2021 (9) TMI 893 - AT - Income Tax

Condonation of delay - eligible reasons of delay - HELD THAT - If we examine the explanation given by the assessee, then it would reveal that the appeals could not be filed by the assessee in time mainly on account of laxity on the part of Chartered Accountant, who has been instructed for further follow up in the matter including filing of the appeal before the Tribunal. Second reason given by the assessee is that of old age and the time taken for collecting various information and documents for filing appeal before the Tribunal. Though, we do not have any material to verify this pleadings, but considering age of the assessee and the facts that the assessee would not gain anything by not filing the appeal in time, more so when he has good cause in hand for defending the case before the Tribunal, we condone the delay. Assessment u/s 153A - incriminating material belong to the assessee found at the premises of the some other person or not? - HELD THAT - As relying on KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT there is no seized material referred by the AO while making additions. Hence, the impugned additions are not sustainable.

Summary

Issues Involved:
1. Condonation of Delay in Filing Appeals
2. Jurisdictional Validity of Assessment under Section 153A
3. Addition of Unexplained Deposits and Investments
4. Penalty under Section 271(1)(c)

Condonation of Delay in Filing Appeals:
The assessee filed two appeals late by 132 and 282 days, respectively. The delay was attributed to the assessee's old age, chronic illness, and negligence by his Chartered Accountant (CA). The Tribunal referenced the Supreme Court's liberal interpretation of "sufficient cause" for condonation of delay, emphasizing that the judiciary should prioritize substantial justice over technicalities. The Tribunal accepted the assessee's explanation, condoned the delay, and proceeded to hear the appeals on merit.

Jurisdictional Validity of Assessment under Section 153A:
The assessee challenged the assessment under Section 153A, arguing it was beyond the scope of material found during the search. The Tribunal referred to the legal position that assessments under Section 153A should be based on incriminating material found during the search. The Tribunal cited the Delhi High Court's decision in CIT vs. Kabul Chawla and the Gujarat High Court's decision in Pr.CIT vs. Saumya Construction, which held that additions can only be made based on incriminating material found during the search. The Tribunal found that no such material was cited by the AO in making the additions, rendering the assessment unsustainable.

Addition of Unexplained Deposits and Investments:
The AO made additions of ?4,48,378/- for unexplained deposits and ?5,13,883/- for unexplained investment in property. The Tribunal noted that these additions were not based on any incriminating material found during the search. Following the legal precedents, the Tribunal held that in the absence of such material, the additions could not be justified. Consequently, the Tribunal deleted the additions.

Penalty under Section 271(1)(c):
The penalty under Section 271(1)(c) was levied based on the aforementioned additions. Since the Tribunal deleted the additions in the quantum appeal, the basis for the penalty ceased to exist. Therefore, the Tribunal cancelled the penalty.

Conclusion:
The Tribunal allowed both appeals filed by the assessee. The delays in filing were condoned, the jurisdictional challenge to the assessment under Section 153A was upheld, the additions for unexplained deposits and investments were deleted, and the penalty under Section 271(1)(c) was cancelled.