2009 (6) TMI 47 - HC - Income Tax

Court grants condonation for late appeal filing against Income-tax Appellate Tribunal order

The court allowed the condonation of delay in filing appeals challenging the correctness of the Income-tax Appellate Tribunal's order. It emphasized the ... AOP – Charge of tax in terms of section 161(1A) and Explanation 2 below sub-section (3) of section 164 of the Act. - In this view of the matter though the learned counsel for the appellant contends that the dismissal of the special leave petition does not absolve the Tribunal to examine the facts and legal evidence on record and the fact that the appellant-trust would earn other income other than the rental income from the single property owned by the trust. In this view of the matter it would be suffice for us to direct the assessing authority to consider the facts pleaded in these appeals as to whether the assessee has earned income only from the house property or any other income other than the house property was earned during the assessment years 1985-86 and 1986-87 at the time of giving effect to the assessment orders Issues:Challenging correctness of order by Income-tax Appellate Tribunal, interpretation of section 161(1A) applicability, consideration of earlier High Court judgment, need for Tribunal to hear appellant-assessee, impact of Supreme Court's dismissal of special leave petition, relevance of lease rent details for assessment years 1985-86 and 1986-87.Analysis:1. Delay in filing appeals:The court accepted the reasons for the delay in filing the appeals and allowed the condonation of delay, emphasizing the importance of the interlocutory application.2. Questioning Tribunal's order:The appeals were filed to challenge the correctness of the Income-tax Appellate Tribunal's order, specifically focusing on the applicability of section 161(1A) while implementing an earlier High Court judgment.3. Interpretation of section 161(1A):The appellant contended that the Tribunal should have considered whether section 161(1A) was applicable to the fact situation, highlighting that the assessment should be made only in the hands of the beneficiaries based on previous court decisions.4. Need for Tribunal to hear appellant:The court emphasized that the Tribunal failed to consider the applicability of section 161(1A) and Explanation 2 of section 164 to the fact situation, stressing the importance of hearing the appellant before passing the impugned order.5. Impact of Supreme Court's decision:Although the Supreme Court dismissed the special leave petition challenging the order, the court noted that the Tribunal still needed to consider the facts of the case for the relevant assessment years, indicating that the dismissal did not absolve the Tribunal from examining the legal evidence on record.6. Relevance of lease rent details:The appellant argued that the lease rent details for the assessment years in question demonstrated that there was no business income, thus asserting that section 161(1A) did not apply. However, the Revenue's counsel suggested that the Tribunal should direct the assessing authority to reconsider the facts of the case.7. Final decision and direction:Ultimately, the court concluded that the charge of tax should be in terms of section 161(1A) and Explanation 2 of section 164, as the order had attained finality. The court directed the assessing authority to consider the facts pleaded in the appeals regarding the appellant's income sources for the relevant assessment years, emphasizing the need to give effect to the assessment orders while disposing of the appeals.