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Facts
The assessee filed an appeal against a revisionary order under section 263. The appeal was filed with a significant delay of 2121 days. The delay was sought to be condoned based on a sequence of previous appeals and legal remedies pursued.
Held
The Tribunal held that the assessee's conduct and the reasons provided in the affidavit do not constitute 'sufficient cause' for condoning the inordinate delay. The Tribunal noted the assessee's failure to establish the genuineness of purchases and the prolonged litigation history.
Key Issues
Whether the delay of 2121 days in filing the appeal is justifiable on grounds of 'sufficient cause', considering the assessee's previous legal proceedings and the nature of the case.
Sections Cited
143(3), 147, 263, 133(6), 69C, 148
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Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI GIRISH AGRAWAL
Assessment Year: 2010-11 Rohit Vallabhdas Shah Income Tax Officer, B-303, Dwarka Apartment Ward 32(3)(2), Vs. Daulat Nagar, Borivali, Mumbai Mumbai – 400066 (PAN: ACCPS2392B) (assessee) (Respondent) Present for: Assessee : Shri Gunjan Kakkad, Advocate Revenue : Shri Annavaram Kosuri, Sr. DR Date of Hearing : 22.07.2025 Date of Pronouncement : 22.09.2025 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by assessee is against the order of Ld. PCIT-32, Mumbai, vide order dated 25.03.2019 passed against the assessment order by Income Tax Officer, Ward-32(3)(2), Mumbai, u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 17.06.2016 for Assessment Year 2010-11.
Grounds taken by the assessee are reproduced as under:
1. 1. On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax has erred in setting aside the assessment order by exercising powers under section 263 of the Income-tax Act, 1961 ("the Act").
2. On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax failed to appreciate that the view of the Assessing Officer could have been substituted in exercise of powers under section 263 of the Act.
3. On the facts and circumstances of the case and in law, the view taken by the Assessing Officer was a plausible view and thus, the Commissioner has erred in invoking the powers under section 263 of the Act.
4. On the facts and circumstances of the case and in law, the Commissioner could not have set aside the assessment order.
Rohit Vallabhdas Shah AY 2010-11 3. At the outset, it is to be noted that Shri Gunjan Kakkad, Advocate represented the assessee in the course of hearing held on 22.07.2025, who extensively argued for condonation of delay of 2121 days in filing the present appeal before the Tribunal. He placed strong reliance on the affidavit filed by the assessee notarised on 16.07.2025. Since the present appeal is against the revisionary order passed u/s.263 after a significant delay of almost six years, details and the factual position of the proceedings concluded earlier in this regard were enquired into from the Bench from the ld. Counsel for the assesse. In the same process, submission of power of attorney to represent the case was also questioned for which ld. Counsel submitted that it shall be submitted by the end of the day after the closing of the hearing and that his submissions made be taken as statement on the Bar. On the strength of his oral submissions alongwith affidavit of the assessee and paper book containing 473 pages, the matter was proceeded for hearing along with able assistance of the ld. Sr. DR. 3.1. As already noted above, there is a substantial delay of 2121 days in filing the present appeal before the Tribunal. Contents of the affidavit filed by the assessee explaining the reasons for delay are reproduced below for ready reference:
Rohit Vallabhdas Shah AY 2010-11 3.2. From the above, as well as from the material on record, we note that assessee filed his return of income on 15.10.2010 reporting total income at Rs.1,72,760/-. Subsequently, on receipt of information from Sales Tax Department and DGIT(Investigation), Mumbai, ld. Assessing Officer took up the matter by reopening the assessment by issuing notice u/s. 148 dated 14.08.2015. According to the reasons to believe recorded by the ld. Assessing Officer, Investigation Wing of the Department had carried out detailed investigation with respect to information received from Sales Tax Department that certain entities are involved in business of issuing bogus bills to earn commission without actually entering into real business. Ld. Assessing Officer alleged that assessee is one of such beneficiaries of obtaining bogus purchases from the following parties:-
3.3. Thus, ld. Assessing Officer formed a reason to believe that income had escaped assessment within the meaning of section 147 of the Act. Assessee in the course of re-assessment, submitted copies of ledger account of the parties, purchase/sales bills and bank statement highlighting the payment, to substantiate the genuineness of the purchase. Ld. Assessing Officer had issued notices u/s.133(6) to the aforesaid parties which were returned unserved by the postal department “Not Known” or “Left” or “Refused”. Ld. Assessing Officer Rohit Vallabhdas Shah AY 2010-11 thus, observed that assessee did not produce the purchase parties for verification to establish the genuineness of their existence. He also noted that information furnished by the assessee had no signature of receiving and there were no delivery challans for the receipt of goods. He thus, completed the assessment by estimating gross profit by applying a percentage of 12.5% being possible profit out of the purchases or Rs.63,70,738/- made through non genuine parties and thus, made an addition of Rs.7,96,342/-. The assessment was thus, completed at total assessed income of Rs.9,69,100/-.
