ACIT, CHENNAI vs. TWENTY FIRST CENTURY MANAGEMENT SERVICES LIMITED, CHENNAI

The appeal by Revenue and Cross objection by assessee are directed against the order of Commissioner of Income Tax (Appeals), Trichy, dated 07.12.2012 for the assessment year 2007-2008.

The issue involved in this appeal is with regard to treating the gains arising from sale of shares as Short Term Capital Gains Head though the Assessing Officer assessed the same as business income.

The assessee has purchased 14,000 shares of M/s. Anent Raj Industries and 1,44,431 shares of M/s. KLG systems and sale on same, the assessee offered the gains as short term capital gains in its return of income. It is noted by the Assessing Officer that assessee had sold 74,000 shares of M/s. Anant Raj Industries and 3,75,980 shares of M/s. KLG Systems. The assessee pleaded before the Assessing Officer that it was held originally had stock in trade of 60,000 shares of M/s. Anant Raj Industries and 2,31,549 shares of M/s.KLG systems and converted the stock in trade as investment.

At the time of hearing, the Departmental Representative submitted that the assessee filed this appeal before the Commissioner of Income Tax (Appeals) on 11.05.2011, whereas the order u/s.143(3) was served to the assessee on 04.01.2010, hence the appeal should have been filed in February, 2010 before the Commissioner of Income Tax (Appeals). In the absence of any mention of condonation of delay in filing of appeal, the Commissioner of Income Tax (Appeals) ought to have dismissed the appeal in limine as belated.

The ld. Authorised Representative for assessee submitted that the assessee had filed condonation petition before the Commissioner of Income Tax (Appeals). If it was not discussed by the Commissioner of Income Tax (Appeals), the assessee cannot be found fault with in this primary issue.

Admittedly, there was a delay in filing of appeal before the Commissioner of Income Tax (Appeals). However, there is no discussion whatsoever by the Commissioner of Income Tax (Appeals) regarding delay in filing of appeal before him. The Commissioner of Income Tax (Appeals) without condoning the delay, adjudicated the appeal on merit which is not appropriate. Hence in the interest of I.T.A.No.381/Mds/2013 :- 4 -: & C.O.No.81/Mds/2013. justice, we are of the opinion that it is appropriate to remit the case to the file of the Commissioner of Income Tax (Appeals) to give his findings with reference to delay in filing the appeal before him and thereafter, he shall proceed to decide the issue on merits.

At this stage, we refrain from going into other grounds raised by the Revenue in this appeal, since we are remitting the issue with regard to delay of filing of appeal before the Commissioner of Income Tax (Appeals) for his consideration. The Cross objection filed by the assessee has become infructuous and accordingly dismissed.

In the result, the appeal of the Revenue is partly allowed and the Cross objection by assessee is dismissed.