2010 (1) TMI 911 - AT - Income Tax

Delay in filing of the appeal - reasons for condonation of delay was that one of the directors who looking after all the business of the company expired other director was busy with the required religious formalities and legal matters for which there was delay in filing of the appeal delay condoned.

Summary

Issues:
1. Condonation of delay in filing the appeal by the assessee.
2. Validity of the order passed under section 144 of the IT Act 1961.
3. Treatment of unexplained cash credit under section 68 of the IT Act.
4. Treatment of interest income on advances.
5. Disallowance of expenses.

Condonation of Delay:
The appeal filed by the assessee was directed against the order dated 10th October, 2008 of the CIT(A)-XXVII, Mumbai relating to assessment year 2005-06. There was a delay of 33 days in filing the appeal, which was explained in an affidavit citing the death of a director and subsequent legal matters. The Tribunal found a reasonable cause for the delay and admitted the appeal for hearing after condoning the delay.

Validity of Order Passed under Section 144:
The assessee's return of income for the assessment year 2005-06 declared a total income of Rs.18,62,509. However, due to the closure of the business and unavailability of books of account, the Assessing Officer completed the assessment under section 144 of the IT Act. Various additions were made, including unexplained cash credit, interest income, and expenses. The CIT(A) dismissed the appeal as nobody appeared, upholding the Assessing Officer's order.

Treatment of Unexplained Cash Credit and Interest Income:
The Assessing Officer had made additions on account of unexplained cash credit, interest income, and expenses. However, due to the circumstances involving the death of a director, closure of the business, and lack of available documentation, the Tribunal deemed it proper to restore the matter back to the Assessing Officer. The Tribunal directed the Assessing Officer to provide the assessee with another opportunity to substantiate the income declared with documentary evidence.

Disallowance of Expenses:
The grounds raised by the assessee were allowed for statistical purposes, and the appeal was ultimately allowed by the Tribunal. The Tribunal's decision to give the assessee another opportunity to present evidence was based on the totality of the case and the interest of justice. The order was pronounced on 22nd January, 2010, and the matter was remanded back to the Assessing Officer for further proceedings in accordance with the Tribunal's directions.