Income-tax---

----Reference---Application to High Court to direct reference ---Limitation-- Condonation of delay in filing application---Section 5 of Limitation Act is applicable---Application futile because adverse decision of jurisdictional High Court---Subsequent reversal of High Court decision by Supreme Court---Further delay due to personal inability of counsel for applicant---Delay in application had to be condoned---Indian Income Act, 1961, 5.256- Indian Limitation Act, 1963, Ss. 5 & 29.

Under section 29(2) of the Limitation Act, 1963, section 5 of the Limitation Act would apply to the periods of limitation prescribed by any special or local law unless such applicability is expressly excluded. The applicability of section 5 of the Limitation Act has not been excluded by section 256 of the Income-tax Act. Hence, section 5 of the Limitation Act applies to petitions under section 256(2) of the Income Tax Act, 1961. The decision shall have to be taken on the facts of each individual case whether the circumstances constitute a sufficient cause for condoning the delay within the meaning of section 5 of the Limitation Act.

Before the Income-tax Appellate Tribunal, the subject-matter of controversy, inter alia, was disallowance of Rs.2, 15, 453 claimed by the assessee under section 43-B of the Income Tax Act, 1961, on account of payment of sales tax made by the assessee within the time prescribed by the H.P. Sales Tax Act. The appeal having been decided adversely to the assessee, the assessee filed an application under section 256(1) of the Income Tax Act, 1961, seeking reference to the High Court of the question of law arising from the order of the Tribunal. The application was rejected on May 30, 1995, by the Tribunal forming an opinion that the answer to the question was covered by a decision of the Delhi High Court, which is the jurisdictional High Court in Escorts Ltd. v. Union of India (1991) 189 ITR 81. A copy of the order was communicated to the assessee on June 28, 1995. The assessee was advised not to pursue the matter further. Subsequently came the judgment of the Supreme Court in Allied Motors (P.) Ltd. v. CIT (1997) 224 ITR 677 wherein the decision of the Delhi High Court in Escorts Ltd's case (1991) 189 ITR 81 was reversed. The judgment of the Supreme Court was delivered on March 10, 1997. The assessee became aware of the decision in April, 1997, when the decision was reported in law reports. The assessee was advised to file the petition under section 256(2) before the High Court. However, G, counsel for the assessee, who was handling the case got busy in the parliamentary elections wherein the brother of counsel was himself a candidate. A period of about 25 days was lost on this account. On May 24, 1997, the petition was filed under section 256(2) of the Income Tax Act accompanied by an application under section 5 of the Limitation Act:

Held, that in the instant case so long as the decision of the Delhi High Court in Escorts Ltd's case (1991) 189 ITR 81 held the field, it would have served no useful purpose in pursuing the matter further. Shortly thereafter, the law was settled by an authoritative pronouncement of the 'Supreme Court. Promptly the matter was entrusted to counsel for moving the High Court by an appropriate application under section 256(2) of the Income-tax Act. A delay of about 25 days was attributable to personal inability of counsel for which the litigant could not be blamed. Factors like gross negligence, contumacy or misconduct could not be attributed either to the litigant or to counsel. The delay in filing the petition under section 256(2) had to be condoned.

Allied Motors (P) Ltd. v. CIT (1997) 224 ITR 677 (SC); Bhagwan Swarup v. Municipal Board, Ujhani AIR 1970 All. 652; Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (SC); CIT v. Taylor Instrument Co. (India) Ltd. (1992) 64 Taxman 6 (Delhi); Escorts Ltd. v. Union of India (1991) 189 ITR 81 (Delhi); Mata Din v. A. Narayanan AIR 1970 SC 1953; Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker AIR 1995 SC 2272; Rakesh Kumar Jain v. Devender Singh Mehta (1995) 57 DLT 135 (Delhi); Ravindra Jain v. Natraj Albums Industries (P.) Ltd. (1997) 1 AD (Delhi) 420 and State of Bihar v. Md. Ismail AIR 1966 Pat. 1 ref.

J. R. Goel for Applicant.

R. D. Jolly with Ms. Premlata Barisal for Respondent.

JUDGMENT

R. C. LAHOTI, J.---An application under section 5 of The Limitation Act, 1963, seeking condonation of delay in filing a petition under section 256(2) of the Income-tax Act, 1961, is the subject-matter of the present order.

