Wrong Tax Advice Not a ‘Sufficient Cause’ for 1,370-Day Delay: ITAT Says Assessee Cannot Shift Entire Blame to Consultant [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has dismissed the appeal on grounds of an inordinate delay of 1,370 days in filing, holding that the assessee’s reliance on its tax consultant’s failure to advise remedial action does not constitute “sufficient cause” for condonation under Section 5 of the Limitation Act, 1963.

The appeal challenged an order dated 29 September 2021 passed by the Commissioner of Income Tax (Appeals) CIT(A) , for the Assessment Year 2018-19. When the case was taken up, no one appeared on behalf of the assessee Attivo Protezione Pvt Ltd despite repeated calls.

An adjournment request was found unjustified as the assessee had failed to submit the mandatory affidavit supporting its condonation plea. The Tribunal, therefore, proceeded ex parte and rejected the adjournment application.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

In its condonation petition, the assessee attributed the delay to the alleged inaction of its tax consultant, who did not advise any further appeal after the CIT(A)’s order.

The Tribunal, however, found this explanation vague and legally untenable. It was observed that merely blaming the consultant could not absolve the assessee, a private limited company, of its statutory responsibility to pursue legal remedies within prescribed time limits.

The bench of Sandeep Gosain (Judicial Member) drew upon a series of Supreme Court rulings, including Basawaraj & Ors. v. Special Land Acquisition Officer (2014) and Anshul Agarwal v. NOIDA (2011), to clarify that “sufficient cause” cannot be interpreted liberally when negligence or lack of bona fides is evident.

The order cited the principle that condonation of delay is a discretionary relief, not a matter of right, and courts cannot exercise such discretion mechanically or on sympathetic grounds.

The Tribunal also emphasised that the law of limitation serves a larger public purpose, as reflected in the maxim “Interest reipublicae ut sit finis litium”-it is in the public interest that litigation should come to an end.

It further referred to decisions in Oriental Aroma Chemical Industries Ltd. v. Gujarat Industrial Development Corporation (2010) and State of West Bengal v. Administrator, Howrah Municipality, which held that only bona fide and diligent conduct qualifies for leniency in delay matters.

Noting that the assessee attended earlier proceedings before the tax authorities and was aware of the adverse appellate order, the Tribunal held that complete inaction for nearly four years showed clear negligence.

The Bench observed that “putting all the blame on the tax consultant would not absolve the assessee of its own responsibility,” stressing that each day of delay must be satisfactorily explained with concrete reasons.

Finding no credible justification or supporting evidence, the Tribunal ruled that the delay was neither bona fide nor unavoidable. Accordingly, it refused to condone the delay and dismissed the appeal as time-barred without examining its merits.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates