Right of appeal is a substantive right created by statute which cannot be retrospective. Appeal has to be filed within limitation prescribed

In a recent judgment, Allahabad High Court has held that  right of appeal is a matter of procedure which gets converted into a substantive right as a creature of statute which cannot create a retrospective right. The appeal has to be filed within the limitation prescribed.

Case Details:
ITA 25 of 2016
Dr. Bhim Rao Ambedkar Educational Society, Lucknow vs. Commissioner Of Income Tax (Exemption)
Coarm: Justice Amreshwar Pratap Sahi and Attau Rahman Masoodi
Date of Judgment: 29/03/2016

Brief Facts of the Case:
Present appeal was filed against the order of the Tribunal dated 31.12.2015 dismissing the appeal of the assessee against the order of CIT on the ground of limitation.

CIT (Exemption) vide letter dated 26.12.2008 had rejected the claim of exemption under Section 10 (23C)(vi) and (via) of the Income Tax Act 1961 against which no appeal was filed by the assessee.

The appellant contended that the appellant-educational Society had sought registration under Section 12AA (1) of 1961 Act in order to seek exemption from income of the Society under Section 11 of the Act. The said application was rejected and the exemption was refused, vide order dated 19.10.2007. It was submitted that the appellant was advised that since registration had been refused the appellant may file an application to the Prescribed Authority under Section 10 (23C) of the Act for grant of approval in the prescribed Form No.56D.

Simultaneously, the appellant had also filed an appeal against the order refusing to grant exemption under Section 12AA. The Income Tax Appellate Tribunal allowed the said appeal, vide judgment dated 31.08.2008 and in compliance thereof, a certificate of registration was issued to the Society on 01.05.2008.

After becoming eligible for exemption, the assessee applied under Section 10(23C) which was rejected on 26.12.2008 and the order was served on the appellant admittedly on 06.01.2009. At that point of time, no statutory right of appeal was available against such an order. The right of appeal emerged only with effect from 01.06.2015 under the Finance Act, 2015 that inserted Clause (f) in Sub-section (1) of Section 253. The appellant has urged that that cause having arisen with this right of appeal, the limitation against the order dated 26.12.2008 deserves to be waived.

Excerpt from HC Judgment:

We have considered the submissions raised and also the judgment in the case of Commissioner of Income Tax Vs. Vatika Township P. Ltd.: [2014] 367 ITR 466 (SC)). The only ground seeking condonation of delay is that since the right of appeal has now been created, therefore, the appellant has a right of appeal against the order passed in 2008. We are unable to agree with this proposition inasmuch as, a right of appeal is a matter of procedure that gets converted into a substantive right as a creature of statute. The appeal has to be filed within the limitation prescribed. It cannot create a retrospective right to file an appeal which did not exist in the year 2008 or even on 06.01.2009 when the order was served on the appellant. In the absence of existence of such a right, it was open to the appellant to have filed a writ petition challenging the same in 2008-09. The very same view has been taken by the Tribunal and it has declined to grant any benefit of a bona fide act as urged by the appellant. The statutory remedy of appeal having come into existence on 01.06.2015, cannot be stretched retrospectively for extending the benefit as claimed by the appellant for condoning the delay. The reliance placed on the judgment by the learned counsel for the appellant is misplaced and no substantial question of law having arisen, the appeal deserves to be rejected.