Delay in filing appeal condoned as CA was unaware of law. Quality of explanation, legal assistance to litigant, and detriment to Revenue important factors to consider- Madras High Court
ABCAUS Case Law Citation:
ABCAUS 1185 (2017) (03) HC
The Moot Question:
Can a litigant be prejudiced on account of, virtually, ignorance of law displayed, by a professional engaged by him, to prosecute his case before the appropriate forum?
Date/Month of Pronouncement: March, 2017
Important Case Laws Cited/relied upon:
Motilal Padampat Sugar Mills V. State of U.P., AIR 1979 SC 621
Brief Facts of the Case:
The appellant assessee was a charitable trust. It made an application for registration under section 12AA of the Income Tax Act, 1961 (‘the Act’). However, the Commissioner of Income Tax (‘CIT’) rejected the application of the trust.
The Tribunal refused to entertain the appeal of the assessee, only on the ground that, it was woefully delayedby 1631 days, which, according to the Tribunal, was solely attributable to the Assessee’s negligence and inaction, and, therefore, could not be condoned. The Tribunal, consequently, did not go into the merits of the matter.
Aggrieved, the dismissal of the appeal by the ITAT, the assessee had filed the present appeal before the Hon’ble High Court under Section 260A of the Act.
Contentions of the Appellant Trust:
It was submitted that the assessee was a charitable institution, and therefore, did not have the best legal assistance available to it, on account of, paucity of funds. It was explained that the assessee had taken the assistance of a Chartered Accountant, who was unaware of the provisions of law that an appeal could be filed against the order of the CIT rejecting registration u/s 12AA, post the amendment made in Section 253(1)(c) of the Act.
Contention of the Respondent Revenue:
The Revenue opposed the appeal on the ground that the condonation of delay petition, which had been filed with the Tribunal, was not supported by an affidavit of the Assessee.
Observations made by the High Court:
The Hon’ble High Court observed that though the an affidavit of the assessee had not been filed along with petition for condonation, the petition had the signature of the counsel for the assessee. Therefore, it can be assumed that what was stated in the petition was based on instructions received from the assessee. The reason for this conclusion was because, the name of the Chartered Accountant was mentioned in the petition. The Hon’ble Court opined that the counsel of the assessee could not have conjured up the name of the Chartered Accountant. Moreover, there was nothing on record to suggest that the Revenue refuted this averment made in the petition.
The Hon’ble High Court referred to the observation made by the Hon’ble Supreme Court wherein their Lordships had observed that while ignorance of law is no excuse, there is not and never has been a presumption that everyone knows the law.
The Hon’ble High Court quoted some of the relevant paras of the judgment of the Hon’ble Supreme Court wherein inter alia the following observations had been made;
“Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law.”
“There is no presumption in this country that every person knows the law: it would be contrary to common sense and reason if it were so”.
“It is impossible to know all the statutory law, and not very possible to know all the common law.”
” …… the fact is that there is not and never has been a presumption that every one knows the law. There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application.” It is, therefore, not possible to presume, in the absence of any material placed before the Court …”
The Hon’ble High Court observed that while dealing such issues not only the period of delay has to be taken in account, but also the quality of explanation, the legal assistance, if any, sought and rendered to the litigant, and the detriment that condonation of delay would cause to the opposing party. The above aspects, if, looked at, closely, will enable the Court to come to a conclusion as to whether the delay was intentional and/or deliberate
Also the Hon’ble Court observed that even if the assessee were to succeed on merits, it could, hardly, be said that the condonation of delay would cause detriment to the Revenue, in a matter involving grant of registration u/s 12AA.
The High Court allowed the appeal and set aside the judgement of the Tribunal. The matter was remitted to the Tribunal for a decision on merits.