M/s. Saiyana Warehouse (P) Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2129/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73707 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Business income; Period of limitation; Time period of passing order; Condonation of delay; Reassessment proceedings
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO. 2129/MDS/2013 / ASSESSMENT YEAR : 2007-08 M/S. SAIYANA WAREHOUSE (P) LTD., 17/19, MARUTHI APARTMENTS, PARTHASARATHYPURAM EXTN, SOUTH USMAN ROAD, T.NAGAR, CHENNAI 600 017 [PAN: AAFCS 1964 D] ( !& /APPELLANT) VS ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-VI(1), CHENNAI ( '(!& /RESPONDENT) / APPELLANT BY : SHRI K. BALASUBRAMANIAN, ADV. / RESPONDENT BY : SHRI S. DASGUPTA, JCIT / DATE OF HEARING : 04-02-2014 /DATE OF PRONOUNCEMENT : 12-02-2014 #) / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILIN G THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI , CHENNAI DATED 28-10-2013 RELEVANT TO THE ASSESSMENT YEAR (A Y) 2007-08. I.T.A. NO. 2129/MDS/2013 2 THE APPEAL OF THE ASSESSEE HAS BEEN DISMISSED BY TH E CIT(APPEALS) ON THE GROUND OF LIMITATION ALONE. 2. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF RENTING OF WAREHOUSES AND GODOWNS. THE ASSESSEE FI LED ITS RETURN OF INCOME FOR THE AY. 2007-08 ON 04-10-2007 DECLARI NG NIL INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HER EIN AFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSE E ON 25-09- 2008. THE ASSESSEE TREATED THE INCOME FROM LETTING OF WAREHOUSES AND GODOWNS AS BUSINESS INCOME. THE A SSESSING OFFICER HELD THE INCOME FROM LETTING OF WAREHOUSES AND GODOWNS AS INCOME FROM HOUSE PROPERTY. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 27-10 -2009, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS) ON 18-02-2013 I.E., WITH THE DELAY OF THREE YEARS TWO MONTHS AND THREE DAYS. THE CIT(APPEALS) WAS NOT CONVINCED WIT H THE EXPLANATION FURNISHED FOR THE DELAY IN FILING OF TH E APPEAL AND AS SUCH, DISMISSED THE APPEAL OF THE ASSESSEE ON THE G ROUND OF LIMITATION. AGGRIEVED AGAINST THIS ORDER OF CIT(APPEALS), THE A SSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. I.T.A. NO. 2129/MDS/2013 3 3. SHRI K. BALASUBRAMANIAN, ADVOCATE APPEARING ON B EHALF OF THE ASSESSEE SUBMITTED THAT THE APPLICATION FOR CON DONATION OF DELAY GIVING DETAILED REASONS FOR DELAY IN FILING O F THE APPEAL BEFORE THE CIT(APPEALS) WAS FILED. THE CIT(APPEALS) WITHO UT APPRECIATING THE REASONS FOR DELAY IN FILING OF THE APPEAL, DISM ISSED THE APPEAL ON GROUND OF LIMITATION. THE LD.COUNSEL REITERATED THE SAME REASONS BEFORE US FOR DELAY IN FILING OF THE FIRST APPEAL. