Unexplained Delay Of 600 Days Not Justified: SC Dismisses SLP Against Mphasis Ltd [Read Judgement]

The Supreme Court of India has dismissed the Special Leave Petition (SLP) filed by the Revenue Department due to the unexcused delay of 600 days. This dismissal sustains the judgment of the Karnataka High Court which held that the proceedings under Section 201 of the Income Tax Act cannot be instituted after an unreasonable period of time even if no such time limit is prescribed for non resident cases.

The case was initiated by the appeal filed by the Revenue Department against Mphasis Limited to the Income Tax Appellate Tribunal (ITAT) under Section 260-A of the Income Tax Act, 1961.The revenue department further challenged the order passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru, dated January 17, 2022, pertaining to the Assessment Year 2006-2007.

The major issue involved was the validity of the orders passed under Sections 201(1) and 201(1A) of the Act. The Revenue had contended that as the Parliament had not prescribed any time limit for the proceedings against the deductees who are non residents therefore the Revenue could initiate the action at any time.

However, the ITAT had held that as the proceedings had commenced on February 5, 2013 nearly seven years after the relevant assessment year, the same was denied by a reasonable time limit.

​The Division Bench of the Karnataka High Court consisting of Hon’ble Justice S.G. Pandit and Hon’ble Justice C.M. Poonacha heard the case on April 1, 2024 held that the substantial questions of law that was raised were decided in favor of the Assessee and against the Revenue confirming the invalidity of the Section 201 orders due to the unreasonable delay.

As a result the Revenue Department filed an appeal in the Supreme Court against the final judgment and order passed by the High Court of Karnataka at Bengaluru. The impugned order of I.T.A. No. 442/2022 dated April 1, 2024.However the petitioner filed an application (IA No. 73891/2026) seeking condonation of delay. It is reported that the petition is beyond the period of limitation by 600 days.

The Bench comprising Hon'ble Justice Manoj Misra and Hon'ble Justice Manmohan, noted that "The explanation given by the Revenue for the delay is not satisfactory. This special leave petition is reported to be beyond time by 600 days. We do not find a satisfactory explanation to condone the delay. The special leave petition is dismissed on grounds of delay."

Accordingly, all the applications pending in this matter were also disposed of by the Court.

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