2014 (9) TMI 11 - HC - Income Tax

Rejection in condonation of delay u/s 249(3) - Delay of three years two months and three days Continuous perusal of appeal before CIT(A) as well as Tribunal on same issues for earlier assessment years - Held that - For the AYs 2004-2005, 2005-2006 and 2006-2007, the assessee has been diligently pursuing the matter before the higher forum and has succeeded in getting a decision in its favour, holding that income from letting out of warehouses is business income - when reopening of assessment was done, the assessee had made a specific request to the AO to rectify the original assessment order in the light of the orders passed by the CIT(A) and the Tribunal treating the income from letting out of warehouses as business income for the earlier assessment years, but such request was rejected by the AO - assessee has been continuously pursuing his appeals for the earlier assessment years on the very same issue before the CIT(A) and the Tribunal - the assessee s plea is bona fide and it would constitute sufficient cause for not presenting the appeal within the prescribed period thus, it is a fit case where the assessee is entitled to the benefit of Section 249(3) of the Act relying upon Collector, Land Acquisition v. Katiji, 1987 (2) TMI 61 - SUPREME Court thus, the delay is condoned and the matter is remitted back to the CIT(A) for fresh consideration Decided in favour of Assessee.

Summary

Issues:
1. Delay in filing appeal before the Commissioner of Income Tax
2. Treatment of income from letting out of warehouses as business income for assessment year 2007-2008

Analysis:
1. The appeal challenges the order of the Income Tax Appellate Tribunal regarding the delay in filing the appeal before the Commissioner of Income Tax for the assessment year 2007-2008. The appellant sought condonation of the delay of three years, two months, and three days. The Tribunal dismissed the appeal citing laches. The appellant argued that the issue was pending decision for previous assessment years, and the delay was due to the ongoing appeals. The High Court referred to Section 249(3) of the Act, allowing the Commissioner of Income Tax (Appeals) to admit an appeal after the prescribed period if sufficient cause is shown. The Court noted the appellant's diligence in pursuing the matter for earlier years and the rejection of rectification requests by the Assessing Officer based on previous decisions in favor of the appellant.

2. The Court observed that the appellant had consistently pursued appeals for earlier assessment years on the same issue of treating income from letting out of warehouses as business income. The appellant's plea was considered bona fide, and the Court found it to be a sufficient cause for the delay in filing the appeal. Citing the Supreme Court decision in The Collector, Land Acquisition v. Katiji, the Court emphasized the elasticity of the term "sufficient cause" to serve the ends of justice. Consequently, the Court allowed the appeal, answering the substantial questions of law in favor of the assessee. The appeal was restored to the file of the Commissioner of Income Tax (Appeals) for fresh consideration on merits, with no costs imposed.