This assessment was accepted by the assessee owing to the smallness of the amount as mentioned in para-2 of the affidavit extracted above. He did not challenge the assessment order before the ld. CIT(A). Later ld. PCIT-32, Mumbai invoked revisionary proceedings by issuing a show cause notice u/s.263 on 30.01.2019, whereby he drew his consideration that ld. Assessing Officer has accepted the bogus purchase bills from bogus hawala bill providers and made an addition only to the extent of 12.5% of these total bogus purchases whereas the addition ought to have been made of the entire amount of Rs.63,70,738/- and thus, has resulted into an underassessment of an income of Rs.55,74,396/- (Rs.63,70,738 – Rs.7,96,342).
4.1. Assessee made its representation which was found not acceptable by the ld. PCIT. He thus set aside the assessment so completed by the ld. Assessing Officer and directed him to pass a fresh order after allowing opportunity of being heard to the assessee and after taking into account the ratio of decision in the case of N.K. Proteins Ltd. by the Hon'ble Supreme Court SLP(C) CC-769 of 2017, dated 16.01.2017, wherein Hon'ble Supreme Court held the decision of Hon'ble Gujarat High Court in the case of N.K. Proteins Ltd. [2016] Rohit Vallabhdas Shah AY 2010-11 72 taxmann.com 289 (Guj) wherein it held that once it comes to a categorical finding that the amount represents alleged bogus purchases from bogus suppliers, it is not incumbent to restrict the disallowance and make addition of 100% of the alleged bogus purchases. He further directed the ld. Assessing Officer that if there are corresponding purchases for the sales booked or not, should be verified and findings should be recorded. Estimation of GP is the secondary step left to the Assessing Officer to consider depending upon the facts of the case. If the purchases are bogus, then there is obviously no question of addition on GP because the entire bogus purchases should be added back.
4.2. Consequent to this revisionary order passed u/s. 263, dated 25.03.2019, ld. Assessing Officer made an order giving effect to the said revisionary order. Ld. Assessing Officer based on the direction given by the ld. PCIT, made the addition of the entire amount of alleged bogus purchases of Rs.63,70,738/- and the order giving effect was passed on 16.11.2019 u/s.143(3) r.w.s. 147 r.w.s. 263.
Against this order giving effect assessment completed by ld. Assessing Officer, assessee filed the first appeal before ld. CIT(A) on 08.01.2020. Ld. CIT(A) taking note of the factual position and relying upon certain judicial precedents, dismissed the appeal of the assessee vide order dated 27.09.2023. Relevant extracts from the first appellate order are reproduced for ready reference- “20. The AO had asked to submit name, PAN, complete addresses of such parties with copy of ledger copy, vouchers and copy of challans but the appellant did not provide any details or produce the parties and further, 133(6) notice returned unserved. Adequate opportunities of being heard were provided during assessment proceedings and appellate proceedings, however, there was no response. Further reliance is placed upon the decision of Hon'ble Supreme Court in the case of CIT vs Durga Parsad More 82 ITR 540 where it has been held that the apparent must be considered as real until it is shown that there are reasons to believe that apparent is not real. In this case enough material has been brought on record to show that the apparent is not real. Further Rohit Vallabhdas Shah AY 2010-11 reliance is placed upon the decision Hon'ble Supreme Court in the case of Sumati Dayal vs. CIT (1995) 214 ITR 802 (SC). After going through the ratio of decisions as referred above, facts of the case, element of human probability and surrounding circumstances, it is noted that the appellant has failed to prove creditworthiness and genuineness of transaction in respect of bogus, purchases. The onus was upon the appellant to explain the source and nature of purchase transactions with satisfactory explanation. However, the appellant has not furnished any explanation and did not furnish any supporting evidence. ……….
The appellant's case, with similar facts and situation as of Shoreline Hotels (P) Ltd. vs. CIT, also had very reliable and genuine information from Sales Tax Authorities with regard to the operations with these hawala dealers, the onus was on appellant to prove that purchases were genuine, in the absence of which despite ample opportunity, entire purchases from such parties was to be treated as non-genuine and accordingly, the addition of unexplained bogus purchases of Rs. 63,70,738/- is upheld u/s 69C of the Act.”
Against the dismissal of the first appeal, assessee went in appeal before the Coordinate Bench of ITAT, Mumbai in for which the order was pronounced on 03.05.2024. The Coordinate Bench dismissed the appeal of the assessee holding that assessee could not establish the identity of the parties and genuineness of the said transactions. The finding arrived at by the Coordinate Bench in para-8 is extracted below: “8. We have given a thoughtful consideration to the orders of the authorities below. It is true that the assessee could not establish the da identity of the parties and genuineness of the said transactions. It is true that the assessee never denied that it has procured the accommodation bills to give color of genuine purchases. All that we have to see is whether the Assessing Officer is justified in making 100% addition of the bogus purchase amount or he should have added only the profit margin earned by the assessee. The Hon'ble Gujarat High Court in the case of N.K. Industries Ltd., [(2016) 72 Taxmann.com 289] has held that once it comes to a categorical finding that the amount represents alleged bogus purchases from bogus suppliers it is not incumbent to restrict the disallowance and thereby directed to make addition of 100% of the alleged bogus purchases. The SLP preferred by the assessee against this decision of the Hon'ble High Court has been dismissed by the Hon'ble Supreme Court in SLP (C) CC No. 769 of 2017 dated 2017 dated 16.01.2017. We find that the First Appellate Authority has followed this decision of the Hon'ble Gujarat High Court. As no distinguishing decision has been brought to our notice in favour of assessee, we do not find any reason to interfere with the findings of the ld. CIT(A).”
