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TMI Blog2018 (7) TMI 1553X X X X Extracts X X X X X X X X Extracts X X X X ..... oposition of supreme court in case of Improvement trust V/S Ujagar Singh supreme court civil appeal no 2395 of 2008, where it has been held that unless the delay is writ large and assessee has good case on merit the delay should be condoned. CIT (A) has erred in not considering the fact that if the matter was decided on merits the addition made by A.O were to be deleted as per the remand report submitted by AO in respect to the appeal filed. CIT(A) has erred in brushing aside remand report of the A.O called for by him where the AO had admitted that addition could not be made in the year under consideration and merely deciding the appeal on technical Breach. RELIEF CLAIMED 1. Looking to the facts and circumstances of the case the additions made by A.O be deleted and Income be assessed at income of Rs.nil/- as returned by the appellant. 2. Addition made under the head unexplained cash credit amounting to Rs. 18,24,500/- be deleted. 3. The appeal may be decided on merit as against technical Breach. The appellant craves right to add, amend, alter, delete or modify any of the Grounds of Appeal at the time of hearing." 2. Briefly stated, the assessee company which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec.68 were not fresh credits, but the brought forward closing balances of the previous years. In the backdrop of the aforesaid contentions advanced by the assessee the CIT(A) called for a remand report from the A.O. The AO submitted his remand report, which read as under: "2. In this case the assessee has filed an appeal before you contending that the addition of Rs. 18.24 lakhs u/s.68 during the year in question is bad in law. The A.O. has made an addition on account of various loans amounting to Rs. 18.24 lakhs which were appearing as outstanding at the year end. The assessee further contended that he had not received the assessment order dt.30.10.2006 passed u/s.144 r.w.s. 263. 3. Facts in brief In this case the assessment u/s. 143(3) of the I. T. Act was completed on 31.12.2013 assessing a total income of Rs.Nil after allowing unabsorbed depreciation of Rs. 8,40,126/-. Subsequently, the CIT-10, Mumbai finds that the assessee had taken unsecured loans amounting to Rs,.18.24 lakhs from 4 parties for which confirmations were not filed at the time of assessment. Further, the unsecured loans at Rs. 38, 70,982/- including Rs. 34,500/- from the Director, as per balance sheet a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ie it appears to be correct. In view of the above, the appeal may be decided on the facts and merit of the case." 5. The CIT(A) on a perusal of the remand report and on further verifications gathered that the assessee had filed the appeal after a lapse of a period of about six years from the date of the assessment order passed by the A.O under Sec.144 r.w.s. 263 of the Act. The assessee in its rebuttal though submitted before the CIT(A) that it had not received the original assessment order, but no evidence in support of his said claim was filed. The CIT(A) taking cognizance of the fact that as no affidavit was filed by the assessee explaining the reason for delay in filing of the appeal before him, thus concluded that the same was backed by total negligence on the part of the assessee to file the same within the statutory time period. The CIT(A) was also not persuaded to accept the contention raised by the assessee that the assessment order passed under Sec.144 r.w.s. 263 was not received by the assessee. On the basis of his aforesaid deliberations the CIT(A) declined to condone the delay and dismissed the appeal. 6. The assessee being aggrieved with the order of the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be payable after that date. It was submitted by the ld. A.R that in the backdrop of the aforesaid facts Mr. N. Shiva Rao gave an undertaking to the directors of the assessee company that he would clear all the pending income tax matters of the assessee company. The ld. A.R submitted that during the absence of the aforesaid directors of the assessee company, viz. Sampat Kumar Badala, Shri Sampatlal Badala and Smt Prem devi Badala from Mumbai, the correspondences pertaining to the assessment proceedings which were initiated by the A.O under Sec.143(2) pursuant to the directions given by the CIT under Sec.263 were probably served on Mr. N. Shiva Rao, however the same were never communicated to the aforesaid directors of the assessee company. It was submitted by the ld. A.R that in the backdrop of the aforesaid facts assessment was framed by the A.O under Sec.144 treating the entire outstanding balance of Rs. 18,24,500/- as an unexplained cash credit under Sec.68 in the hands of the assessee. It was submitted by the ld. A.R that as the property of the assessee at Mumbai viz. 17-1, Mathuradas colony, Santacruz (E), Mumbai, was sold by the old directors of the assessee company in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee company. The aforesaid director had in her affidavit deposed that the exparte order passed by the A.O for A.Y 2001-02 on 30.10.2006 was never received by the company. It was further deposed by her that the likelihood of the assessment order having been served on the earlier tax consultant of the assessee company, viz. N. Shiva Rao who was in the past looking after the latters tax affairs and was carrying on his profession from the said address could not be ruled out. It was further stated by her that it was only when the new representative of the assessee company who was looking after the tax affairs of the company, in the course of the latters scrutiny assessment for A.Y 2009-10 and A.Y 2010-11 was made aware of the outstanding arrears against the company for A.Y 2001-02, that it was for the very first time on making of further enquiry that it was gathered by him that an exparte assessment order for A.Y 2001-02 was way back passed in the case of the assessee company. It is further deposed that the said tax consultant immediately on learning about the said factual position applied for a copy of the assessment order, which was made available to him on 20.02.2013. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company had resigned as directors and had walked out of the business and transferred the same to Shri Mahindra Kothari and Smt. Sneh Lata Kothari, who were inducted as the new directors of the company. We find that as Shri Sampat Badala had sold his property at Mumbai from where the company was earlier functioning, viz. 17-1 Mathuradas Colony, Kalina, Santacruz (E) in the year 2005, thus there could have been no occasion for the assessee to have received the order passed by the A.O under Sec.144 r.w.s. 263, dated 30.10.2006 at the address which was mentioned by the A.O in the assessment order. We are of the considered view that the CIT-10, Mumbai being aware of the fact that the directors of the assessee company were no more available at the aforementioned address viz. 17-1 Mathuradas Colony Kalina, Santacruz (E), had thus passed the order under Sec.263 dated 12.07.2005 at the registered address of the assessee company, viz. NH-8, Piparda-Kankoroli, Rajsmand, Rajasthan. We find it beyond comprehension that now when the order was passed by the CIT-10, Mumbai at the registered address of the assessee company at NH-8, Piparda Rajsamand, Rajasthan, thus there could be no valid reason o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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