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Facts
The assessee, M/s. Kanaka Landmark Holidays Private Limited, filed an appeal against the order of the CIT(Appeals) which dismissed their appeal on grounds of delay. The primary issue stems from an intimation order where rental income was added to the total income, and subsequently, a rectification order did not change the addition, leading to alleged double taxation.
Held
The Tribunal observed that the CIT(A) had not decided the case on merits, having rejected the appeal solely on the ground of delay. Considering the interest of justice, the Tribunal decided to remand the matter back to the CIT(A) to decide the grounds of appeal on merit after condoning the delay.
Key Issues
Whether the CIT(A) erred in not condoning the delay in filing the appeal, and whether the rental income was subjected to double taxation.
Sections Cited
250, 154, 143(1), 249(2)
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI NARENDRA KUMAR CHOUDHRY & SHRI RATNESH NANDAN SAHAY
O R D E R Per: Ratnesh Nandan Sahay, Accountant Member:
1. 1. This appeal has been filed by the appellant against the Order of the Ld. CIT (Appeals) passed u/s. 250 of the Income Tax Act [the ‘Act’ in short] M/s. Kanaka Landmark Holidays Private Limited; A. Y.2018-19 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1064404864(1) Dated 26/04/2024 for the Assessment Year 2018-19.
2. Following grounds of appeal have been raised by the appellant: 1. “On facts and circumstances of the case, the order passed u/s 154 of the Act by the Ld. CPC is void ab initio; invalid, bad in law and grossly in violation of principles of natural justice.
2. The Ld. CIT (A) has erred in not condoning the delay in filing the appeal without appreciating the genuine reasons for delay in filing the appeal and not giving due consideration to the peculiar facts and circumstances of the case.
3. The Ld. CIT (A) erred in facts and law in not appreciating the fact that the rental income earned of Rs.52,69,228/-is taxed twice e. once under the head "Income from Business and Profession" and another under the head "Income from House Property thereby leading to double taxation which is not tenable.
4. Each of the above Grounds of Appeals an independent and without prejudice to one another.
5. Your appellant craves leave to add, amend, alter or drop all or any of the above grounds of appeal.”
3. The facts of the case, in brief, are that M/s. Kanaka Landmark Holidays Private Limited was in receipt of the intimation order u/s. 143(1) of the Act dated 13/06/2019 wherein, a sum of Rs.52,69,230/- was added to the total income of the assessee. At the time of filing of return of income and computing the profit and gain from business and profession, the assessee company deducted a sum of Rs.54,00,646/- comprising rental income of Rs.52,69,228/- which has been taken to Income from House Property and M/s. Kanaka Landmark Holidays Private Limited; A. Y.2018-19 interest income of Rs.1,31,418/- under Income from other sources. However, it was erroneously indicated that the entire income was from other sources, when, in fact, it should have been categorized as income from house property which included rental income as evidenced in Income Tax Return Form.
4. To rectify the mistake in the intimation order, the assessee filed the rectification request on 10/01/2020 and has received rectification order u/s. 154 dated 14/02/2020 wherein, addition of Rs.52,69,230/- which was added to the gross total income of the assessee, still remained unchanged. This resulted in double taxation of same income as the same has already been considered by the assessee and the income being offered to tax under the head ‘income from house property’. In view of the adjustments made by the CPC, rental income of Rs.52,69,230/- was taxed twice: (i) one under Income from House Property, (ii) and another under Income from other Sources. This is a clear mistake apparent from record which ought to have been rectified u/s. 154 of the Act.
5. While considering the appeal of the assessee, the Ld. CIT (A) issued following e- notices/ letters to the assessee. 1) Deficiency letter dated 06/01/2024 2) Hearing letter dated 14/02/2024 M/s. Kanaka Landmark Holidays Private Limited; A. Y.2018-19 3) Hearing letter dated 21/02/2024 4) Hearing letter dated 25/03/2024 6. In response to the above notices, the appellant filed written submissions on various dates i.e.09/02/2024, 14/02/2024, 22/02/2024, 25/02/2024 and 21/03/2024. Further, it was found by the Ld. CIT (A) that there was a delay of 1419 days in filing appeal u/s. 249(2) of the Act. Out of 1419 days, 715 days get covered under the order of the Hon'ble Supreme Court vide order dated 23/03/2020 in suo-moto Writ Petition (Civil) No. 03 of 2020 along with its further restoration order dated 27/04/2021 and circular no. 10/2021 issued by Central Board of Direct Tax dated 25/05/2021. However, still there was a delay of 704 days. The assessee was, therefore, asked to explain why there was a delay of 704 days. In response to that, the assessee filed petition before the Ld. CIT (A) for the condonation of delay on the ground of covid-19 pandemic. The Ld. CIT (A), however, rejected the reasons given for the said delay by placing reliance on various decisions of Hon’ble High Court and Hon’ble Supreme Court and dismissed the appeal of the appellant as barred by limitation.
