2018 (9) TMI 1024 - AT - Income Tax

Condonation of delay - delay of 146 days - Estimation of income - survey operation u/s.133A of the IT Act to mention that the assessee realized profit at ₹ 500/- per sft in respect of area of 77835 sft sold by him - Held that - In the case before us, the CIT (A) has refused to condone the delay of 146 days. According to us, the assessee does not stand to gain anything by filing the appeal belatedly. Therefore, as held by the Hon ble Supreme Court in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (1987 (2) TMI 61 - SUPREME COURT) when substantial justice and technical consideration are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice done because of a non-deliberate delay. Respectfully following the same, we are inclined to condone the delay of 146 days. As regards the merits of the additions are concerned, since the CIT (A) has not decided the appeal on merits on the ground that it is an agreed addition, we are of the opinion that since the AO in the A.Y 2013-14 has accepted the valuation at ₹ 272/-, the valuation for the earlier year cannot be higher at ₹ 500/-sq. ft. Therefore, there is clear dichotomy in the stand of the Department in these two years. Therefore, we deem it fit and proper to remand the issue to the file of the CIT (A) for reconsideration in accordance with law after giving the assessee a fair opportunity of hearing

Summary

Issues involved:
Delay in filing appeal before CIT (A) and refusal to condone the delay, Addition of income based on survey operation, Validity of admission of income during survey, Comparison of valuation of property in different assessment years, Merits of the additions made by AO, Dichotomy in Department's stand on valuation, Decision to remand the issue to CIT (A) for reconsideration.

Delay in filing appeal before CIT (A) and refusal to condone the delay:
The assessee filed an appeal before the CIT (A) with a delay of 146 days. The CIT (A) refused to condone the delay, citing lack of proper explanation. The learned Counsel for the assessee argued that the delay should have been condoned as the additional income admitted during the survey was found to be high upon verification of the books of account. The Tribunal, following the principle of substantial justice over technical considerations, decided to condone the delay of 146 days, emphasizing that substantial justice should prevail.

Addition of income based on survey operation:
During a survey operation, it was observed that the assessee had admitted a profit of ?500 per sq. ft. on a certain area. The Assessing Officer (AO) brought the difference in profit to tax as the assessee had not offered this income in the return. The CIT (A) upheld the addition, stating it was based on an agreement by the Managing Partner and hence not maintainable. The Tribunal noted the gap between the survey and assessment dates and emphasized that the Department failed to identify material supporting the profit estimation, leading to a decision to remand the issue for reconsideration.

Validity of admission of income during survey:
The Managing Partner had admitted to a certain profit per sq. ft. during the survey, which was the basis for the addition made by the AO. The Tribunal held that mere admission during the survey is not sufficient to sustain the addition without corroborating evidence. The Tribunal emphasized the need for supporting evidence to justify income additions.

Comparison of valuation of property in different assessment years:
The assessee argued that the valuation of the property in the current assessment year was accepted at a lower rate compared to the previous year. This raised doubts about the consistency in valuation by the Department. The Tribunal noted this inconsistency and decided to remand the issue for a fair reconsideration by the CIT (A).

Merits of the additions made by AO:
The CIT (A) did not decide on the merits of the additions, citing it as an agreed addition. The Tribunal disagreed with this approach, considering the inconsistency in valuation between two assessment years. The Tribunal opined that the valuation for the earlier year should not be higher than the accepted valuation in the subsequent year, leading to a decision to remand the issue for proper consideration.

Dichotomy in Department's stand on valuation:
The Department's differing stands on the valuation of the property in two assessment years raised concerns about the consistency and fairness of the assessments. The Tribunal noted this dichotomy and decided to remand the issue for a fresh review by the CIT (A) to ensure a fair opportunity for the assessee.

In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes and remanded the issues for reconsideration by the CIT (A) to ensure a fair and just assessment based on supporting evidence and consistent valuation practices.