The Punjab and Haryana High Court has upheld the rejection of an income tax appeal filed 441 days late, holding that an unsupported claim of the tax consultant’s prolonged illness did not establish “sufficient cause” for the delay. 

The bench of Justice Deepak Sibal and Justice Sunish Bindlish said a liberal approach to condonation cannot excuse prolonged inaction when the taxpayer has not shown why the appeal could not be filed in time.

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The bench had affirmed the Commissioner of Income Tax (Appeals)’s refusal to condone the delay in his first appeal.

For assessment year 2014–15, the taxpayer declared income of ₹3,73,618 from his dairy products business. His case was selected for scrutiny, but notices issued under Sections 143(2) and 142(1) of the Income Tax Act remained uncomplied with. According to the judgment, notices were returned with the endorsement “Refused to take”, and the taxpayer did not produce books of account or material supporting his return.

The Assessing Officer rejected the books of account and made a best-judgment assessment on December 7, 2016. Applying a net profit rate of 3% to declared gross receipts of ₹12,28,16,022, the officer computed income at ₹36,84,481 and made an addition of ₹33,10,863.

The assessment order was served on December 9, 2016. The taxpayer filed his appeal before the CIT(A) on February 22, 2018, with an application seeking condonation of a 441-day delay.

The taxpayer attributed the delay to his tax consultant’s personal circumstances. He said the consultant’s mother had been hospitalised and died on January 26, 2017. The consultant returned to his office on March 15, 2017, but, according to the taxpayer, subsequently suffered from liver and heart ailments. He resumed work on February 1, 2018, and filed the appeal later that month.

The CIT(A) found that the taxpayer had not established reasonable cause for the delay and dismissed the appeal without examining the assessment on its merits. The Tribunal agreed. It noted, among other things, that the claim of prolonged illness had not been satisfactorily proved and that the taxpayer had taken no effective steps to pursue the appeal for nearly a year.

Before the High Court, the taxpayer argued that he had entrusted the matter to a professional and should not lose the opportunity for a decision on merits because of circumstances affecting his counsel. The Income Tax Department maintained that the explanation was general, unsupported by satisfactory evidence, and failed to account for the taxpayer’s own lack of diligence.

The High Court noted that Section 249(2) of the Income Tax Act prescribes 30 days for presenting an appeal before the CIT(A). Section 249(3) permits a late appeal to be admitted if the appellate authority is satisfied that there was sufficient cause for the delay.

The Bench accepted that “sufficient cause” should be considered with a liberal, justice-oriented approach. But it said the decisive question was whether the explanation was credible and adequate. The consultant’s bereavement could, at best, explain the period up to his return to office on March 15, 2017. For the following period of nearly eleven months, the taxpayer had offered only a general claim of continuing ill health.

No medical certificate, prescription, hospital record or other supporting material had been produced before the CIT(A) to substantiate the claimed liver and heart ailments, the Court observed. It also considered the taxpayer’s conduct during assessment: statutory notices had been refused, and books of account and supporting documents had not been supplied despite opportunities to do so. In those circumstances, the Bench was not persuaded that the late filing was wholly attributable to the consultant.

The Court also distinguished the principle that a litigant should not suffer for a lawyer’s default. In the case relied on by the taxpayer, an appeal had been filed on time and the lawyer later failed to appear at a hearing. Here, the taxpayer had not adequately explained his own inaction in ensuring that the first appeal was filed within the limitation period.

The CIT(A) and Tribunal had both found, on the facts, that sufficient cause was absent. The High Court held that it would not reassess those findings in an appeal under Section 260A unless they were shown to be perverse or based on an improper consideration of the record. It found no such defect and concluded that no substantial question of law arose.

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