Facts of the Case

The petitioner, KLJ Organic Ltd., filed a writ petition challenging an order dated 27 March 2021 passed by the Commissioner of Income Tax (International Taxation)-2 for Assessment Year 2018–19.

The dispute arose when the petitioner’s revision petition under Section 264 of the Income Tax Act was dismissed on the ground of limitation.

The petitioner initially filed an appeal under Section 248 of the Act, under a bona fide belief that such appeal was maintainable. The appeal was pursued diligently until June 2019. However, it was later realized that the appeal was not maintainable due to non-payment of tax under Section 195(2).

Subsequently, the petitioner withdrew the appeal and filed a revision petition under Section 264 within four days thereafter. However, the same was rejected as time-barred.

Issues Involved

  1. Whether the delay in filing the revision petition under Section 264 should be condoned?
  2. Whether Section 14 of the Limitation Act, 1963 applies to proceedings under the Income Tax Act?
  3. Whether time spent in pursuing a remedy before an incorrect forum can be excluded while computing limitation?

Petitioner’s Arguments

  • The petitioner acted under a bona fide mistake of law by filing an appeal under Section 248.
  • The appeal was pursued diligently and in good faith based on prior favorable orders.
  • Upon discovering the mistake, the petitioner immediately withdrew the appeal and filed a revision petition.
  • The delay should be condoned under proviso (3) to Section 264, as sufficient cause existed.
  • The time spent before the wrong forum must be excluded under Section 14 of the Limitation Act.

Respondent’s Arguments

  • The Revenue contended that the reasons provided for condonation of delay were untenable in law.
  • The revision petition was rightly dismissed as being barred by limitation.

Court’s Findings / Order

  • The Delhi High Court held that Section 14 of the Limitation Act, 1963 is applicable in the present case.
  • The Court observed that the petitioner had prosecuted the earlier proceedings bona fide and with due diligence before a forum lacking jurisdiction.
  • It was held that time spent in pursuing the appeal under Section 248 must be excluded.
  • Upon such exclusion, the revision petition under Section 264 would fall within limitation.

Important Clarification by Court

  • The Court emphasized that procedural technicalities should not defeat substantive justice.
  • Bona fide prosecution before an incorrect forum can justify exclusion of time under Section 14.
  • The judgment reinforces a liberal approach toward condonation of delay in tax matters.

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:656-DB/MMH18022022CW30712022_212101.pdf

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