Limitation Period For Appeal Commences From Date Assessee Receives Copy Of ITAT Order, Not Date Of Pronouncement: Bombay High Court Under Section 254(3) Income Tax Act

"Mere knowledge of the order, by way of pronouncement is not enough to hold that day to be the first day on which the limitation commences." Clarifying the computation of limitation for statutory tax appeals, the Bombay High Court held on October 27, 2026, that the period of limitation for filing an appeal against an order of the Income Tax Appellate Tribunal begins only when the signed copy of the order is received by the assessee under Section 254(3) of the Income Tax Act, 1961, and not from the date of its oral pronouncement in open court.

The applicant, GS Strategic Investments Limited, sought condonation of an 88-day delay in preferring an income tax appeal against an ITAT order dated October 22, 2024, which remanded the issue of long-term capital gains tax exemption back to the Assessing Officer. Although pronounced in October 2024, the ITAT dispatched the signed order on February 25, 2025, which was delivered to the assessee on February 27, 2025. Following subsequent consultations on whether to pursue rectification under Section 254(2) or an appeal, the appeal was instituted on September 23, 2025.

Whether the period of limitation for preferring an appeal under the Income Tax Act commences from the date of receipt of the order dispatched by the Tribunal or from the date of pronouncement and knowledge of the decision.

Whether the assessee established sufficient cause under Section 5 of the Limitation Act to warrant condonation of the 88-day delay in filing the appeal.

A division bench of Justice G. S. Kulkarni and Justice Dr. Neela Gokhale examined the statutory architecture governing Tribunal orders, particularly Section 254(3) of the Income Tax Act and Rules 35 and 49 of the Income-Tax (Appellate Tribunal) Rules, 1963. The Court observed that the scheme mandates the Tribunal to sua sponte dispatch free certified copies of the signed order to both the assessee and the Commissioner, without requiring an application for certified copies.

Limitation runs from the receipt of the written decision rather than mere knowledge

The bench emphasized that procedural statutes require receipt of the written text to enable effective legal evaluation and formulation of grounds of appeal. The Court held:

"All these provisions clearly demonstrate that as per procedure, the ITAT, once an order is pronounced, dispatches a copy of the same to both the parties free of costs. Thus, the Act and the Rules themselves contemplates that the copy of the Judgment and Order pronounced by the Appellate Tribunal is sent by the Tribunal to the parties. There is no provision in the Act or in the Rules regarding applying for or obtaining a certified copy. Thus, considering the relevant ITAT Rules, we are of the clear opinion that once the Rules contemplate dispatching the copy of the Judgment and Order by the Tribunal to the Assessee and the PCIT, the limitation shall naturally commence from the day on which the same is received by the respective party."

Substantive right of appeal cannot be curtailed by open court pronouncement

Rejecting the Revenue's submission that the assessee’s presence and knowledge of the order on the date of pronouncement should trigger limitation, the High Court held that knowing the outcome does not equate to knowing the underlying reasoning. The bench observed:

"Mere knowledge of the order, by way of pronouncement is not enough to hold that day to be the first day on which the limitation commences. The pronouncement of a Judgment and Order from the dais in open Court, ordinarily declares the fate of the proceeding. For the aggrieved party to deliberate and consider as to whether he wishes to assail the same and on what grounds to do so, it is necessary for the party have a complete copy of the Judgment and Order which will apprise him of the finding and reasons given by the Court/Tribunal, on the basis of which the order is passed. In these circumstances, we are of the view that the limitation shall commence from the day on which a copy of the Judgment and Order passed by the ITAT, is received by the aggrieved party. To hold otherwise would be depriving the aggrieved party of his right to prefer a substantive appeal based on cogent grounds."

Sufficient cause established through chronological stage-wise explanation

Evaluating the explanation under Section 5 of the Limitation Act, 1963, the High Court relied on the Supreme Court's ruling in Maniben Devraj Shah v. Municipal Corporation of Brihan Mumbai, reiterating that a justice-oriented and liberal approach must be adopted where the delay is not of such magnitude as to indicate deliberate or mala fide inaction.

The Court observed that the applicant provided a comprehensive stage-wise chronological explanation for the 88-day delay reckoning from February 27, 2025. It noted that the assessee was initially pursuing a miscellaneous application under Section 254(2) before deciding to institute a full-fledged appeal, demonstrating bona fide conduct and an absence of gross negligence.

The High Court allowed the interim application, condoned the 88-day delay in filing the appeal, and directed the removal of office objections within eight weeks without any order as to costs.

Date of Decision: October 27, 2026