special Public Prosecutor had mistakenly believed he had already submitted his legal opinion after applying for a certified copy of the order in May 2019.

They further argued that internal jurisdictional changes following the introduction of the faceless assessment system and restricted office functioning during the nationwide COVID-19 lockdown had delayed the process. The Department stated that once the Principal Commissioner of Income Tax clarified the jurisdiction and directed the filing of the appeal on 9 September 2020, the appeal was quickly filed on 17 September 2020.

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The respondent’s counsel argued that there was no sufficient cause for condoning such a long delay of 447 days. They argued that the Department had offered no clear explanation for its inaction over an extended period and that reopening the case after years of litigation would cause hardship, as the proceedings related to an income tax return filed more than two decades earlier.

The single-judge bench comprising Justice Shreeram V. Shirsat observed that although the respondent’s reliance on Bherulal was relevant, each case must be examined on whether sufficient cause has been shown.

The court explained that the delay in this case resulted from a bona fide mistake by the Special Public Prosecutor and administrative confusion caused by jurisdictional changes, compounded by the impact of the pandemic. The court pointed out that after receiving directions from the Principal Commissioner on 9 September 2020, the Department acted immediately and filed the appeal on 17 September 2020.

The court observed that refusing to condone the delay would prevent the matter from being decided on merits and could result in injustice. It explained that courts should adopt a pragmatic approach in such cases, as laid down in Collector (Land Acquisition) v. Mst. Katiji (1987) 2 SCC 107, and prioritize substantial justice over technicalities.

The court allowed the application, condoned the 447-day delay, and directed the Registry to register the appeal so that it could be decided on merits. The application was accordingly disposed of.

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