MR. KARUPPASAMY PILLAI VADIVEL MURUGAN,CHENNAI vs. ITO, NON CORPORATE WARD 10(5), CHENNAI

Aforesaid appeal by assessee for Assessment Year (AY) 2011-12 arises out of the order of learned Commissioner of Income Tax (Appeals)-12, Chennai [CIT(A)] dated 22-05-2019 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) r.w.s 147 of the Act on 11-12-2018. The grounds raised

The Registry has noted delay of 1150 days in the appeal, the condonation of which has been sought by Ld. AR on the strength of condonation petition which is supported by the affidavit of the assessee. It has been submitted that the assessee was facing adverse medical conditions which is evidenced by medical records as placed on record. The Ld. AR further submitted that another factor which led to delay in the appeal was that Ld. CIT(A) confirmed the quantum order which led to initiation of penalty proceedings. Considering the same, the assessee was advised to file the appeal. The revenue has opposed condonation of delay and filed written submissions, in this regard. It 3 - has been submitted that the assessee underwent Coronary Angiogram during April, 2021 whereas impugned order was passed on 22-05- 2019. Therefore, there is no valid reason with the assessee for inordinate delay.

I find that the period commencing from 15-03-2020 to 28-02-2022 is attributable to Covid-19 Pandemic and this period has to be excluded for limitation considering the decision of Hon’ble Supreme Court in its suo-moto miscellaneous application No. 29 of 2022 in Re. Cognizance for extension of limitation wherein Hon’ble Court has directed for exclusion of this period for the purpose of computation of limitation. It is also a fact that the assessee was facing adverse medical conditions and underwent Coronary Angiogram during April, 2021 and it was facing adverse medical conditions. Considering all these facts, I am inclined to condone the delay and accordingly, proceed with adjudication of the appeal on merits. 4. The Ld. AR has stated that the issue of rental payment is pending before appropriate authority and adjudication therein shall have direct bearing on the merits of the case. The Ld. AR also submitted that notice u/s 148 was barred by limitation since the same was served after 6 years. The Ld. Sr. DR opposed any interference in the impugned order. 5. From case records, it emerges that the assessment for this year was reopened and notice u/s 148 was issued on 24-03-2018 which was duly served on the assessee. The proceedings stem from the fact that the assessee did not reflect correct rental income as earned from Central Warehousing Corporation Ltd. since higher figure of Rs.10.36 Lacs was reported in Form 26AS whereas the assessee admitted 4 - income of Rs.1.29 Lacs only. The Ld. AO, rejecting assessee’s submissions, assessed rental income at Rs.10.36 Lacs and made net addition of Rs.6.34 Lacs. Another addition was for Rs.1.40 Lacs being gift received from assessee and deposited in bank account since the assessee did not file any confirmation or corroborative evidences.

Before Ld. CIT(A), the assessee raised a legal ground that the notice was served on 02-04-2018 i.e., beyond 6 years and therefore, it was hit by limitation period of 6 years. However, this plea was rejected. On merits, the assessee submitted that the amount of Rs.10.36 Lacs was rent payable and not rent received. There was legal dispute in this regard which was pending before Hon’ble High Court of Madras. The TDS was deducted by tenant only as abundant precaution. However, this plea was also rejected by Ld. CIT(A). The addition of Rs.1.40 Lacs was also confirmed for want of supporting evidences. Aggrieved, the assessee is in further appeal before me.

So far as the legal ground is concerned, I find that notice u/s 148 was issued on 24-03-2018 and put to service on assessee. In such a case, the ratio of decision of Hon’ble High Court of Madras in Sadhna Tolasariya vs. ITO (127 Taxmann.com 127) would apply wherein it has been held that 'Issue of Notice' and 'Service of Notice' to the assessee cannot be compared at all. What is contemplated under Sec. 149 of the Income-tax Act is 'issue of notice' and not 'service of notice' to the assessee. The service part is to be complied with subsequently enabling the assessee to defend his case. Undoubtedly, the assessee can defend his case only after service. However, for reckoning the period of limitation 'issue of notice' is sufficient. Respectfully following the same, I am not inclined to accept the legal grounds raised by Ld.

So far as the determination of rental income is concerned, I find that impugned rental income as reported in Form 26AS is rent payable which is under dispute and the same is pending for adjudication before appropriate court. The status of the same has been placed by Ld. AR on page no.18 of the paper-book. I find that adjudication therein would have direct bearing on quantum of rental income that would accrue to the assessee. In such a scenario, I deem it fit to remit the matter back to the file of Ld. CIT(A) for fresh adjudication after considering the outcome of legal dispute qua rental income between the assessee and Central Warehousing Corporation Ltd. The addition of Rs.1.40 Lacs also stand restored back to the file of Ld. CIT(A) for re-adjudication with a direction to the assessee to substantiate the same. The grounds, on merits, stands allowed for statistical purposes.

The appeal stand partly allowed for statistical purposes Order pronounced on 21st February, 2023.