(O&M)JAGJIWAN LAL vs. C.I.T., LUDHIANA

Facts

The assessee, Jagjiwan Lal, filed an appeal before the Punjab and Haryana High Court against an order dated March 28, 2008, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT had dismissed the assessee's appeal for the assessment year 2003-2004. The assessee initially filed a return of income on December 9, 2003, which was processed under Section 143(1). An assessment order was completed on March 31, 2006. The assessee appealed this order before the CIT(A) on April 25, 2006, but withdrew it on September 4, 2006, to file a writ petition. The writ petition was also withdrawn on October 12, 2006, with liberty to pursue other remedies. Subsequently, the assessee filed an application under Section 154 before the CIT(A) which was dismissed on May 10, 2007. An appeal was then filed before the ITAT on June 29, 2007, which was dismissed by the impugned order.

Held

The High Court held that the appeal was dismissed. The Tribunal had dismissed the assessee's appeal against the CIT(A)'s order allowing the withdrawal of the assessee's earlier appeal. The primary reason for dismissal by the Tribunal was the significant delay of 196 days in filing the appeal against the CIT(A)'s order, for which the assessee provided no satisfactory explanation. The Tribunal noted that the assessee had consciously withdrawn the initial appeal before the CIT(A) to pursue a writ petition in the High Court, which was also subsequently withdrawn. The Tribunal found no infirmity in the CIT(A)'s order allowing the withdrawal of the appeal. The High Court further observed that the assessee had not been able to point out any infirmity in the Tribunal's order. The High Court also noted that the appeal was admitted on a substantial question of law concerning Section 253(5) but concluded that no substantial question of law arose for consideration as the appeal was dismissed on grounds of delay and lack of merit, and no interim stay was granted. The appeal was dismissed.

Key Issues

1. Whether, on the true and correct interpretation of Section 253(5) of the Income Tax Act, 1961, the "bonafide" withdrawal of an appeal to approach the writ court and thereafter withdrawal for pursuing an appeal remedy falls under the expression "reasonable cause" and "opportunity" for hearing? The assessee contended that the withdrawal of the initial appeal before the CIT(A) to approach the High Court via writ petition, and the subsequent withdrawal of the writ petition to pursue statutory remedies, constituted a "bonafide" withdrawal and a "reasonable cause" for any delay in filing subsequent appeals. The assessee argued that this should be considered under Section 253(5) for condonation of delay and opportunity for hearing. The revenue, through the ITAT's order, argued that the assessee had consciously withdrawn the appeal before the CIT(A) and subsequently withdrew the writ petition for unstated reasons. The ITAT found no satisfactory cause for the delay in filing the appeal against the CIT(A)'s order allowing withdrawal, attributing the delay to the assessee's own decision to pursue a remedy before the High Court instead of the statutory appeal route. The revenue did not explicitly argue on the interpretation of Section 253(5) but rather on the lack of justifiable cause for delay and the assessee's failure to point out any infirmity in the CIT(A)'s order.