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HON BLE SUPREME COURT OF INDIA IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST.KATIJI REPORTED AS 167 ITR 471 HAS HELD THAT LIBERAL INTERPRETATION SHOULD BE GIVEN FOR CONDONING DELAY AND WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS AR E PITTED AGAINST EACH OTHER THE CAUSE OF SUBSTANTIAL JUSTICE DESERVE S TO BE PREFERRED. THE LD.COUNSEL PRAYED FOR SETTING ASIDE THE IMPUGNED ORDER. 4. ON THE OTHER HAND, SHRI S. DASGUPTA, APPEARING O N BEHALF OF THE REVENUE SUBMITTED THAT THE ASSESSEE HAS FILED A PPEAL BEFORE THE CIT(APPEALS) WITH THE DELAY OF MORE THAN THREE YEARS. THE LD.DR CONTENDED THAT THE ASSESSEE HAS FAILED TO GIV E SUFFICIENT REASON, WHICH PREVENTED THEM TO FILE AN APPEAL WITH IN THE PERIOD OF LIMITATION. THE REASON GIVEN BY THE ASSESSEE IS NO T PLAUSIBLE. THE I.T.A. NO. 2129/MDS/2013 4 LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE CIT(APP EALS) AND PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDG MENT OF THE HONBLE SUPREME COURT OF INDIA ON WHICH THE LD. COU NSEL FOR THE ASSESSEE HAS PLACED RELIANCE. IT IS A WELL SETTLE D LAW THAT CONDONATION OF DELAY IS A RULE AND REFUSAL AN EXCEP TION. THE HONBLE SUPREME COURT IN VARIOUS JUDGMENTS HAS HELD THAT WHERE SUFFICIENT REASON IS GIVEN FOR DELAY IN FILING OF THE APPEAL, THE SAME SHOULD BE ACCEPTED AND THE DELAY SHOULD BE CONDONED . THE TECHNICALITIES SHOULD NOT COME IN WAY IN RENDERING JUSTICE ESPECIALLY WHEN HUGE STAKES OF THE PARTIES ARE INVO LVED. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE APEX COURT I N THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST.KATIJI (SUPRA). THE HONBLE SUPREME COURT OF INDIA HAS ALSO PUT A W ORD OF CAUTION THAT WHILE CONDONING DELAY, IT HAS TO BE AS CERTAINED WHETHER THE DELAY IN FILING OF THE APPEALS IS SUFF ICIENTLY EXPLAINED. A DELIBERATE INACTION ON THE PART OF PARTY TO THE L IS IN NOT INITIATING APPEAL CANNOT BE A VALID REASON FOR CONDONING DELAY . THE CONDONATION OF DELAY IS THE DISCRETION OF THE COURT . LENGTH OF DELAY I.T.A. NO. 2129/MDS/2013 5 IS NOT THE MATTER, ACCEPTABILITY OF THE EXPLANATION IS THE ONLY CRITERION. SOMETIMES DELAY OF THE SHORTEST RANGE M AY BE UNCONDONABLE DUE TO WANT OF ACCEPTABLE EXPLANATION WHEREAS IN CERTAIN OTHER CASES, THE DELAY OF A VERY LONG RANGE CAN BE CONDONED IF SUFFICIENT CAUSE IS SHOWN FOR THE DELAY . WHEN THERE IS REASONABLE GROUND TO THINK THAT THE DELAY IS OCCASI ONED BY THE PARTY DELIBERATELY, THE COURT SHOULD LEAN AGAINST A CCEPTANCE OF THE EXPLANATIONS. 6. IN THE PRESENT CASE, THE ASSESSMENT ORDER FOR TH E AY. 2007- 08 WAS PASSED ON 27-10-2009. THE ORDER WAS RECEIVE D BY THE ASSESSEE ON 15-11-2009. THE LIMITATION FOR FILING OF THE APPEAL WAS UPTO 14-12-2009. THE ASSESSEE FILED APPEAL BEF ORE THE CIT(APPEALS) ON 18-02-2013 I.E., WITH THE DELAY OF THREE YEARS TWO MONTHS AND THREE DAYS. THE REASON GIVEN BY THE ASS ESSEE BEFORE CIT(APPEALS) FOR DELAY IN FILING OF APPEAL IS AS UN DER: 1. THE ASSESSMENT ORDER FOR A.Y.2007-08, UNDER APP EAL, WAS PASSED U/S 143(3) ON 27.10.2009. 