2023 (11) TMI 1138 - AT - Income Tax

Condonation of delay filing appeal in ITAT - delay of 1326 days - sufficient Reason for delay - HELD THAT - If we examine the explanation of the assessee then, it would reveal that basically the delay has occurred on account of lacunae by the erstwhile tax consultant of the assessee Shri S.K. Paul and the assessee did not have any malafide intention to cause the delay. Therefore, cumulative setting of all these factors would suggest that there is no deliberate delay at the end of the assessee because the assessee was not going to gain anything from delaying this appeal. It is also pertinent to note that the Hon ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy 1998 (9) TMI 602 - SUPREME COURT has observed that period of delay does not matter. It is the quality of the explanation. If some valid reason is there, then any period can be condoned. In this case delay was caused due to fault of the erstwhile tax consultant of the assessee. Taking into consideration all these factors, we condone the delay and admit this appeal. Revision u/s 263 - unexplained cash deposits - as per CIT no explanation as to the nature and source of the cash deposit and as to whether the same is explained for income tax purposes given - CIT observed that AO framed the assessment without making enquiries and verifications which should have been made - HELD THAT - As submissions were filed by the assessee regarding the cash collected from investors, depositing them in ICICI Bank account and then payments made to project organisers and thereafter the cash withdrawal from ICICI Bank account and refunded to the investors. As submissions filed by the assessee which pertains to the deal of purchase of land from Ramel Group of Industries which could not materialize, it is established that the alleged cash deposit and withdrawal are not related to the business turnover of the assessee and the same is a separate transaction. Since the assessee was able to satisfy the AO that alleged cash withdrawal are not part of the regular business carried out by the assessee of trading in goods, he accepted the contention by way of proper application of mind and took plausible view provided under the statute and did not make any addition for cash deposits. It has been consistently held that where on a particular issue, AO has conducted a detailed enquiry, called for the relevant information to which necessary compliance has been made by the assessee and ld. Assessing Officer took a plausible view which may or may not be beneficial to the revenue but the assessment order is not erroneous, then under such circumstances, the jurisdiction u/s 263 of the Act, cannot be invoked. As considering the fact that issue referred in the show cause notice u/s 263 of the Act, in respect of source of cash deposited in the bank account of the assessee held with ICICI Bank, assessee having successfully explained the said transaction before the ld. Assessing Officer after passing through detailed enquiry and again before ld. Pr. CIT, the submissions were made giving proper details in which the ld. Pr. CIT failed to find any specific error as no such defect has been recorded in the impugned order. Therefore, since detailed enquiry has been conducted by the ld. Assessing Officer on the issue raised in the show cause notice and a plausible view has been taken, we are of the considered view that ld. Pr. CIT erred in assuming jurisdiction u/s 263 - Decided in favour of assessee.

Issues Involved:
1. Assumption of jurisdiction under Section 263 of the Income-tax Act.
2. Examination of cash deposits in the savings bank account.
3. Compliance with Explanation 2 to Section 263(1) of the Income-tax Act.
4. Validity of the assessment order under Section 143(3) of the Income-tax Act.
5. Explanation provided by the assessee regarding business activities and cash deposits.
6. Condonation of delay in filing the appeal.

Summary of Judgment:

1. Assumption of Jurisdiction under Section 263 of the Income-tax Act:
The Tribunal examined whether the Principal Commissioner of Income Tax (Pr. CIT) erred in assuming jurisdiction under Section 263 to impose his views on the Assessing Officer (A.O.). The Tribunal noted that the A.O. had conducted a thorough examination of the cash deposits in the savings bank account and had taken a plausible and judicious view. The Tribunal concluded that the Pr. CIT's assumption of jurisdiction was incorrect as the A.O.'s order did not suffer from a lack of independent and adequate enquiry.

2. Examination of Cash Deposits in the Savings Bank Account:
The Tribunal evaluated whether the A.O. had adequately examined the cash deposits. The A.O. had issued notices under Section 133(6) and thoroughly examined the bank accounts and cash deposits with the books of accounts. The Tribunal found that the A.O. had conducted proper enquiries and verifications, and the Pr. CIT's holding of the assessment order as erroneous and prejudicial to the interest of the revenue was incorrect.

3. Compliance with Explanation 2 to Section 263(1) of the Income-tax Act:
The Tribunal assessed whether the assessment order complied with Explanation 2 to Section 263(1). It was found that the A.O. had made proper enquiries and verifications regarding the cash deposits. The Tribunal concluded that the assessment order was passed after making the necessary enquiries and verifications, and thus, the order under Section 263 was liable to be quashed.

4. Validity of the Assessment Order under Section 143(3) of the Income-tax Act:
The Tribunal reviewed the validity of the assessment order under Section 143(3). It was determined that the A.O. had taken a plausible view after a detailed examination of the cash deposits. The Tribunal held that the A.O.'s order was not erroneous or prejudicial to the interests of the revenue, and the Pr. CIT's order under Section 263 was quashed.

5. Explanation Provided by the Assessee Regarding Business Activities and Cash Deposits:
The Tribunal considered the assessee's explanation that the cash deposits were related to various business activities, including acting as a mediator in land deals. The Tribunal found that the A.O. had accepted the explanation after proper verification. The Tribunal noted that the cash deposits were not part of the regular business turnover and were satisfactorily explained.

6. Condonation of Delay in Filing the Appeal:
The Tribunal addressed the issue of the delay in filing the appeal, which was time-barred by 1326 days. The delay was attributed to the lacunae by the erstwhile tax consultant. The Tribunal, citing various judicial pronouncements, concluded that the delay was not deliberate and condoned the delay, admitting the appeal.

Conclusion:
The Tribunal quashed the revisionary order passed by the Pr. CIT under Section 263 of the Income-tax Act and restored the assessment order under Section 143(3). The appeal of the assessee was allowed.

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