2021 (7) TMI 889 - AT - Income Tax

Addition u/s 68 - income of the assessee from the commodity profit - AO made the addition observing that the brokers did not come up to verify the transactions - HELD THAT - AO was required to make proper enquiries before reaching to the conclusion that the transaction of commodity profit was bogus - the interest of justice will be well-served if the matter is restored to the file of the Assessing Officer with a direction to make further necessary enquires to arrive at a correct conclusion in this respect by using the powers of summoning and attending of witness etc. as per the provisions of Income Tax Act - the impugned order of the CIT(A) is set aside and the matter is restored to the file of the Assessing Officer with the above stated directions. Appeal of the assessee allowed for statistical purposes.

Summary

Issues Involved:
Treatment of income as business income or income from undisclosed sources, Delay in filing appeal, Set off of brought forward losses, Condonation of delay.

Analysis:

Issue 1: Treatment of Income
The primary issue in this appeal was whether the income of ?1,99,999 should be considered as business income from commodity profit or as income from undisclosed sources under section 68 of the Income Tax Act. The Assessing Officer concluded that the income was unaccounted and added it to the assessee's total income. The CIT(A) upheld this addition. However, the Tribunal found that proper enquiries were necessary before deeming the transaction as bogus. The matter was remanded back to the Assessing Officer for further investigation and verification with directions to summon relevant witnesses.

Issue 2: Delay in Filing Appeal
The appeal was filed 571 days late, and the assessee requested condonation of delay. The delay was attributed to family problems, including the death of both parents, and difficulties faced during the Covid-19 pandemic. The Tribunal accepted these reasons as sufficient cause and condoned the delay in filing the appeal.

Issue 3: Set Off of Brought Forward Losses
The Assessing Officer had denied the set off of brought forward losses against the additional income. Given the decision to remand the primary issue back for further investigation, the Tribunal also remanded this issue to the Assessing Officer for fresh adjudication.

Issue 4: Condonation of Delay
The assessee had prayed for the condonation of the delay in filing the appeal. Considering the reasons provided and the acceptance of the delay condonation for the primary appeal issue, the Tribunal granted the condonation of delay for this ground as well.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, setting aside the CIT(A)'s order and remanding the primary issue and the set off of brought forward losses back to the Assessing Officer for fresh consideration. The delay in filing the appeal was condoned based on the reasons presented by the assessee.