2. THE SAME WAS RECEIVED BY APPELLANT ON 15.11.2009 . APPELLANT OUGHT TO HAVE FILED AN APPEAL WITHIN 30 D AYS FROM THE DATE OF RECEIPT THEREOF I.E. BEFORE 14.12.2009. BUT THE I.T.A. NO. 2129/MDS/2013 6 SAME COULD NOT BE FILED BY APPELLANT IN TIME FOR TH E FOLLOWING REASONS: ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 27.10.2009 COMPUTING INCOME UNDER THE HEAD BUSINESS AS NIL BUT INCOME FROM HOUSE PROPERTY AT ` 56,05,500/- AND BALANCE TAX AND INTEREST WAS DETERMINED AT ` 14,40,668/-. IN RESPECT OF EARLIER AYS VIZ. 2004-05, 2005-06 & 2006 -07, SIMILAR METHOD OF COMPUTING THE INCOME UNDER THE HE AD H.P INSTEAD OF BUSINESS WAS HELD TO BE NOT CORRECT BY T HE FIRST APPELLATE AUTHORITY. BUT THE DEPARTMENT WENT ON AP PEAL TO ITAT AGAINST THE CIT(A) ORDER FOR A.Y.2005-06. THE HONBLE ITAT B BENCH IN ITA NO.266/2010 DATED 21.7.2011 SET ASIDE THE ASST. ORDER WITH DIRECTION TO VERIFY THE COMMER CIAL ACTIVITY INVOLVING WAREHOUSING OPERATIONS CARRIED ON BY APPE LLANT. IN REDOING THE SET ASIDE ASST. THE LEARNED AO GAVE A F INDING THAT EFFECTIVE WAREHOUSING WAS IN FUNCTION, COMMERCIAL A CTIVITIES WERE CARRIED ON AND THEREFORE, RENTAL/LEASE INCOME DERIVED BY THE ASSESSEE FROM LETTING OUT OF WAREHOUSES/GODOWN IS TREATED AS INCOME FROM BUSINESS. THIS WAS ON 12.12 .2011. IN THE MEANTIME, HONBLE CIT(A) CHENNAI IN HIS ORDE RS IN ITA NO.269 & 270/2008-09 DATED 13.03.2009 FOR AT S 2005- 06 & 2006-07, FOLLOWING ITAT C BENCH ORDER IN ITA N OS. 1189, 1190 & 1191/MDS/2005 DATED 24.08.2007 IN THE CASES OF M/S SSM ESTATES LTD. HAS HELD THAT INCOME FROM WAREHOUS ING ACTIVITIES SHOULD BE ASSESSED UNDER HEAD BUSINESS A ND COMPUTATION OF THE SAME UNDER THE HEAD H.P WAS HELD TO BE NOT CORRECT. AS ALREADY POINTED OUT, THE ORDER UNDER APPEAL IS D ATED 27.10.2009. DURING THE COURSE OF SUCH ASSESSMENT PROCEEDINGS, APPELLANT FILED COPY OF THE CIT(A) ORD ER DATED I.T.A. NO. 2129/MDS/2013 7 13.3.2009 AND REQUESTED FOR ASSESSING THE INCOME AS ADMITTED INSTEAD OF COMPUTING IT UNDER THE HEAD BUS INESS. THOUGH THE AO ORALLY AGREED, BUT PREFERRED TO WAIT FOR THE ITATS ORDER ON DEPARTMENTAL APPEAL FOR AY.2004-05. BUT IN THE MEANTIME HE PASSED THE IMPUGNED ASST. ORDER ON 27.10.2009 WITHOUT GIVING OPPORTUNITY TO THE APPELL ANT. AFTER RECEIPT OF ASST. ORDER WHEN THE APPELLANT APPROACHE D THE AO AGAIN WITH THE CIT(A) ORDER, THE AO OPINED THAT HE MAY CONSIDER APPLICATION OF SEC.154 AFTER RECEIPT OF IT ATS ORDER, CITED ABOVE. IN THE MEANTIME, THE ASST. WAS REOPENED ON 21.3.201 2 TO DISALLOW INTEREST PAID TO IDBI AS NOT ALLOWABLE U/S.24. DURING THE COURSE OF THIS REASSESSMENT PROCEEDINGS ALSO APPELLANT REITERATED ITS REQUEST TO