CIT(A) violated natural justice by rejecting appeal on delay grounds without examining double taxation of rental income under section 154

ITAT Mumbai allowed appellant's appeal for statistical purposes after CIT(A) rejected it solely on delay grounds without examining merits. The case involved rental income being taxed twice under both business income and house property heads, following a CPC order under section 154. ITAT held that CIT(A) violated natural justice principles by not deciding on merit. Matter remanded to CIT(A) with directions to condone delay, provide reasonable hearing opportunity, and decide substantive issues on merit.

---

---

Issues:
1. Appeal against Order u/s 154 of the Income Tax Act
2. Delay in filing appeal before the Ld. CIT (A)
3. Double taxation of rental income
4. Condonation of delay in filing appeal
5. Order passed by the CPC u/s 154 being bad in law

Issue 1: Appeal against Order u/s 154 of the Income Tax Act

The appellant filed an appeal against the Order of the Ld. CIT (Appeals) passed u/s. 250 of the Income Tax Act, challenging the addition of Rs. 52,69,230 to the total income. The appellant contended that the order passed u/s 154 was void ab initio and in violation of principles of natural justice. The rental income was erroneously categorized under "Income from Business and Profession" and "Income from House Property," leading to double taxation. The appeal raised independent grounds, seeking to rectify the mistake in the intimation order.

Issue 2: Delay in filing appeal before the Ld. CIT (A)

The appellant faced a delay of 704 days in filing the appeal, out of which 715 days were covered under Supreme Court orders and circulars. The appellant attributed the remaining delay to lack of knowledge about the rectification order passed by the Assessing Officer. Despite filing grievances, the delay was not condoned by the Ld. CIT (A) due to reasons related to the Covid-19 pandemic. The appellant argued that the delay was not deliberate and sought condonation based on substantial justice principles.

Issue 3: Double taxation of rental income

The rental income of Rs. 52,69,230 was taxed twice under "Income from House Property" and "Income from other Sources." The appellant argued that this double taxation was a clear mistake apparent from the record and should have been rectified u/s. 154 of the Act. The appellant contended that the order passed by the CPC was bad in law and in violation of principles of natural justice, seeking a decision on the merit of this issue by the ITAT.

Issue 4: Condonation of delay in filing appeal

The appellant sought condonation of the delay in filing the appeal, emphasizing that the delay was not deliberate or due to malafide intent. Citing relevant case laws, the appellant argued that substantial justice demanded a practical approach in condoning the delay. The appellant highlighted that the delay was due to bonafide reasons and reasonable cause, aiming to promote substantial justice.

Issue 5: Order passed by the CPC u/s 154 being bad in law

The appellant challenged the order passed by the CPC under section 154 of the Act, alleging that the rental income was taxed twice, leading to double taxation. The appellant requested the ITAT to decide this issue on merit, as the Ld. CIT (A) had not addressed this aspect and rejected the appeal based on the delay in filing. The ITAT remanded the matter back to the Ld. CIT (A) to decide on the merit of the grounds of appeal by condoning the delay and providing a reasonable opportunity for the appellant to be heard.

This detailed analysis covers the various issues involved in the legal judgment, addressing the grounds raised by the appellant and the decisions made by the Ld. CIT (A) and the ITAT.

---