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2014 Supreme(Mad) 2440
High Court of Judicature at Madras
R. SUDHAKAR & G.M. AKBAR ALI, JJ.
Saiyana Warehouse (P) Ltd.
Versus
The Assistant Commissioner of Income Tax
T.C.(A).No.463 of 2014
Decided On : 12-08-2014
For the Appellant:M/s. N.V. Balaji, B. Ramanakumar, Advocates.
For the Respondent: M. Swaminathan, Senior Standing Counsel.
The main legal point established in the judgment is that 'sufficient cause' for not presenting an appeal within the prescribed period should be interpreted in a meaningful manner to subserve the ends of justice, as supported by the decision of the Supreme Court in The Collector, Land Acquisition v. Katiji, [1987] 167 ITR 471 (SC).
Headnote:
Income Tax - Appeal - Section 249 - Summary: The court allowed the appeal filed by the assessee, holding that the assessee had sufficient cause for not presenting the appeal within the prescribed period under Section 249(3) of the Income Tax Act. The court referred to the assessee's diligent pursuit of the matter before higher fora and the rejection of the request to rectify the original assessment order. The court also cited the decision of the Supreme Court in The Collector, Land Acquisition v. Katiji, [1987] 167 ITR 471 (SC) to support its decision.
Fact of the Case:
The assessee appealed the order of the Income Tax Appellate Tribunal, challenging the dismissal of the appeal due to a delay in filing. The assessee had been pursuing the matter before higher authorities and had succeeded in previous assessment years. The department declined to treat the income of the assessee from letting out of warehouses as business income for the assessment year 2007-2008, despite orders from higher authorities.
Finding of the Court:
The court found that the assessee had sufficient cause for not presenting the appeal within the prescribed period and allowed the appeal, restoring it to the file of the Commissioner of Income Tax (Appeals) for fresh consideration on merits.
Issues: The main issue was whether the Tribunal was right in dismissing the appeal due to a delay in filing and whether the Tribunal ought to have condoned the delay, considering the merits of the case and the previous decisions in the appellant's favor.
Ratio Decidendi: The court held that the assessee's diligent pursuit of the matter before higher fora, the rejection of the request to rectify the original assessment order, and the bona fide plea constituted 'sufficient cause' for not presenting the appeal within the prescribed period under Section 249(3) of the Act.
Final Decision: The court allowed the appeal and answered the substantial questions of law in favor of the assessee, restoring the appeal to the file of the Commissioner of Income Tax (Appeals) for fresh consideration on merits.
R. Sudhakar, J.
1. This appeal is filed by the assessee challenging the order of the Income Tax Appellate Tribunal Chennai 'D' Bench, dated 12.2.2013 made in ITA No.2129/Mds/2013 for the assessment year 2007-2008, raising the following substantial question of law:
“1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in dismissing the appeal by not condoning the delay of three years two months and three days in preferring the appeal before the Commissioner of Income Tax?
2. Whether on the facts and in the circumstances of the case, the Tribunal ought to have condoned the delay where the Tribunal had already discussed the merits of the case and adjudged in the appellant's favour for the previous assessment years 2004-05, 2005-06 and 2006-07?
2.1. The brief facts of the case are as under: The assessee is engaged in the business of warehousing and transportation. For the assessment year 2004-2005, the Tribunal, by order dated 21.7.2011 made in I.T.A.No.266/Mds/2010, treated the income of the assessee from letting out of warehouses as business income. For the assessment years 2005-2006 and 2006-2007, the Commissioner of Income Tax (Appeals), by order dated 13.3.2009 made in I.T.A.Nos.269 and 270/2008-09, held that warehousing income should be treated as business income.
2.2. Despite the above orders passed by the higher authorities, the department declined to treat the income of the assessee from letting out of warehouses as business income for the assessment year 2007-2008 and an assessment was made under Section 143(3) of the Act on 27.10.2009.
2.3. This assessment order ought to have been appealed by the assessee before the Commissioner of Income Tax (Appeals). However, the assessee did not file an appeal primarily on the ground that the issue as to whether the income from letting out of warehouses is income from business or income from house property was the subject matter of the appeals pending before the Commissioner of Income Tax (Appeals) and the Tribunal for the assessment years 2004-2005 to 2006-2007. As the issue was pending decision, the assessee thought it fit not to pursue the matter before the Assessing Officer and requested the Assessing Officer to lay his hands off or to rectify the order based on the decision that would be rendered by the Commissioner of Income Tax (Appeals) and the Tribunal. The Assessing Officer, however, did not pay heed to such request and rejected the same.
2.4. Thereafter, by notice dated 21.3.2012 issued under Section 148 of the Act, the assessment for the assessment year 2007-2008 was reopened on some other grounds. Even at this stage, the assessee made a request for rectification of the original assessment order by treating the income from letting out of warehouses as business income. The said request made by the assessee did not find favour with the Assessing Officer and revised assessment order was passed on 28.12.2012.
2.5. Thereafter, on 18.2.2013, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) along with a petition for condonation of the delay of three years, two months and three days. The Commissioner of Income Tax (Appeals), without going into the merits of the matter, dismissed the appeal on the ground of laches. On further appeal, the Tribunal confirmed the order passed by the Commissioner of Income Tax (Appeals).
2.6. In such backdrop, the present appeal is filed by the assessee on the substantial questions of law, referred supra.
3. We have heard the learned counsel on either side and perused the orders passed by the Tribunal and the authorities below.
4. Before adverting to the merits of the case, it would be relevant to refer to Section 249(3) of the Act, which reads as under:
“Section 249. Form of appeal and limitation.-
(1) and (2) .......
(3) The Commissioner (Appeals) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause
