2004 (2) TMI 281 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing the appeal due to short deposit of Tribunal fee.
2. Justification of the addition of Rs. 2,90,133 on account of alleged unaccounted sales to M/s Partap Bhangu Solvex (P) Ltd.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:

The appeal filed by the assessee was barred by a period of limitation of 2 years and 317 days due to the short deposit of Tribunal fee. The assessee contended that the delay was due to a mistaken belief regarding the fee amount and not due to any mala fide intention. The Tribunal noted that the appeal was initially filed within the period of limitation but became barred due to the short deposit of the fee, which was a curable defect. The Tribunal found that the defective memos issued by the registry were not served upon the assessee as they were returned unserved by the postal authorities. Upon receiving the last notice, the assessee promptly made the payment to rectify the shortfall. The Tribunal referred to the Supreme Court's decision in Vedabai Alias Vijayanatabai Baburao Patil vs. Shantiram Baburao Patil & Ors., emphasizing a pragmatic approach and liberal construction of "sufficient cause" to advance substantial justice. Consequently, the Tribunal condoned the delay in filing the appeal, considering it a fit case for such condonation.

2. Justification of the Addition of Rs. 2,90,133:

The addition of Rs. 2,90,133 was made by the AO based on a diary seized during a search and seizure operation at the premises of M/s Partap Bhangu Solvex (P) Ltd., which allegedly showed unaccounted sales by the assessee. The CIT(A) upheld the addition, stating that the diary's entries were reliable as other rice shellers had made disclosures under the VDIS scheme. However, the assessee argued that entries in the books of a third party are not conclusive proof, citing the jurisdictional High Court's decision in Chiranji Lal Steel Rolling Mills vs. CIT and a similar case decided by the Tribunal in M/s Sadhu Ram Parkash Chand vs. ITO. The Tribunal noted that the Revenue did not provide any corroborative evidence such as G.R. numbers, transporter details, or payment receipts to substantiate the alleged sales. The Tribunal held that the addition was not justified solely based on the third party's diary entries without corroborative evidence. Therefore, the Tribunal set aside the order of the CIT(A) and deleted the addition of Rs. 2,90,133, allowing the assessee's appeal.

Conclusion:

The appeal filed by the assessee was allowed. The Tribunal condoned the delay in filing the appeal due to the short deposit of the Tribunal fee and found that the addition of Rs. 2,90,133 on account of alleged unaccounted sales was not justified in the absence of corroborative evidence.