On this order of the Coordinate Bench, assessee moved a miscellaneous application vide MA No.217/Mum/2024 for which the Rohit Vallabhdas Shah AY 2010-11 order was pronounced on 05.11.2024, alleging that the Coordinate Bench had passed the order hurriedly, merely relying on the decision of Hon'ble Gujarat High Court in the case of N.K. Industries Ltd. (supra) and that the laid order is non speaking and contrary to the law. It was also urged that the order be recalled as the case of the assessee is covered by the precedent said by Jurisdictional High Court. The Coordinate Bench dealt with the miscellaneous application and found that there is no rectifiable mistake in the said order which is apparent from record as required under the provisions of section 254(2). The said miscellaneous application filed by the assessee was thus, dismissed.
7.1. Against the order of the Coordinate Bench and after the disposal of the miscellaneous application, assessee has filed an appeal before the Hon'ble High Court of Bombay, which is pending for admission, fact of which is averred by the assessee in para-4 of his affidavit extracted above. Assessee mentions that the appeal before Hon'ble High Court Bombay was pursued after the dismissal of miscellaneous application by the Tribunal.
From the chronology of the multiple proceedings detailed above, it is evident that assessee from all the forums could not establish the genuineness of the purchases which have been alleged to be bogus. Having got exhausted for the redressal of his grievance at multiple forums, assessee has now come up in appeal before the Tribunal against the revisionary order passed u/s. 263 with a delay of 2121 days. As already noted above, assessee had been pursuing the remedies available under the Act contesting the addition made without challenging the revisionary proceedings before the Tribunal for which opportunity was always available with the assessee to file an appeal Rohit Vallabhdas Shah AY 2010-11 before the Tribunal within the prescribed limitation of 60 days from the passing and receipt of the impugned order. Assessee chose at that point of time to take recourse to the other channel of redressal of contesting the ‘order giving effect’ to the revisionary order, rather than challenging the revisionary order itself. Having failed at all stages to establish his case, assessee is now before the Tribunal, contesting the revisionary proceeding with the prayer for condonation of delay of almost six years. There was nothing which prevented the assessee from filing the present appeal within time. Assessee choosing the other channel of redressal and contesting his case at all stages from the first appeal before ld. CIT(A) to second appeal before the Tribunal, followed by miscellaneous application and now before the Hon'ble High Court for which the appeal is pending for admission, demonstrates his good understanding of the process of law available under the Act. Thus, the plea raised by the assessee in his affidavit does not establish the bonafide and inspire confidence to justify condonation of delay. This present appeal is nothing but taking another chance after having exhausted the remedies available as aforesaid and reflects abuse of process of law.
8.1. Having perused the ‘order giving effect’ to the impugned revisionary order as well as the appellate orders of ld. CIT(A) and the Coordinate Bench including that for miscellaneous application, the present appeal is filed merely to exploit the process of law, without justifiable reasons and establishment of bonafides. The conduct of assessee and the averments in the affidavit do not fall under “sufficient cause” required for the condonation of delay. Phrases like “liberal approach”, “justice oriented approach” and cause for the advancement of “substantial justice” cannot be employed to defeat the law of limitation so as to allow stale matters or as a matter of fact, Rohit Vallabhdas Shah AY 2010-11 dead matters to be revived and reopened by taking aid of the Limitation Act. The law of limitation is founded on public policy and enshrined in the legal maxim “interest reipublicae ut sit finis litiun”, i.e., it is for the general welfare that the period of limitation be put to litigation. Every public policy requires that there should be an end to the litigation, otherwise it would be a dichotomy, if the litigant is made immortal, vis-à-vis the right in parties. Tax statute has provided for limitation for filing appeals before various authorities and the same provides discretionary power to the authorities for condoning delay, provided there is sufficient cause with reasonable explanation, establishing bonafides of the case.
8.3. In the present set of facts as elaborated above, and the redressal approach adopted by the assessee at the first instance, travelling from the first appeal before ld. CIT(A) to now pending admission of appeal before the Hon'ble High Court, the delay of 2121 days in filing the present appeal against the revisionary order is not within the stipulated timeline and does not fall within the canons of “sufficient cause”.
8.4. In the given set of facts and circumstances, as discussed above, we do not find any reason to condone the delay of 2121 days in filing the present appeal before the Tribunal, to admit the appeal for its adjudication. Accordingly, the appeal so filed is dismissed, on account of the aforesaid delay, without its admission for adjudication.
8.5. Before parting, it is important to take note of the fact that until the passing of this order, despite couple of follow-ups by the Bench Clerk, ld. Counsel has not put up his power of attorney on record, though the same was assured in the course of hearing. Such a
In the result, appeal of the assessee is dismissed.