2024 (1) TMI 945 - AT - Income Tax

Condonation of delay - appeal is time barred by 266 days - HELD THAT - As delay has not been adopted by the assessee as a strategy to litigate with the Revenue because by making the appeal time-barred, he will not gain anything. The assessment order and ld. CIT(Appeals) s order are required to be challenged otherwise he cannot be absolved from the tax liability. It appears there is some bonafide mistake for not appearing before the lower authorities and filing the appeal well in time. Apart from the above, we are going to comment on the merits and how ld. Assessing Officer has framed the assessment order. Thus in our opinion, the delay in filing the appeal deserves to be condoned. We accordingly condone the delay and proceed to decide the appeal on merit. Best Judgment assessment - debit balance from a Bank account added to the income of the assessee - AO has verified this expenses in comparison to the turnover shown by the assessee under section 44AD. This exercise has been made by the AO while passing a best judgment assessment order. We failed to appreciate under which law a debit balance from a Bank account could be added to the income of the assessee. The available balance was not treated as an unexplained balance in the Bank account. It might be flowing from the earlier years, out of that the assessee had made the payments. AO was unable to lay his hands on any of the details that such payments were not in connection with the business of the assessee. He simply considered the total withdrawal from the Bank, vis- -vis the turnover of the assessee and then held that debit balance from the Bank is to be treated as unexplained income of the assessee under section 69C. In our view, it is just an absurd conclusion without any cross verification and without collecting any information. It is further found that the ld. 1st Appellate Authority has also again not appreciated any of these circumstances but dismissed the appeal for want of prosecution. No doubt in a best judgment, element of assumption will always be invoked, but that estimation could not be yield one and it cannot be used as a tool to punish the assessee. AO is supposed to collect information from the surroundings of the assessee and thereafter formed a reasonable belief that the available income required to be assessed from the assessee. Due to this simple reason, we have reproduced the complete assessment order. Therefore, in our opinion, the addition is not sustainable. In the second item, AO observed that cash in hand shown at Rs. 24,00,490/- but on perusal of the ITR, the abovementioned cash in hand was not shown. According to the ld. Counsel for the assessee, this is again an incorrect assumption at the end of the assessee. The cash in hand in the books is only Rs. 4,000/-, rest is available in the accounts and it cannot be construed as cash in hand. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Delay in filing appeal before the Tribunal.
2. Merits of the assessment order passed by the ld. Assessing Officer.

Summary:

Issue 1: Delay in filing appeal before the Tribunal
The present appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2016-17. The Registry pointed out a delay of 266 days in filing the appeal. The assessee explained the delay citing his age, engagement of Advocates, and lack of understanding leading to an ex-parte decision. The ld. D.R. contended that the assessee's failure to appear before revenue authorities and delay in filing the appeal showed negligence. The Tribunal referred to legal provisions allowing condonation of delay if sufficient cause is shown, emphasizing a liberal interpretation of the term "sufficient cause." Citing Supreme Court decisions, the Tribunal concluded that the delay was not deliberate and deserved to be condoned, allowing the appeal to proceed on merit.

Issue 2: Merits of the assessment order
The assessment order was non-speaking and sketchy, alleging unexplained expenses and cash credits based on bank account details. The ld. Assessing Officer treated debit balances as unexplained income under section 69C without proper verification or justification. The Tribunal found the assessment conclusions absurd and lacking cross-verification, leading to an incorrect assumption. The ld. Assessing Officer's observation regarding cash in hand was also deemed incorrect, with the Tribunal noting the actual cash in hand amount. Considering these facts, the Tribunal allowed the appeal and deleted both additions made by the ld. Assessing Officer. The appeal of the assessee was allowed, and the order was pronounced in open court on 11/01/2024.