The facts in brief.

Before the Income-tax Appellate Tribunal, the subject-matter of controversy, inter alia, was disallowance of Rs.2, 15, 453 claimed by the assessee under section 43-B of The Income-tax Act, 1961, on account of payment of sales tax made by the assessee within the time prescribed by the H.P. Sales Tax Act, The appeal having been decided adversely to the petitioner-assessee, the assessee filed an application under section 256(1) of the Income-tax Act, 1961, seeking reference to the High Court of the question of law arising from the order of the Tribunal. The application was rejected on May 30, 1995, by the Tribunal forming an opinion that the answer to the question was covered by a decision of the Delhi High Court, which is the jurisdictional High Court m Escorts 'Ltd. v. Union of India (1991) 189 ITR 81 (Delhi). Copy of the order was communicated to the petitioner on June 28. 1995.

The petitioner was advised not to pursue the matter further inasmuch as it would not yield any result m view of the decision of the Delhi High Court being adverse to the assessee. However, then came the judgment of the Supreme Court in Allied Motors (P.) Ltd. v. CIT (1997) 224 ITR 677, wherein the action of the Delhi High Court in Escorts Ltd.'s case (1991) 189 ITR 81 was reversed. The judgment of the Supreme Court was delivered on March 10, 1997. The petitioner became aware of the decision in April, 1997, when the decision was reported in law reports. The petitioner was advised to file the petition under section 256(2) before the High Court. However, Shri J. R. Goel, counsel for the petitioner, who was handling the case got busy in the parliamentary elections wherein the brother of counsel was himself a candidate. A period of about 25 days was lost on this account. On May 24, 1997, the petition under section 256(2) of the Income-tax Act accompanied by an application under section 5 of the Limitation Act setting out the above said facts has been filed.

The condonation of delay in filing the application is thus, sought for on two grounds: partly, the change in the law brought about by the decision of the Supreme Court without which it would have been futile for the petitioner to have moved the High Court under section 256(2) of the Income tax Act; and partly on account of events attributable to the personal inability of counsel for the petitioner who was handing the brief.

The prayer for condonation of delay has been opposed vehemently on behalf of the Revenue. Learned senior standing counsel for the Revenue has submitted that section 5 of the Limitation Act, 1963, is not applicable to an application under section 256(2) of the Income-tax Act because the limitation for filing the application is provided not by the Limitation Act but by the Income-tax Act itself. It has also submitted that change in the view of the law cannot be a ground for condoning the delay in filing an application. In other words, change in the view of law does not amount to "sufficient cause" within the meaning of section 5 of the Limitation Act.

The first question for consideration is whether the applicability of section 5 of the Limitation Act, 1963, is at all attracted. It is true that the period of limitation for filing an application under section 256(2) of the Income-tax Act is provided in section 256 it self and not by the Schedule appended to the Limitation Act. Here, the change in law brought by the introduction of the Limitation Act, 1963, over its predecessor enactment assumes significance. Under the Limitation Act, 1908, section 5 could not be applied to a period of limitation prescribed by special or local law unless its applicability was specifically attracted. Under section 29(2) of the Limitation Act, 1963, section 5 of the Limitation Act would apply to the periods of limitation prescribed by any special or local law unless such applicability is expressly excluded. It is not disputed that the applicability of the Limitation. Act section 5 has not been excluded by section 256 of the Income-tax Act. This controversy stands resolved by the Supreme Court in Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker AIR 1995 SC 2272. Their Lordships have held (headnote):

"Section 29(2) would apply even to a case where a difference between the special law and Limitation Act arose by the omission to provide for limitation to a particular proceedings under the Limitation Act.

There is no express exclusion anywhere in the Rent Act taking out the applicability of section 5 of the Limitation Act to appeals, filed before appellate authority under section 18 of the Act. Consequently, all the legal requirements for, applicability of section 5 of the Limitation Act to such appeals in the light of section 29(2) of the Limitation Act can be said to have been satisfied."