M/s. Kanaka Landmark Holidays Private Limited; A. Y.2018-19 7. Aggrieved by the order of the Ld. CIT (A), the instant appeal has been filed. During the appellate proceedings before us, the appellant submitted as under: “Ground No. 2: CIT(A) is not condoning the delay in filing the appeal: 4. An application for appeal before CIT (A) was preferred vide Form 35 on 03-02-2024 against the rectification order passed u/s. 154 of the Act dtd. 14-02-2020 where the assessee was required to file appeal on 14-03-2020 as a result there has been a delay of 1419 days. With regards to delay of 715 days the same has been allowed by CIT(A) as the same gets covered by the order of the Hon'ble Supreme Court vide order dated 23rd March 2020 in writ petition (civil) No. 03 of 2020 and even CBDT has issued Circular No. 8/2021 on 30th April 2021 providing various relaxations till 31st May 2021 including extended time for filing the appeals before CIT(Appeals).
However, with regards to balance 704 days we wish to state that assessee was neither knowing the fact that rectification order has been passed by the Id. Assessing Officer nor the appellant was intimated by the auditors appointed by the assessee company regarding such order. When the assessee got the knowledge of the same the assessee was advised by his auditor that issue would get resolved by filing grievances. Therefore, assessee has duly filed grievance several times as can be seen from the portal same is tabulated below: Sr. No. Grievance Ack A.Y. Date Logged No. 1 14159835 2018-19 12-Sep-23 2 14199961 2018-19 13-Sep-23 M/s. Kanaka Landmark Holidays Private Limited; A. Y.2018-19 3 15779573 2018-19 01-Jan-24 4 16245683 2018-19 22-Feb-24 6. after getting consulted by another Chartered Accountant, assessee came to know that the issue would get resolved only through filing of appeal and not simply by grievance application. He immediately proceeded to file appeal against the Rectification order issued u/s. 154 of the Act vide Form 35 which was filed on 03-02-2024. Consequently, on enablement of Communication window the appellant has duly submitted affidavit in respect of delay in filing of appeal but id. Commissioner of Income Tax (Appeal) (CIT- A) has passed order u/s. 250 of the Act dt. 26-04- 2024 and has declined condonation on the basis that the assessee has no sufficient or good reason for condoning inordinate delay of more than 704 days in filing appeal.
In this regards, we wish to submit that delay did not occurred deliberately, or on account of culpable negligence, or on account of malafides. Without considering relevant facts and circumstances of this case and that the assessee was trying to get relief under the other alternative. Further, when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
8. In support we wish to place reliance on the decision in case of Smt. Rupa Maheshbhai Gandhi vs. ITO, Ward-3(2)(10) Ahmedabad (ITA No.2224/Ahd/2018) "7. In the light of the above, if I consider explanation of the assessee before the Id. CIT(A), then it would reveal that the assessee was not aware about the assessment order or about the proceedings at the level of the assessment officer. Immediately, when she came into the knowledge about the order, she e-filed the appeal, and in the process delay of 66 days was occurred. To my mind, looking to the quantum of delay of 66 days, and also of the fact that on similar set of facts, in the case of relative of the assessee viz. Kuntalal Mahesh Gandhi for the Α.Υ. 2012-13 to 2014-15, the delay of 870 days has been condoned by the Id.CIT(A), substantial justice demands a practical approach on the part of the Id. CIT(A) in condoning the delay. It is pertinent to take note that by making delay in filing appeal before the Id. CIT(A), the assessee would not achieve anything. Thus, such delay cannot be adopted as a strategy. I condone the impugned delay, and set aside order of the Id. CIT(A). I remit all other issues to the file of M/s. Kanaka Landmark Holidays Private Limited; A. Y.2018-19 the Id. CIT(A) for adjudication on merit. Needless to say, the assessee will cooperate with the CIT(A) in the appellate proceedings, and will not resort to unnecessary delay tactics. As a result, appeal of the assessee is allowed"
9. Hon'ble Delhi High Court in case of HL Malhotra & Company Pvt. Ltd. Vs DCIT (ITA No. 211/2020 & CM Appeals 32045- 32047/2020 dated 22nd December, 2020) wherein delay of 498 days in filing was condoned by the Hon'ble Delhi High Court and it was held that in absence of anything male fide or deliberate delay as a dilatory tactic, the Court should normally condone the delay as the intent is always to promote substantial justice 10. In view of the above facts and circumstances, the delay in filing appeal before Hon'ble CIT (A) was due to bonafide reasons and reasonable cause and in no manner whatsoever to frustrate the proceedings with any malafide intent”.
Besides above, the appellant has also taken ground that the order passed by the CPC u/s. 154 of the Act is bad in law and in violation of principles of natural injustice as the rental income was taxed twice- under the head ‘income from business and profession’ and ‘income from house property’ and made a prayer that the Hon’ble ITAT may decide this issue on merit.
We have considered the facts of the case and the submissions made by the appellant and we are of the view that since the Ld. CIT (A) has not decided the case on merit and rejected the appeal on the ground of delay in filing appeal, it would be in the interest of justice if the matter is sent back to the file of the Ld. CIT(A) to decide, on merit, the grounds of appeal
filed by the appellant against the order u/s.154 passed by the CPC dated 14/02/2020 by condoning the delay considering the submissions made by the appellant. The matter is, thus, remanded back to the file of M/s. Kanaka Landmark Holidays Private Limited; A. Y.2018-19 the Ld. CIT (A) to decide the issue on merit by providing reasonable opportunity of being heard to the appellant. The appellant is also directed to explain its case before the Ld. CIT (A).
10. In the result, the appeal is allowed for statistical purpose. Order pronounced in the open court on 28.08.2024.