Co-operative Bank Fails to explain 542-day delay in filing Income Tax appeal: Kerala HC remands matter to ITAT [Read Order]

The Division Bench of the Kerala High Court allowed an appeal filed by Co-operative Bank Ltd., setting aside an order of the Income TaxAppellate Tribunal (ITAT) that had rejected the bank's statutory appeal due to a delay of 542 days.

The Court found that while the ITAT was justified in its scepticism regarding the vague explanation offered for the delay, the bank should be granted one final opportunity to explain the delay cogently, considering the statutory nature of the remedy involved.

The Chathamangalam Service Co-operative Bank had approached the High Court challenging the ITAT's refusal to condone the 542-day delay in filing the appeal for the Assessment Year 2015-16. The ITAT had dismissed the delay condonation application as "incredulous," noting that the bank merely claimed their work was outsourced to an outside agency without providing specific details about the agency or the reasons for the delay.

The dispute arose after the Commissioner of Income Tax (Appeals) disallowed the bank's claim for deduction under Section 80P of the Income Tax Act, prompting the bank to appeal.

Preetha S. Nair, counsel for the appellant, conceded that the affidavit filed before the Tribunal was poorly drafted. She argued that the bank should not be denied its statutory right to appeal, especially since they were supported by binding Supreme Court judgments and had filed the first appeal before the CIT without delay. She sought an opportunity to furnish proper reasons before the Tribunal.

Per contra, G. Keerthivas, Standing Counsel for the Revenue, supported the Tribunal’s order. He submitted that the sole issue was whether the delay was properly explained and argued that the Tribunal was correct in refusing to condone the delay when no specific details were provided. He contended that the merits of the case could not be looked into at the stage of condonation of delay.

The bench of Justices Devan Ramachandran and Basant Balaji, perusing the records, observed that a 542-day delay is significant and that the explanation provided was indeed deficient in material particulars. However, acknowledging that the appellant was invoking a statutory remedy supported by a Supreme Court precedent, the Court deemed it appropriate to grant a fresh chance.

The Court remitted the matter to the ITAT, directing the bank to file an appropriate additional affidavit within three weeks. Until the ITAT disposes of the application and communicates the order, all recovery proceedings shall remain deferred.

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