2024 (2) TMI 1330 - AT - Income Tax

Condonation of delay in filing the appeal - delay of 326 days - sufficient cause - misguidance of the former Tax Consultant - HELD THAT - It is always to be kept in mind that the condonation of delay is always a double edged sword, which has sharp edges on both sides and to be handled carefully by any party. - In our considered view, the assessee has demonstrated a reasonable cause for not filing the appeals within the statutory period of limitation, on the mis-representation of former Tax Consultant resulting in passing exparte orders and filing appeals with delay. - Delay condoned. Assessment u/s 153A - unexplained cash credits - incriminating material found in search or not? - Penalty levied u/s 271(1)(c) - HELD THAT - When an assessment has to be made in relation to the search or requisition u/s 153A of the Act, namely, in relation to material disclosed during the course of search or requisition, if in relation to any particular assessment year, at the same time when there is no incriminating material found, no addition or disallowance can be made in relation to that assessment year in exercise of powers u/s 153A and the earlier assessment shall have to be reiterated. This legal preposition is now settled in the batch of cases namely PCIT, Central-3 -Vs- Abhisar Buildwell Pvt. Ltd. 2023 (4) TMI 1056 - SUPREME COURT holding that in respect of completed assessments/unabated assessments, no addition can be made by AO in the absence of any incriminating material found during the course of search u/s 132 or requisition made u/s 132A of the Act. We have no hesitation in deleting the additions made on account of unexplained cash credit made by the AO without any incriminating material found during the course of search from the premises of the assessee. Penalty u/s 271(1)(c) - Since the additions made on the quantum appeals for the above assessment years are already deleted vide paragraphs 10 and 11 of this order, consequently the present penalty appeals has no legs to stand and therefore the penalty levied is hereby deleted. Assessee appeal allowed.

Summary

Issues Involved:
1. Condonation of delay in filing appeals.
2. Unexplained cash credits.
3. Penalty under section 271(1)(c) of the Income Tax Act.

Condonation of Delay in Filing Appeals:
The assessee filed quantum appeals with a delay of 326 days and penalty appeals with a delay of 1 day. The delay was attributed to the non-communication and misguidance by the former Chartered Accountant. The Tribunal considered the affidavit filed by the assessee and the principles laid down by the Jurisdictional High Court in the case of Jayvantsinh N. Vaghela, which emphasized that appeals should not be dismissed on technical grounds like delay unless there is gross negligence or mala fide intention. The Tribunal found the assessee's reasons for the delay to be genuine and condoned the delay, allowing the appeals to be heard on merits.

Unexplained Cash Credits:
The assessee was assessed for unexplained cash credits of Rs. 7,50,000/-, Rs. 10,41,000/-, and Rs. 10,00,000/- for the Assessment Years 2009-10, 2010-11, and 2013-14, respectively. The additions were made based on the verification of the capital account, where the amounts were introduced as gifts from paternal uncles. The Tribunal noted that there was no incriminating material found during the search and that the assessments were unabated. Citing the legal precedent set by the Gujarat High Court in Saumya Construction Pvt. Ltd. and confirmed by the Supreme Court in Abhisar Buildwell Pvt. Ltd., the Tribunal held that no additions could be made in the absence of incriminating material. Consequently, the additions made by the AO were deleted.

Penalty under Section 271(1)(c):
The penalty appeals for the Assessment Years 2010-11 and 2013-14 were also addressed. Since the quantum additions were deleted, the penalties levied under section 271(1)(c) had no basis to stand. The Tribunal, therefore, deleted the penalties and allowed the appeals filed by the assessee.

Conclusion:
The Tribunal condoned the delay in filing the appeals, deleted the additions made on account of unexplained cash credits due to the absence of incriminating material, and consequently, deleted the penalties levied under section 271(1)(c). The appeals filed by the assessee were allowed.