ASSESS THE INCO ME UNDER THE HEAD BUSINESS AND TO RECTIFY THE ORIGINAL ASST. ORD ER. BUT THIS REQUEST WAS NEITHER DISCUSSED NOR REJECTED IN THE R EASST. ORDER AS THE REASST. WAS ALMOST DROPPED. THUS, THE APPELLANT WAS UNDER THE BONAFIDE IMPRESSI ON THAT BECAUSE OF THE APPELLATE ORDER, THE LEARNED AO WILL SUO MOTO RECTIFY THE ORIGINAL ASSESSMENT OR ON THE APPL ICATION OF APPELLANT IN THE REASST. PROCEEDINGS, U/S.154. SIN CE THIS HAS NOT HAPPENED, THE APPELLANT NOW FILES THIS APPEAL A FTER A DELAY OF 3 YEARS 2 MONTHS AND 3 DAYS WHICH HAS HAPPENED U NDER THE CIRCUMSTANCES EXPLAINED ABOVE AND WHICH WEE BEY OND THE CONTROL OF THE APPELLANT. THE APPELLANT FERVEN TLY APPEAL TO THE HONBLE CIT(A) TO CONDONE THE DELAY, ADMIT THE APPEAL AND RENDER JUSTICE. I.T.A. NO. 2129/MDS/2013 8 7. THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE T HAT IT PURSUED WRONG REMEDY. THE LD.COUNSEL FRO THE ASSES SEE HAS NOT BEEN ABLE TO SHOW THAT THE ASSESSEE HAD FILED APPLI CATION U/S.154 OF THE ACT BEFORE THE ASSESSING OFFICER AT ANY STAG E. THE ONLY REASON CITED BY THE ASSESSEE IS THAT THEY WERE WAIT ING FOR THE ORDERS OF THE TRIBUNAL IN REVENUES APPEAL FOR THE EARLIER ASSESSMENT YEARS AND WERE ADVISED BY THE ASSESSING OFFICER TO FILE APPLICATION U/S.154 AFTER RECEIPT OF ITATS OR DER. THE ASSESSEE IS A COMPANY AND HAS BEEN REPRESENTED BY PROFESSION AL EXPERTS BEFORE THE ASSESSING OFFICER AND THE CIT(APPEALS). THERE WAS NO OCCASION FOR THE ASSESSEE TO MERELY RELAY ON THE OP INION OF THE ASSESSING OFFICER. BE THAT AS IT MAY, THE TRIBUNAL DECIDED THE APPEALS OF THE REVENUE ON 21-07-2011 STILL THE ASSE SSEE TOOK MORE THAN 17 MONTHS TO FILE FIRST APPEAL AGAINST TH E ASSESSMENT ORDER. THE ASSESSEE HAS NOT BEEN ABLE TO SHOW SUF FICIENT CAUSE FOR THE INORDINATE DELAY IN FILING OF THE APPEAL. THE ASSESSEE WAS VERY MUCH AWARE OF THE PERIOD OF LIMITATION FOR FILING OF THE APPEAL BEFORE THE CIT( APPEALS), DESPITE THE FACT THAT THE LIMITATION PERIOD FOR FILING THE APPEAL HAD EXPIRED, THE ASSESSEE CHOSE NOT TO FILE APPEAL FOR SUCH A LO NG TIME. THE ASSESSEE WAS THOROUGHLY NEGLIGENT IN PROSECUTING HI S CASE, THE I.T.A. NO. 2129/MDS/2013 9 CIT(APPEALS) LEGITIMATELY EXERCISED HIS DISCRETION IN NOT CONDONING THE DELAY. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE A RE OF THE CONSIDERED OPINION THAT THE DELAY IN FILING OF THE APPEAL BY THE ASSESSEE IS A RESULT OF SLIPSHOD AND LACKADAISICAL APPROACH AND NOT BECAUSE OF ANY BONAFIDE REASON OR ANY OTHER FAC TOR WHICH CAN BE CONSIDERED AS SUFFICIENT REASON PREVENTING THE A SSESSEE FROM FILING OF THE APPEAL FOR SUCH A LONG TIME. THE APPEAL OF THE ASSESSEE IS DISMISSED BEING DEVO ID OF MERIT. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 12 TH FEBRUARY, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR