2012 (3) TMI 26 - AT - Income Tax

Condonation - Delay of 788 days - Sufficient and reasonable cause - hearing held just once - Held That - In view of Collector, Land Acquisition vs. Mst. Katiji & Ors.(Supreme Court), pragmatic and liberal approach while considering the petition for condonation of delay. Closing Stock in books at Rs 1,44,77,950 carried forward at Rs 1,15,20,868 - Assessment under 143 - CIT invoked 263 - Held That - C.I.T. assumed that the opening stock of the subsequent assessment year was correct, which led him to assume that closing stock of the assessment year under consideration was shown at lesser value, which was based on unfounded premises without considering the audited books of accounts of the assessee. 263 of the Act is not one which depends on contingency or guess work, but it should be actually an error either of fact or of law.CIT vs. Trustees of Anupam Charitable Trust (1986 - TMI - 25628 - RAJASTHAN High Court), Jai Kumar Kankaria vs. CIT (2000 -TMI - 14058 - CALCUTTA High Court)

Summary

Issues:
1. Delay in filing appeal - condonation of delay.
2. Merits of the case - jurisdiction under section 263 of the Act.

Issue 1: Delay in filing appeal - Condonation of delay

The appeal by the assessee was delayed by 788 days due to various reasons explained by the assessee. The delay was attributed to the unavailability of crucial documents after the departure of the tax consultant, leading to erroneous advice from a new consultant. The assessee sought condonation of the delay, emphasizing the absence of willful negligence or malafides. The Tribunal, after considering the submissions and an Affidavit from the new consultant, decided to condone the delay of 788 days based on the principles laid down by the Hon'ble Supreme Court in previous cases, emphasizing a pragmatic and liberal approach towards such matters.

Issue 2: Merits of the case - Jurisdiction under section 263 of the Act

The ld. C.I.T. set aside the assessment order passed by the ld. A.O. under sections 147/144 of the Act, invoking jurisdiction under section 263 of the Act due to an alleged under-assessment of income. The ld. C.I.T. pointed out a discrepancy in the closing stock of finished goods for the assessment year under consideration and the opening stock for the subsequent year, leading to an under-assessment. The assessee challenged this decision, arguing that the ld. C.I.T. presumed discrepancies without considering audited accounts and failed to provide a reasonable opportunity for explanation. The Tribunal found that the ld. C.I.T. did not point out any irregularity in the accounts maintained by the assessee for the relevant year. Moreover, the Tribunal noted that the assessee had requested an adjournment due to illness, which was rejected without proper justification. Therefore, the Tribunal decided to send the matter back to the ld. C.I.T. for fresh adjudication, emphasizing the importance of providing adequate opportunity to the assessee to represent their case.

In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes, highlighting the significance of adhering to procedural fairness and providing ample opportunities for parties to present their case effectively.