The Calcutta High Court has upheld the dismissal of an income tax appeal filed after a delay of 2,628 days, observing that the assessee had neither filed an application for condonation of delay nor provided a satisfactory explanation for the prolonged delay.
The bench of Justice Rajarshi Bharadwaj and Justice Sudip Deb dismissed the appeal challenging the Income Tax Appellate Tribunal’s order, rejected the accompanying stay application, finding no reason to interfere with the Tribunal’s decision.
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The dispute arose from an assessment involving an addition of ₹2.71 crore under Section 68 of the Income Tax Act, 1961, towards unexplained share capital and share premium. However, the High Court’s decision concerned the delayed filing and the assessee’s conduct in pursuing the appeal, rather than the merits of the addition.
The assessee company filed its income tax return for Assessment Year 2012–2013 on June 3, 2013, declaring income of ₹2,769. Its case was subsequently selected for scrutiny under the Computer Assisted Scrutiny Selection system in connection with the receipt of a large share premium.
By an assessment order dated March 23, 2015, the Assessing Officer determined the total income at ₹2,71,24,875. This included ₹2.71 crore treated as unexplained cash credit under Section 68.
The assessment order recorded net tax payable of ₹1,27,60,980. Separate penalty proceedings under Section 271(1)(c) were also initiated for concealment of income and furnishing inaccurate particulars of income.
The first appellate authority affirmed the assessment on April 4, 2017. The company subsequently approached the Kolkata “B” Bench of the ITAT on August 13, 2024.
The Tribunal dismissed the appeal at the threshold, recording a delay of 2,628 days, the absence of a delay-condonation application and the failure to rectify appeal defects despite multiple opportunities.
Before the High Court, the appellants argued that the Tribunal had caused a miscarriage of justice by dismissing the appeal on grounds of delay and defects without examining the dispute on merits.
They also contended that sufficient cause existed for condoning the delay and raised allegations concerning an ex parte order and improper service of notice.
On the underlying assessment, the appellants maintained that the identity and creditworthiness of the investors, as well as the genuineness of the share capital and share premium transactions, had been established. Their proposed substantial questions of law also questioned the validity of proceedings against a company allegedly struck off the Register of Companies.
The Court nevertheless found that the Tribunal’s records did not support interference with the dismissal.
The High Court rejected the plea that the company lacked knowledge of the proceedings before the Tribunal. It noted that the company’s directors had submitted three applications seeking adjournment.
These applications were filed on December 9, 2024, January 7, 2025, and March 24, 2025. The Court held that these requests demonstrated the company’s awareness of the pending appeal.
The Bench also noted the Tribunal’s finding that a director’s signatures differed between two adjournment applications. According to the Court, this finding, based on contemporaneous documents, cast serious doubts on the company’s bona fide intention to pursue the appeal.
Despite repeated opportunities, the company had neither corrected the defects nor explained the delay. The Bench described its conduct as indolent and found that it had deliberately failed to proceed with the appeal.
The Court reiterated that a party seeking condonation of delay must establish sufficient cause. In this case, it found that the company had failed to meet that requirement.
The absence of a condonation application, the unexplained delay and the failure to cure procedural defects supported the Tribunal’s decision to dismiss the appeal.
Accordingly, the High Court dismissed the appeal and the stay application without any order as to costs. It did not adjudicate the substantive challenges to the Section 68 addition or the questions concerning the company’s alleged removal from the Register of Companies.
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