676-Day Appeal Delay Condoned Due to Auditor Change

Case Details: Mallelil Industries (P.) Ltd. vs. Principal Commissioner of Income-tax - [2026] 187 taxmann.com 508 (Kerala)

Judiciary and Counsel Details

Devan Ramachandran & Basant Balaji, JJ.
Raja Kannan, M. Gopikrishnan Nambiar, K. John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C. Abraham, Venkitesh M.J., Smt. Varsha S. Nambiar & Smt. Rini Anna Kurian for the Appellant.
Jose Joseph, SC for the Respondent.

Facts of the Case

The assessee filed an appeal before the ITAT against the order of the CIT(A), with a delay of 676 days. The assessee explained that it relied on professional auditing firms and counsel and believed the earlier auditors would have filed the appeal. After the earlier tax auditors withdrew from the audit assignment, a new audit firm was engaged.

Upon learning that no appeal had been filed, steps were promptly taken through a new tax consultant to file the appeal, with averments providing specific details of the firms and the difficulties faced. ITAT declined to condone the delay and dismissed the appeal. The matter reached the Kerala High Court.

High Court Held

The High Court held that the Tribunal relied upon the judgment of the Hon’ble Supreme Court in Guruswamy H. v. A. Krishnaiah Since Deceased By Lrs. (2025) 15 SCC 724. The Court is fully aware that, in the said judgment, the Hon’ble Court has cautioned all Courts, including High Courts, from dealing with applications for condonation of delay in a casual manner, particularly when it involves large amounts of time. That said, when an application seeking condonation of delay is considered, the reasons stated in the explanation must be scrutinised and assessed.

The assessee explained that its earlier auditors had withdrawn from the assignment, and another Firm had to be engaged. The averments are not vague but include specifics regarding the names of the Firms and the nature of the problem they faced. Further, they have come out clean, stating that they received the order of the Commissioner on 24.08.2022 and that they believed their earlier auditors would have filed an appeal against it, but subsequently learned that it was not done.

Undoubtedly, the explanation above cannot be substantiated with documentary materials, and the assessee relies solely upon their averments in corroboration. The Tribunal cannot be found in error for not accepting the explanation, as it has not been corroborated. However, the finding that they are not bona fide does not fully persuade the Court, since, as noted above, the assessee has provided specific details of their former and present Auditors, thereby strengthening their case.

In such a perspective, the Court is of the opinion that even within the rigour of the declarations in Guruswamy H. (supra), this Court will be justified in finding in favour of the assessee, particularly since the statutory appeal they filed before the learned ITAT is one at the first instance before a judicial forum.