ITAT Condones 78-Month Delay and Remands Case Over Alleged Double Taxation of Income

The Income Tax Appellate Tribunal (ITAT) has condoned a significant 78-month delay in filing an appeal for M/s. Hibiscus Hospitality Services. The assessee argued that the CPC's adjustment of Rs. 18.20 lakh as 'Income from House Property' could lead to double taxation, as the income was already offered as business income. Despite numerous attempts to resolve the issue, the appeal was dismissed by the CIT(A) due to the delay. The ITAT, satisfied with the assessee's detailed explanation for the delay, including COVID-19 disruptions, restored the matter to the Assessing Officer for a proper examination of the double taxation claim.

In the case of M/s. Hibiscus Hospitality Services v. ITO, the assessee, engaged in providing hospitality services to hotels, filed its return of income under Section 139(4). While processing the return under Section 143(1), the Centralised Processing Centre (CPC) added Rs. 18.20 lakh under the head “Income from House Property.”

The assessee contended that the amount represented hire charges received for furniture and cutlery and not rental income from any land or building. It was further submitted that the income had already been offered as business income under the presumptive taxation scheme. Therefore, the additional adjustment under the head “Income from House Property” could result in the same income being taxed twice.

After the intimation was issued, the assessee made several attempts to resolve the issue through representations before the Assessing Officer, rectification applications under Section 154 and grievances raised with the Department. The assessee also approached the deductors to seek correction of the section under which tax had been deducted at source. However, the issue remained unresolved.

The appeal against the Section 143(1) intimation was ultimately filed after a delay of 78 months. The CIT(A) declined to condone the delay and dismissed the appeal on the ground of limitation.

Before the ITAT, the assessee submitted a detailed explanation covering the circumstances that led to the delay, including the efforts made to pursue rectification and the disruption caused during the COVID-19 period.

The Tribunal observed that the assessee had provided a detailed explanation for the delay and had substantially explained the period of delay. It held that sufficient cause existed for condoning the delay.

The ITAT further noted that the claim regarding possible double taxation had not been examined by the CPC or the CIT(A), as the appeal had been dismissed on the ground of limitation. In the interest of justice, the Tribunal set aside the order of the CIT(A), condoned the delay and restored the matter to the AO for fresh consideration.

The appeal was partly allowed for statistical purposes.

Key Takeaway: A substantial delay in filing an appeal may be condoned where the assessee provides a detailed and credible explanation and has been continuously pursuing remedies. Further, a claim that the same income has been taxed under different heads should be examined on merits rather than being rejected solely on procedural grounds.

Disclaimer: This AI-generated summary is for informational purposes only. Please view the attached original judgment for the complete text and authoritative interpretation.