2023 (4) TMI 1185 - AT - Income Tax

Assessment u/s 153A - estimation of net profit, addition u/s 68 respect of the share application money and premium - As submitted all the persons responsible for the affairs of the company were in judicial custody and, therefore, the assessee could not produce all the relevant books, vouchers etc., before the authorities to prosecute the case diligently. HELD THAT - As from 12/02/2016 to 23/10/2018 all the persons responsible for the affairs of the company were in custody and in their absence, as claimed by the learned AR, some part of the material was produced before the authorities. There is nothing contrary to disbelieve the statement of the learned AR that the assessee could not prosecute the proceedings before the authorities diligently due to the fact of non-availability of the persons responsible for the affairs of the company. In fact, this peculiar circumstance is taken note by the Co-ordinate Benches of this Tribunal in the cases of the group concerns on earlier occasions. Thus we are of the considered opinion that it would be in the interest of justice to set aside the impugned orders and to restore the matters to the file of AO to adjudicate the same afresh, after giving an opportunity of being heard to the assessee and also to produce all the relevant material at their custody. We hold and direct accordingly. Grounds of appeals of both the assessee and the Revenue treated as allowed for statistical purpose.

Summary

Issues Involved:
- Assessment of business income and unexplained cash credits
- Treatment of interest income as 'income from business'
- Delay in filing appeals due to imprisonment of company director

Assessment of business income and unexplained cash credits:
The Appellate Tribunal ITAT Hyderabad addressed the issues arising from a search and seizure operation conducted on the assessee, resulting in additions to business income and unexplained cash credits. The Assessing Officer estimated business income at 15% of gross receipts and added Rs. 13,17,83,402, along with Rs. 2.45 crores under section 68 of the Income Tax Act for unexplained cash credits. Additionally, an amount of Rs. 4,50,30,229 was added under 'income from other sources'. The assessee appealed to the CIT(A), who directed the adoption of a 5% profit rate for business income estimation and sustained the addition under section 68. However, the interest income was directed to be treated as 'income from business'.

Treatment of interest income as 'income from business':
The CIT(A) directed the Assessing Officer to treat the interest income as 'income from business' in the case of the assessee. This decision was challenged by the Revenue, leading to appeals before the Appellate Tribunal ITAT Hyderabad. The Tribunal considered the material before it and upheld the CIT(A)'s direction regarding the treatment of interest income, resulting in the appeals being treated as allowed for statistical purposes.

Delay in filing appeals due to imprisonment of company director:
The delay in filing appeals for assessment years 2009-10, 2010-11, and 2015-16 was attributed to the imprisonment of the company director. The director was in prison from February 2016 and was released on 08/06/2018, leading to the delayed filing of appeals. The Tribunal, after condoning the delay, proceeded to hear the matter on merits. The peculiar circumstances surrounding the imprisonment of key company personnel were taken into account, emphasizing the importance of allowing the assessee to produce all relevant material for a fair adjudication of the case.

This judgment highlights the significance of considering all relevant factors, such as the circumstances leading to delays in legal proceedings and the proper treatment of various sources of income, in ensuring a just and comprehensive resolution of tax-related disputes.