NAVEEN TIMBER PVT LTD vs. CENTRAL BORAD OF DIRECT TAX AND OTHERS

Facts

The petitioner, Naveen Timbers (P) Ltd., filed an appeal on 03.02.2020. The Income Tax Appellate Tribunal (ITAT) rules, specifically Section 250(6A) of the Income Tax Act, 1961, mandate that appeals should ideally be heard within one year. Despite this provision, the petitioner's appeal remained pending for over four years. During this prolonged delay, after the petitioner had advanced final arguments and submitted written submissions, the Tax Recovery Officer, Rohtak, issued summons under Rule 83 of the 2nd Schedule of the Income Tax Act, 1961. This action by the revenue authority occurred while the appeal was still undecided.

Held

The High Court observed that the appeal had been pending for over four years, significantly exceeding the one-year period stipulated by Section 250(6A) of the Income Tax Act, 1961, for hearing appeals. The Court noted that while the period is directory, officers are expected to decide appeals within the prescribed timeframe. The issuance of summons by the Tax Recovery Officer while the appeal was still pending was considered a serious situation that frustrated the purpose of the appellate provisions. The Court directed the Principal Chief Commissioner of Income Tax to take notice of such delays and issue appropriate directions to concerned authorities to decide appeals within the prescribed time, holding them accountable for delays. The Court further directed that the petitioner's appeal (Annexure P-4) be decided within two months. No specific finding was made on the merits of the appeal itself, as the focus was on procedural delay.

Key Issues

1. Whether the delay in deciding the petitioner's appeal, which has been pending for over four years, frustrates the purpose of the appellate provisions under the Income Tax Act, 1961, and warrants intervention by the High Court? (Question of law and fact, concerning Section 250(6A) of the Income Tax Act, 1961). Assessee's contention: The petitioner argued that the significant delay in deciding its appeal, exceeding four years, is unacceptable and undermines the statutory intent of providing a timely appellate mechanism. The issuance of summons by the Tax Recovery Officer while the appeal was pending further exacerbated the situation. Revenue's contention: The judgment does not record any specific contentions made by the respondents (CBDT and others) regarding the delay or the issuance of summons. Ms. Gauri Neo Rampal Opal, Sr. Standing Counsel, accepted notice on behalf of the respondents.