2010 (3) TMI 726 - AT - Income Tax

Condonation of delay - Estimation of net profit - Search - condonation of delay is lacking conviction and that the assessee was not prevented by a reasonable cause in preferring these appeals belatedly - The assessment orders were passed on23-3-2006 and they were received by the assessee on10-4-2006 - in condoning the delay of preferring of the appeals in 2008 - The assessee had not brought on record any documentary evidence to suggest that he was prevented by a reasonable or sufficient cause in not preferring these appeals within the stipulated time limit - The reasons set-out by the assessee, to put it mildly, are lacking conviction and that he was very active in attending to the assessment proceedings, recording of his statements on oath, receiving the seized materials from the Assessing Officer and so on so forth which belied his stand that he was prevented by a reasonable and sufficient cause Revenue s other ground of restriction of estimation of net profit at 5 per cent by the CIT(A) as against 12 per cent estimated by the Assessing Officer on sale of old tractors becomes obsolete - Decided against the assessee

Summary

Issues Involved:
1. Condonation of delay of 28 months in filing the appeals.
2. Estimation of net profit on the sale of old tractors.

Detailed Analysis:

Issue 1: Condonation of Delay
The Revenue challenged the CIT(A)'s decision to condone a delay of 28 months in filing the appeals. The CIT(A) accepted the delay based on a medical certificate and the Supreme Court's decision in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471, which suggests a liberal approach towards condoning delays to ensure justice.

The Revenue argued that the medical certificate should not have been considered as the assessee was active in various tax-related activities during the period in question, including appearing before tax authorities, filing returns, and approaching the High Court for relief.

The Tribunal found that the CIT(A) did not provide sufficient evidence or reasoning to justify the condonation of delay. The Tribunal noted that the assessee was actively involved in tax matters during the period of alleged incapacity, which contradicted the claim of being unable to file appeals due to health issues. The Tribunal concluded that the CIT(A) acted in a casual manner without proper analysis and annulled the CIT(A)'s order condoning the delay.

Issue 2: Estimation of Net Profit
The second issue concerned the CIT(A)'s decision to reduce the estimated net profit on the sale of old tractors from 12% (as determined by the Assessing Officer) to 5%.

The Assessing Officer had estimated a 12% profit margin based on seized materials and the assessee's admission that he was involved in the sale of old tractors. The CIT(A) reduced this to 5%, reasoning that the profit margin should be comparable to that of new tractors, which was around 5-6%.

However, since the Tribunal annulled the CIT(A)'s order on the first issue, the second issue became obsolete and was not addressed further.

Conclusion:
The Tribunal annulled the CIT(A)'s order condoning the delay and restored the Assessing Officer's orders. The appeals for the assessment years 2002-03, 2003-04, and 2004-05 were allowed in favor of the Revenue.