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Facts
The appeals relate to the assessment of rent received from Andhra Pradesh State Warehousing Corporation for AY 2012-13. The assessee claimed the income as business turnover under Section 44AD, offering 8% thereof. However, the AO treated the entire receipt as income, and the appeals before the CIT(A) were dismissed ex-parte due to the tax practitioner's inability to follow up due to old age and ill health.
Held
The Tribunal condoned the delay in filing the appeals, noting the sufficient cause shown by the assessees due to their tax practitioner's circumstances. The Tribunal found that the AO's assessment without considering the income offered under Section 44AD needed reconsideration.
Key Issues
Whether the delay in filing the appeals should be condoned due to the tax practitioner's incapacitation, and whether the ex-parte assessment treating rental income as fully taxable needed reconsideration.
Sections Cited
147, 148, 143(3), 250, 144, 44AD, 143(1), 250(6)
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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
Warehousing Corporation, therefore, for the sake of convenience, these 3 appeals are clubbed together for hearing and are being disposed of by this composite order.
There is a delay of 61 days, 274 days and 366 days in filing the 3 appeals. The assessees have filed petitions for condonation of delay supported by the affidavits.
We have heard the learned AR as well as the learned DR on the condonation of delay. The assessee has explained the cause of delay in the petition in as under:
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Identical reasons for the delay has been explained by all the 3 assessees in their affidavits. The Income Tax Practitioner to whom the matters were assigned by these assessees, has also filed affidavits and explained the cause of not filing the relevant details before the Assessing Officer as well as the learned CIT (A), on the ground of his old age and ill health and only when the assessee received messages from the Department regarding the outstanding demand, they approached the Income Tax Practitioner who was looking after the tax matters and on verification, it was found that the learned CIT (A) has already passed the orders ex-parte on account of non-appearance. The assessees were dependent on the Tax Consultant/Practitioner regarding the assessement proceedings as well as appeals filed before the learned CIT (A). The Tax Practitioner has now made a solemn statement in the affidavit that, due to his old age and ill health, he could not properly follow up the proceedings before the learned CIT (A) and consequently, the order was passed ex-parte. Further, the orders were also not communicated to the assessee which has caused the delay in filing the present appeals.
On the other hand, the learned DR has objected to the condonation of delay in filing these appeals.
Having considered the reasons and cause explained by the assessees in the respective petitions for condonation of delay as well as the affidavits filed by the assessee and the Tax
Page 5 of 10 Practitioner, we are satisfied that the assessees were having sufficient cause for delay in filing these appeals. Hence, the delay of 61 days, 274 days and 366 days in filing the 3 appeals are hereby condoned subject to cost of Rs.2500/- for each appeals to be paid to the Prime Minister’s National Relief Fund within one month from the date of this order. The assessee is directed to deposit the necessary payment slips to the Registry accordingly.
The assessees have filed common grounds in these appeals. The grounds raised by the assessee in are reproduced as under:
At the time of hearing, the learned AR of the assessee has submitted that the assessment order was passed u/s 144 r.w.s. 147 of the I.T. Act, 1961, because there was no compliance to the notices issued by the Assessing Officer. He has explained the cause of non-appearance before the Assessing Officer, as the Tax Practitioner due to his ill health and old age, could not properly handle the cases of the assessee. He has further pointed out that the Assessing Officer made the addition of the rental income received by the assessees from Andhra Pradesh State Warehousing Corporation, whereas the same was offered to tax as business income u/s 44AD of the I.T. Act, 1961 @ 8%. The Assessing Officer has also not given the credit of TDS amount which was duly reflected in Form 26AS. Due to non-participation in the proceedings by the Representative of the assessee, the learned CIT (A) has dismissed the appeals ex-parte. Thus, the learned AR has prayed that the impugned orders may be set aside and the matters may be remanded to the record of the Assessing Officer for fresh adjudication.
On the other hand, the learned DR has relied upon the orders of the authorities below and submitted that this is a case of gross negligence on the part of the assessee who have not responded to the notices issued by the Assessing Officer as well as the learned CIT (A) and therefore, there was no option for the Assessing Officer as well as the learned CIT (A) to pass the ex- parte orders.
We have considered the rival submissions as well as the relevant material available on record. The Assessing Officer has recorded the fact that as per the information, the assessee received rental income from Andhra Pradesh State Warehousing Corporation and has not filed the return of income. Consequently, when there was no response to the notices issued by the Assessing Officer, he assessed the entire rental income to tax. The assessee has pleaded before us that the assessee has been regularly filing their return of income for the earlier as well as subsequent years wherein the rent received from Andhra Pradesh State Warehousing Corporation has been declared as business turnover u/s 44AD of the I.T. Act, 1961 and offered to tax @ 8% which were accepted by the Department as business income. Therefore, assessing the rental income received from Andhra Pradesh State Warehousing Corporation on gross basis by the Assessing Officer without considering the income offered by the assessee in the earlier years as well as in the subsequent years as business income @ 8% needs reconsideration. Hence, in the facts and circumstances of the case and in the interest of justice, when both the Assessing Officer as well as the learned CIT (A) have passed ex-parte orders, the matter is remanded to the record of the Assessing Officer for fresh adjudication. Needless to say, the assessee shall be given proper opportunity of hearing before passing the fresh order.
In the result, all the 3 appeals filed by the assessee are allowed for statistical purposes.