VISHWA UTILITES PRIVATE LIMITED,HYDERABAD vs. DCIT CIRCLE-8(1), HYDERABAD

This appeal is filed by M/s. Vishwa Utilities Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned ADDL/JCIT(A)-2, Jaipur (“Ld. First Appellate Authority”), dated 04.09.2024 for the A.Y. 2014-15.

The brief facts of the case are that the assessment in the case of the assessee was completed under section 143(3) of the Income Tax Act, 1961 (“the Act”) on 31.05.2016, determining the total income at Rs.NIL. The assessee filed an appeal before the Ld. First Appellate Authority against the said assessment order, which was delayed by 2,235 days.

The Ld. First Appellate Authority, after considering the record, declined to condone the delay and dismissed the appeal as time-barred. Aggrieved by the said order, the assessee is in appeal before us.

The learned Authorised Representative (“Ld. AR”) submitted that the Ld. First Appellate Authority erred in dismissing the appeal without appreciating the reasons for delay. It was submitted that the delay occurred due to severe managerial and operational constraints faced by the assessee. The Ld. AR brought to our notice that the company was under financial and administrative crisis, and the management had collapsed, due to which there was no responsible person to handle tax litigation. The Ld. AR submitted that the case of the assessee was also referred to the National Company Law Tribunal (“NCLT”) under regulatory mechanisms, and eventually, new management took over the company.

In support of the plea for condonation, the Ld. AR placed on record a condonation petition along with an affidavit, stating that the previous management had failed to act diligently and that the current management, upon taking charge, promptly initiated corrective steps including filing the appeal. The Ld. AR prayed that the delay may be condoned in the interest of justice and the matter may be restored to the file of the Ld. First Appellate Authority for adjudication on merits.

Per contra, the learned Departmental Representative (“Ld. DR”) opposed the prayer for condonation. It was submitted that the delay of over 6 years is highly excessive and the reasons cited by the assessee are vague and not backed by any cogent evidence. The Ld. DR contended that if the assessee was capable of pursuing proceedings before the NCLT , then there was no reasonable explanation for the failure to file a timely appeal before the Ld. First Appellate Authority. Accordingly, the Ld. DR prayed for dismissal of the appeal.

We have considered the rival submissions and perused the material available on record. The Ld. AR submitted that the delay of 2,235 days occurred due to managerial vacuum, financial hardship, and subsequent restructuring of the management, and placed reliance on the condonation petition and affidavit submitted before us. We have gone through the condonation petition and affidavit placed on record, and on perusal, we find that the sole reason cited by the assessee for the delay is that it was facing operational difficulties, had no managing personnel, and was undergoing restructuring which culminated in change of management.

While these reasons may explain some delay, the explanation offered by the assessee does not establish sufficient cause for the entire delay of over 6 years. Moreover, we note that the assessee was capable of actively participating in proceedings before the NCLT during the relevant period, which suggests that it was aware of and engaged with its tax matters. If the assessee could make submissions before the NCLT, it is not explained why the appeal before the Ld. First Appellate Authority against the original assessment order was not filed in time. This shows lack of diligence on the part of the assessee and casts serious doubt on the credibility of the reasons cited.

It is a settled principle of law that “every day’s delay” must be explained to the satisfaction of the appellate authority, and condonation of delay is a discretionary relief that requires demonstration of bona fide intent and reasonable cause. In the present case, we are of the view that the assessee has not demonstrated sufficient cause for condoning such an extraordinary delay.

Accordingly, we uphold the order of the Ld. First Appellate Authority in dismissing the appeal as barred by limitation and decline to condone the delay in filing the appeal. In the result, the appeal of the assessee is dismissed. 11.