2022 (7) TMI 1053 - AT - Income Tax

Condonation of delay - appeal filed by the assessee is delayed by 384 days - Denial of natural justice - no opportunity to explain whether such delay was for sufficient cause or not - order under Section 154 of the Act according to which the demand has arisen - HELD THAT - According to the provision of Section 249(2)of the Act, the appeal to the learned CIT (A) shall be presented within 30 days from the date of service of the notice of demand relating to the assessment order. As claimed by assessee that order under Section 154 of the Act was not available on ITBA but only the tax computation sheet is available. Such order was made available to the assessee only on 28 February 2019 and therefore, according to the assessee the appeal is field within time provided under Section 249(2) of the Act. CIT (A) perused column no. 14 of form no. 35 but did not peruse the column 2(b) and (c) of the same form. Merely, based on column no. 14 of form no. 35 the appeal of assessee was considered as delayed by taking the date of the order as 9 February 2018. There was dispute that the order was passed on 9 February 2018 but received by assessee on 28 February 2019. Appeal is required to be filed within 30 days from the date of receipt of order. Therefore, appeal as claimed by the assessee is filed in time and therefore, learned CIT (A) should have perused the various columns filed in form no. 35, which is stated to be true to the best of the information of the director of the company. CIT A looked at the date of order i.e. 9/02/2018 , noted that appeal is filed on 28/03/2019 , in column where it is mentioned that there is no delay in filing appeal, held that appeal is delayed by 384 days , no condonation request is filed, hence, dismissed appeal. CIT (A) should have at least given an opportunity to the assessee of clarifying the above facts stated when mobile number and email address of the assessee are provided at column no. 17 of form no. 35. If one looks at the stand of the assessee, appeal is not delayed. Therefore, according to us, the learned CIT (A) could not have held without giving an opportunity of clarifying about the timely filing of the appeal that appeal is delayed and dismissing the appeal of the assessee holding that it is filed late. We set aside this appeal back to the file of the learned CIT (A) to first examine, a. What is the mode and delay of the service of the order u/s 154 to the assessee and whether such service is in accordance with the law or not. b. Whether there was any deal in filing of the appeal or not for the reasons stated above and then decide about the condonation of the same. c. If it is found that appeal is really delayed, assessee must be given an opportunity to explain whether such delay was for sufficient cause or not. In the event , assessee submits such an explanation, to consider it in accordance with law. d. If the appeal of the assessee is found to have been filed in time and in accordance with law, the appeal of the assessee should be decided on the merits of the case in accordance with the law. e. If it is found that appeal is really delayed, assessee must be given an opportunity to explain whether such delay was for sufficient cause or not. In the event , assessee submits such an explanation, to consider it in accordance with law.

Summary

Issues:
1. Delay in filing appeal u/s 246A of the Act.
2. Rectification order passed by the Assessing Officer.
3. Capitalization of pre-construction interest.
4. Depreciation on capitalization of pre-construction interest.
5. Credit of TDS not allowed.

Issue 1 - Delay in filing appeal u/s 246A of the Act:
The appeal was filed against the order passed by the National Faceless Appeal Centre, Delhi for A.Y. 2014-15. The Assessing Officer held that the appeal was delayed by 384 days and dismissed it as time-barred. The appellant contended that the appeal was filed within 30 days of the service of the notice of demand, as prescribed under Section 249(2)(c) of the Act. The appellant argued that the order under Section 154 of the Act was not made available until 28 February 2019, and hence, the appeal was filed within the stipulated time. The ITAT found that the CIT (A) did not consider all relevant details and columns in the appeal form, leading to the incorrect conclusion of delay. The ITAT set aside the appeal back to the CIT (A) for a thorough examination of the service of the order, the reasons for any delay, and to provide the appellant with an opportunity to clarify the timely filing of the appeal.

Issue 2 - Rectification order passed by the Assessing Officer:
The Assessing Officer passed a rectification order proposing disallowance of interest expenditure and property tax. The appellant objected to this order, leading to the Assessing Officer passing a rectification order disallowing standard deduction and pre-construction interest cost. The CIT (A) noted a delay in filing the appeal electronically and dismissed it as time-barred. The ITAT found discrepancies in the assessment order and the appellant's contentions regarding the treatment of rental income and disallowances. The ITAT directed the CIT (A) to reexamine the case and decide on the merits after addressing the issues related to the rectification order.

Issue 3 & 4 - Capitalization of pre-construction interest and Depreciation:
The appellant argued for the capitalization of pre-construction interest and depreciation on the same, which the Assessing Officer had not allowed. The ITAT directed the CIT (A) to consider these arguments along with the rectification order issues and decide on the merits in accordance with the law.

Issue 5 - Credit of TDS not allowed:
The appellant claimed credit for TDS in the return of income but the Assessing Officer failed to allow it. The ITAT did not specifically address this issue in the judgment as it was not required to be adjudicated upon due to the decision made on the first issue. The appeal of the appellant was allowed for statistical purposes, and the case was remanded back to the CIT (A) for a comprehensive review and decision on all relevant aspects.