For the foregoing reasons, we are of the opinion that section 5 of the Limitation Act, 1963, applies to petitions under section 256(2) of the Income-tax Act, 1961. Such is the view taken by a Division Bench of the Delhi High Court in CIT v. Taylor Instrument Co. (India) Ltd. (1992) 64 Taxman 6.

The second question is whether change in the view of the law can be a sufficient cause for condoning the delay in preferring petition within the meaning of section 5 of the Limitation Act.

Learned counsel for the petitioner-assessee has brought to our notice two Full Bench decision. In Bhagwan Swarup v. Municipal Board. Ujhani, AIR 1970 All 652 and in State of Bihar v. Md. Ismail, AIR 1966 Patna 1, it has been held that delay in filing any appeal due to conflicting decisions misleading the parties in filing an appeal is a good ground for condoning the delay.

In the matter of pursuing a legal battle based purely on legal issues the litigants are generally advised by lawyers of their confidence and their opinion is accepted more or less conclusive in determining or guiding their course of action. In Mata Din v. A. Narayanan, AIR 1970 SC 1953, their Lordships of the Supreme Court have held that a delay occasioned by mistaken advice of counsel may be accepted by the Court as a justification in extending time unless the error of counsel was tainted by any mala fide motive though the mistake of counsel cannot be treated as sufficient ground to condone delay by way of a rule of universal application. It is all a question of determining the bona fides of the litigant. We are of the opinion that decision shall have to be taken in the facts of each individual case whether such circumstances constitutes a sufficient cause for condoning the delay within the meaning of section 5 of the Limitation In the case at hand the decision was given by the Tribunal rejecting the petitioner's application under section 256(1) of the Income-tax Act on May 30, 1995, forming an opinion that the issue being governed by an available decision of the jurisdiction High Court, no referable question of law arose from its appellate order. So long as the decision of the Delhi High Court in Escorts Ltd.'s case (1991) 189 ITR 81 held the field, it would have served no useful purpose in pursuing the matter further. Rather it would have amounted to attempt at striking the head against the wall. Shortly thereafter the law was settled by an authoritative pronouncement of the Supreme Court. Promptly the matter was entrusted to counsel for moving the High Court by an appropriate application under section 256(2) of the Income-tax Act, delay of about 25 days was occasioned for factors attributable to personal inability of counsel for which the litigant cannot be blamed. Factors like gross negligence, contumacy or misconduct cannot be attributed either to the litigant or to counsel.

In Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471, their Lordships of the Supreme Court have held that a justice oriented approach has to be adopted while dealing with an application under section 5 of the Limitation Act and in the name of "every day's 'delay must be explained" a rigid and pedantic approach cannot be adopted. The Court should be on its guard to see that refusal to condone the delay may result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated.

Having reviewed several decided cases from the Supreme Court, this Court has held in Rakesh Kumar Jain v. Devender Singh Mehta (1995) 57 DLT 135:

"While dealing with applications seeking condonation of delay under section 5 of the Limitation Act or for setting aside the abatement under rule 9 of Order 22, of the Civil Procedure Code, the approach has to be liberal and judicious guided by the paramount consideration of not depriving a litigant ordinarily of adjudication of rights on merits. Hyper technical, too strict, and pedantic approach as may cause injustice has to be avoided."

In Ravindra Jain v. Natraj Albums Industries (P) Ltd. (1997) I AD (Delhi) 420, a Division Bench of this Court has observed: -

"A litigant fighting his case with diligence, would not ordinarily allow the litigation to be lost by deliberately defaulting in taking steps requisite for keeping the litigation alive so as to secure adjudication of the lies on merits."

In the case at hand, it cannot be held that the petitioner-assessee had abandoned his legal pursuit and submitted to the judgment of the Tribunal by -unreasonable delay either preceding or following the pronouncement of the Supreme Court. We are, therefore, of the opinion that sufficient cause within the meaning of section 5 of the Limitation Act is made out for condoning the delay in filing the petition under section 256(2) of the Income-tax Act.

The application is, therefore, allowed. The delay in filing the petition under section 256(2) of the 'Income-tax Act, 1961, is condoned. It shall be treated to have been filed within the prescribed period of limitation.

M.B.A./2/FC

Application allowed.