2017 (7) TMI 360 - AT - Income Tax

Condonation of delay - settlement commission proceedings - Held that - The assessments have been reopened on 31.12.2008, but before any assessment could be passed petitions for other years admitted by the Settlement Commission were also abated on 31.3.2008 because of the amendment made in the Income Tax Act by way of Finance Act, 2007. Thus, a very vexed situation developed. On one hand, the assessee has filed writ petition before the Hon ble High Court challenging order of the Settlement Commission dated 31.3.2008 vide which, their applications admitted for consideration for some of the years, were treated as abated by operation of law. On the other hand, the AO has initiated reassessment proceedings in some of the years giving a belief to the assessee that now the proceedings are pending in other years. They can also be taken into Settlement Commission. The important fact which weigh with us for accepting bonafide of the assessee is that even in 2013, the ld.CIT(A) has haboured a belief that proceedings are pending before the Settlement Commission, and therefore, the ld.CIT(A) has no jurisdiction to entertain the issue agitated by the assessee on merit. This findings of the ld.CIT(A) supports bona fide of the assessee in believing that their applications under section 245E would be entertained by the Settlement Commission and there is no need to challenge the order of the CIT(A). It is also important to note that there is no adjudication on merit on the issues involved in these appeals by the ld.CIT(A). The appeals were dismissed for the reason that they are not maintainable. Considering this aspect and in the interest of justice, we deem it appropriate to condone the delay in filing the appeal. We proceed to decide the appeal on merit.

Summary

Issues Involved:
1. Delay in filing appeals.
2. Validity of reopening assessments.
3. Jurisdiction of CIT(A).
4. Merits of the additions made by the AO.

Issue-wise Detailed Analysis:

1. Delay in Filing Appeals:
The appeals were time-barred by 847 to 1113 days. The appellants filed applications for condonation of delay, citing reasons such as the complexity of the case, pending settlement petitions, and incorrect legal advice. The Tribunal noted that the expression "sufficient cause" should be interpreted liberally to advance substantial justice. The Tribunal found the appellants' belief that their cases would be taken up by the Settlement Commission to be bona fide, supported by the fact that the CIT(A) also believed proceedings were pending before the Settlement Commission. Therefore, the delay was condoned.

2. Validity of Reopening Assessments:
A survey under section 133A revealed that a CA was creating bogus capital for various clients, including the appellants. The AO reopened assessments based on this information and issued notices under section 148. The appellants failed to explain the source of certain advances, leading to additions to their income. The Tribunal did not delve into the merits of these additions, focusing instead on procedural issues.

3. Jurisdiction of CIT(A):
The CIT(A) dismissed the appeals on the ground that the appellants had approached the Settlement Commission and proceedings were pending. The Tribunal found this reasoning flawed, especially since the CIT(A) believed proceedings were pending before the Settlement Commission, supporting the appellants' belief that they did not need to file appeals. The Tribunal set aside the CIT(A)'s orders, noting that there was no adjudication on the merits.

4. Merits of the Additions Made by the AO:
The Tribunal did not adjudicate the merits of the additions made by the AO, as the CIT(A) had dismissed the appeals on jurisdictional grounds. The Tribunal remanded the cases back to the CIT(A) for re-adjudication on merits.

Conclusion:
The Tribunal condoned the delay in filing the appeals, set aside the CIT(A)'s orders, and remanded the cases for re-adjudication on merits. The appeals were allowed for statistical purposes.