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Facts
The appellant, a real estate partnership firm, did not file a return of income under Section 139(1). A survey under Section 133A led to a notice under Section 148, and the assessment under Section 143(3) read with Section 147 resulted in a significant disallowance of expenditures. The CIT(A) confirmed the disallowance, prompting the present appeal to the ITAT.
Held
The Tribunal dismissed the appeal due to a delay of 265 days in filing, for which the reasons provided for condonation were deemed insufficient. Additionally, the appeal was considered defective as it was filed by partners other than the Managing Partner, who is the competent person to file a return and appeal for a firm under Section 140(cc) of the Income Tax Act.
Key Issues
Whether there was sufficient cause to condone the 265-day delay in filing the appeal. Whether partners other than the Managing Partner are competent to file an appeal for a firm as per Section 140(cc) of the Income Tax Act.
Sections Cited
139(1), 133A, 148, 143(3), 147, 140, 115WD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SOUNDARARAJAN K., JM
O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-3, Kochi [CIT(A)], dated 14.01.2022 for Assessment Year (AY) 2007-08.
Brief facts of the case are that the appellant is a partnership firm engaged in the business of real estate. No return of income under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act) was filed by the assessee. The AO conducted survey & 925/Coch/2022 New Cochin Real Estae Developers operations u/s. 133A of the Act, wherein certain incriminating material was stated to have been found. Accordingly, a notice u/s. 148 of the Act was issued on 01.04.2009. In response to the notice the appellant filed return of income on 28.10.2019 declaring total income of Rs. 1,41,86,602/-.
Against the said return of income, the assessment was completed by the DCIT, Central Circle-1, Ernakulam (hereinafter called "the AO") vide order dated 31.12.2010 passed u/s. 143(3) r.w.s. 147 of the Act at a total income of Rs. 11,73,82,410/-. While doing so, the AO mad disallowance of Rs. 10,31,95,811/- being expenditure claimed on the following heads based on the confession made by the assessee vide letter dated 21.12.2010: -
a) Boundary fixing and fencing Rs. 33,90,300 b) Bund expenses Rs. 76,64,315 c) Site development Rs. 24,06,900 d) Soil cost Rs.8,45,33,580 e) JCB & Truck expenses Rs. 35,52,507 f) Loading & Unloading Rs. 6,87,935 4. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before us in the present appeal.
At the outset we find that there is a delay in filing the appeal by 205 days. The appellant filed a petition seeking condonation of & 925/Coch/2022 New Cochin Real Estae Developers delay purportedly sworn by one Mr. Siddique, stated to be the partner of the appellant firm. The petition reads as under as under: - “Condonation Petition Ref: Appeal No. ITA-263/E/CIT(A)-III/2014-15 dated 14.01.2022 Petition submitted by the Appellant for condonation of delay and production of additional evidence. The Firm in which appellant is a partner, is engaged in the business of real estate. It is constituted with the following five partners as per the Deed of Partnership dated 06.12.2005.
Martin Sebastian 35% 2. Siddique Meethalalakath 15% 3. T. M. Thanveer 15% 4. Thayathupurayil Hameed 15% 5. Meethalakath Mahamood 20% The Appellate Order No. ITA 263/E/CIT(A)-III/2014-15 dated 14.01.2022 was received by the Managing Partner Sri Martin Sebastian on 21.01.2022. He appears to have accepted the appellate order without filing appeal before the hon. ITAT for his own reasons. We, three partners - 1. Siddique Meethalalakath 3. Meethalakath Mahamood, 2. Thayathupurayil Hameed and came to know of the proposed sale of the Firm's properties extending to 206.07 Ares in KUMBALAM village from ITCP 13 dated 19th day of September 2022 (proclamation of sale) exhibited on the notice board of the office of the TRO at Kandamkulathy Towers, M. G. Road, Ernakulam. We are aggrieved against the appellate order of the CIT(As) confirming the demand raised by the Assessing Officer. We are, therefore, filing this appeal against the impugned appellate order of the CIT(As). There is a delay of 265 days i.e from 21.01.2022 to 13.10.2022. The delay was not intentional or deliberate. This was beyond the control of the appellant. The circumstances narrated above & 925/Coch/2022 New Cochin Real Estae Developers may be treated as sufficient reason for the delay of 265 days in filing this appeal. Hence it is most respectfully submitted that the hon. Tribunal may be so pleased as to condone the delay of 265 days and admit the appeal for the Assessment Year 2007- 08 against the appellate order dated 14.01.2022.”
Form the above it is clear that the affidavit seeking codonation of delay was not filed by the Managing Partner of the firm, who is competent to sign the return of income and also file the appeal but filed by one of the partners. During the course of hearing before this Tribunal the learned A.R. fairly conceded that the appellant firm had one Managing Partner, but owing to differences of opinion the other three partners opted for filing the appeal. Accordingly the appeal is filed by the partners other than the Managing Partner. From a reading of the averments made in the petition, it is clear that the partners who chose to file the present appeal was not aware of the order of the CIT(A) till a proclamation notice for the sale of the property was issued by the office of the TRO. Therefore, the delay was not intentional.
Firstly, the appeal is filed by a non-competent person. As per provisions of section 140 of the Act, the appeal is required to be filed by a person who is competent to file the return of income under the provisions of section 140 of the Act. Under clause (cc) of section 140 in the case of a firm the return of income is required to be verified by the Managing Partner. The relevant clause reads as under: - & 925/Coch/2022 New Cochin Real Estae Developers “Return by whom to be verified.
The return under section 115WD or section 139 shall be verified— …………….. (cc) in the case of a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor; ………………….”
It is not the case of the appellant that the Managing Partner is not able to sign the appeal papers for any unavoidable reasons, but the partners, other than the Managing Partner, chose to file the appeal owing to differences of opinion with the Managing Partner. Thus, the appeal papers were not verified by competent person. Even the affidavit seeking condonation of delay in filing the appeal was not filed by a competent person. Furthermore, we find that the averments made in the affidavit seeking condonation of delay do not really explain the reasons for the delay. Further, even the appeal papers, i.e. Form 36 was also signed and verified by one of the partners other than the Managing Partner of the firm. Thus the appeal filed is also defective. Therefore, the appeal is dismissed both on the grounds of delay and latches and also as defective appeal.
Order pronounced in the open court on 20th March, 2025.