2019 (9) TMI 914 - AT - Income Tax

Condonation of delay - delay of 1038 days in filing the appeal before the Tribunal - whether the assessee s failure is sufficient cause for condoning the delay? - Whether 1038 days was excessive or inordinate? - HELD THAT - When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non deliberate delay. No counter-affidavit was filed by the Revenue denying the submission made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed in MST. KATIJI AND OTHERS 1987 (2) TMI 61 - SUPREME COURT if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. This Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 1038 days has to be condoned. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In case the delay was not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in our opinion, the delay of 1038 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merit. We condone the delay of 1038 days in filing the appeal and admit the appeal for adjudication. Estimation of income of the assessee on the basis of the seized records - Estimation of G.P. - There is no error in the estimation of income of the assessee on the basis of the seized records. The estimation of income by the AO is based on the documents found during the search and statement recorded during the course of search. Being so, the AO is completely justified in adopting those figures for the whole year and for the next year. For this proposition, reliance is placed on the judgment of the Jurisdictional High Court in the case of Travancore Diagnostics P. Ltd. vs. ACIT 2016 (11) TMI 76 - KERALA HIGH COURT wherein it was held that when suppression had been found from the documents and the statement on record, the AO was completely justified in adopting those figures for the whole year and for the next year which was based on sound rationale, since from the statement on behalf of the assessee, the suppression was found to be continued. In view of the uncontroverted and admitted statement given on behalf of the assessee u/s. 133A and the documents impounded during the survey, which were also virtually admitted by the assessee, there was no error in the order of the Tribunal in accepting the materials on record in order to arrive at an assessment.

Issues Involved:
1. Delay in filing the appeal.
2. Confirmation of additions by the CIT(A).
3. Estimation of suppressed turnover and profit.
4. Comparison with other firms' trading results.
5. Reference to purchase of immovable properties.
6. Discrediting of books of accounts.
7. Stay Petition for recovery of outstanding demand.

Detailed Analysis:

1. Delay in Filing the Appeal:
The assessee filed the appeal with a delay of 1038 days. The reasons for the delay were explained through an affidavit, citing the mix-up of papers and simultaneous handling of multiple appeals as the cause. The Tribunal found the reasons genuine and bona fide. The Madras High Court in Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and the Apex Court in Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) were referenced to support the condonation of delay, emphasizing that substantial justice should prevail over technicalities. The Tribunal concluded that the delay was not intentional or willful, and condoned the delay to advance substantial justice.

2. Confirmation of Additions by the CIT(A):
The CIT(A) confirmed additions of ?93,56,364/- for the assessment year 2008-09. The assessee contested this, arguing that the enhancement of sales turnover from ?2,00,49,352/- to ?6,68,31,173/- was arbitrary and lacked material evidence. The Tribunal referred to previous cases within the Sunny Jacob Jewellers Group, where similar issues were decided against the assessee. The Tribunal found no error in the estimation of income based on seized records and upheld the CIT(A)'s decision.

3. Estimation of Suppressed Turnover and Profit:
The assessee argued that the estimation of suppressed turnover and profit was arbitrary and lacked evidence. The CIT(A) had estimated the profit at 20% of the suppressed turnover. The Tribunal referenced the Jurisdictional High Court's judgment in Travancore Diagnostics P. Ltd. vs. ACIT (390 ITR 167), which supported the estimation based on seized documents and statements. The Tribunal upheld the estimation, finding it justified and based on sound rationale.

4. Comparison with Other Firms' Trading Results:
The assessee contended that comparing their trading results with those of other firms in different locations was misconceived. The Tribunal did not find merit in this argument and upheld the CIT(A)'s approach, referencing the Jurisdictional High Court's judgment in CIT vs. Hotel Meriya (332 ITR 537), which supported uniform assessment based on consistent suppression practices.

5. Reference to Purchase of Immovable Properties:
The assessee argued that the reference to the purchase of immovable properties by the appellant and her husband was misconceived. The Tribunal noted that similar references were made in previous assessments of the appellant's husband, which were set aside by the ITAT. However, the Tribunal did not find this argument sufficient to overturn the CIT(A)'s decision.

6. Discrediting of Books of Accounts:
The assessee claimed there were no valid reasons for discrediting the books of accounts for the assessment year 2008-09. The Tribunal found that the discrediting was justified based on the seized records and statements made during the search, which indicated suppression of income.

7. Stay Petition for Recovery of Outstanding Demand:
The assessee filed a Stay Petition seeking to stay the recovery of an outstanding demand of ?16,48,792/-. Since the appeal was decided against the assessee, the Stay Petition was rendered infructuous and dismissed.

Conclusion:
The Tribunal dismissed both the appeal and the Stay Petition filed by the assessee. The delay in filing the appeal was condoned, but the merits of the case, including the estimation of suppressed turnover and profit, were decided against the assessee. The Tribunal upheld the CIT(A)'s decision and found no error in the estimation based on seized records and statements.

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