2018 (7) TMI 1553 - AT - Income Tax

Revision u/s 263 - assessment order passed by the A.O under Sec.144 r.w.s. 263 was not served on the assessee company - Held that - Even during the course of the hearing of the appeal before us the ld. D.R had failed to place on record any such material which could conclusively prove to the hilt that the assessment order passed by the A.O under Sec. 144 r.w.s. 263, dated 30.10.2006 was validly served upon the assessee. We are of a strong conviction that in the backdrop of the aforesaid facts it emerges that the assessment order passed by the A.O under Sec.144 r.w.s. 263 was not served on the assessee company. Rather, it was only after the new tax consultant of the assessee company was made aware of the outstanding tax liability, that at his request a copy of the assessment order was made available to him. It can safely be concluded that as the assessment order was made available to the assessee only as on 20.02.2013 (as deposed by the director in her affidavit), thus the appeal filed by the assessee with the CIT(A) on 06.03.2013 was well within the stipulated time and did not involve any delay. Before parting, we may herein observe that as observed by us hereinabove, no material had been placed on record by the ld. D.R which could have persuaded us to conclude that the order passed by the A.O under Sec. 144 r.w.s. 263, dated 30.10.2006 was earlier validly served on the assessee. Restore the matter to the file of the CIT(A) with a direction to readjudicate the issue on merits. - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Dismissal of the appeal by the CIT(A) due to late filing and refusal to condone the delay.
2. Examination of the addition made by the A.O under the head "unexplained cash credit" amounting to ?18,24,500/-.
3. Consideration of whether the appeal should have been decided on merit rather than on technical grounds.

Detailed Analysis:

1. Dismissal of the Appeal Due to Late Filing and Refusal to Condoning the Delay:
The assessee filed an appeal against the CIT(A)-21, Mumbai's order dated 24.06.2014, which arose from the A.O's order under Sec.144 r.w.s. 263 of the Income Tax Act, 1961, dated 30.10.2006 for A.Y 2001-02. The CIT(A) dismissed the appeal due to late filing and did not condone the delay. The assessee argued that the delay was not intentional and cited the Supreme Court's proposition in the case of Improvement Trust V/S Ujagar Singh, where it was held that unless the delay is writ large and the assessee has a good case on merit, the delay should be condoned. The CIT(A) did not consider the merits and dismissed the appeal based on the technical fault of the assessee.

2. Examination of the Addition Made by the A.O Under the Head "Unexplained Cash Credit" Amounting to ?18,24,500/-:
The assessee company, engaged in manufacturing marble slabs and tiles, filed its return for A.Y 2001-02 declaring a total income of Rs.Nil. The original assessment under Sec.143(3) was framed on 31.12.2003, accepting the returned income. The CIT-10, Mumbai, observed that the assessee had taken unsecured loans of ?18,24,500/- from four parties without filing confirmations and noticed unsecured loans aggregating ?38,70,982/- were not examined. The CIT-10 revised the assessment order, directing the A.O to make a fresh assessment. The A.O issued notices under Sec.143(2) and 142(1) but framed the assessment under Sec.144 r.w.s. 263 due to non-compliance by the assessee. The A.O added ?18,24,500/- as unexplained cash credit under Sec.68. The assessee argued before the CIT(A) that the amount was brought forward closing balances of previous years. The A.O, in the remand report, confirmed that the amount was the closing balance of previous years and no new loans were taken during the year.

3. Consideration of Whether the Appeal Should Have Been Decided on Merit Rather Than on Technical Grounds:
The CIT(A) noted that the appeal was filed after six years from the date of the assessment order and dismissed it due to lack of evidence supporting the claim that the original assessment order was not received. The assessee contended that the original assessment order was not received and that the A.O had admitted in the remand report that the amount added as unexplained cash credit was the closing balance of previous years. The assessee argued that the assessment order was passed at a wrong address and was never communicated to the directors. The new directors of the assessee company came to know about the tax dues only after recovery proceedings. The affidavit of Smt. Snehlata Mahindra Kothari, a new director, supported the claim that the assessment order was never received. The Tribunal found that the assessment order was likely not served at the correct address and concluded that the appeal filed on 06.03.2013 was within the stipulated time.

Conclusion:
The Tribunal restored the matter to the file of the CIT(A) for re-adjudication on merits, as the assessment order was not served at the correct address, and the appeal filed by the assessee was within the stipulated time. The appeal of the assessee was allowed for statistical purposes. The Tribunal refrained from addressing the merits of the case, as the matter was set aside for fresh adjudication. The order was pronounced in the open court on 23.07.2018.