SHI vs. U PIELKENROOD WATEK LTD.,CHENNAIVS.ITO, CORP. WARD-6(2), CHENNAI

The brief facts of the case emanating from the records are that the assessee company filed its return of income for the A.Y 2014-15 on 01.04.2015 admitting an income of Rs.20,53,150/-. The case was selected for scrutiny and assessment was completed u/s.143(3) of the Act on 30.12.2016 by making addition of Rs.4,64,80,000/- as income from other sources u/s.56(2)(viib) of the Act and Rs.6,46,53,183/- as bogus credit and the total assessed income was Rs.11,50,15,734/-. Aggrieved by this, the assessee filed an appeal before the ld.CIT(A)-15 (erstwhile) wherein the addition of Rs.4,64,80,000/- as income from other sources u/s.56(2)(viib) is deleted by ld.CIT(A) and with regards to the bogus credit, ld.CIT(A) has partly allowed the assessee’s appeal by deleting Rs.1,60,57,680/- and confirmed the remaining addition to the tune of Rs.4,85,95,503/-. 3. Aggrieved by the order of the ld.CIT(A), the assessee filed an appeal before the Tribunal, wherein the Tribunal partly allowed the assessee’s appeal by holding as under: “The Id CIT(A) directed the AO to delete the addition of credits in respect of those 15 parties, who have confirmed the credit, at Rs.1.60.57,680/- and sustained the remaining addition. Since the impugned sum being credits in the assessee's books of account, it is settled law that the assessee must satisfy three conditions namely, (1) identity of the creditor. (2) genuineness of the transaction and (3) credit worthiness of the creditor. Once this is established, then, it is held that the assessee has discharged his burden In this case, ii is clear from the above that the assessee has not established its onus even after the first appellate authority gave an opportunity. Therefore, the addition sustained is upheld subject to the following further finding. We find merit in the assessee's submission that the addition on such cases cannot be made during this assessment year to the extent there are opening balances in those creditors. Therefore, we direct the AO to compute the assessable credits accordingly, after giving an effective opportunity to the assessee. In the result the assessee's appeal is treated as partly allowed to the above extent.”

Consequent to the Tribunal order, as the assessee did not produce the details of the Creditors and other supporting documentary evidences in response to the hearing notice dated 11.03.2021 & 23.03.2021, giving effect to the order of the Tribunal u/s.254 r.w.s. 143(3) of the Act, an order has been passed on 31.03.2021, confirming and reiterating the additions confirmed by the Ld.CIT(A) to the tune of Rs.4,85,95,503/- as bogus credit for the AY 2014-15 made vide Assessment Order u/s. 143(3) dated 30.12.2016.

The Hon’ble High Court of Madras has pronounced the following directions in W.P.No. 10914 of 2021 & WMP No.11548 & 11546 of 2021 dated 29.11.2021: “Considering the same, the impugned order is quashed and the case is remitted back to the respondent to pass a fresh speaking order in accordance with law and on merits within a period of sixty five days from the date of receipt of a copy of this order. Needless to state, that the petitioner is directed to file a reply/representation if any, within a period of thirty days from the date of receipt of a copy of this order. Thereafter, the respondent shall pass an order within a period prescribed above, if required, the petitioner is requested for personal hearing or through video conferencing” As per the Hon'ble ITAT order in ITA No. 797/Chny/2019 dated 23.12.2019 "We find merit in the assessee's submission that the addition on such cases cannot be made during this assessment year to the extent there are opening balances in those creditors. Therefore, we direct the AO to compute the assessable credits accordingly, after giving an effective opportunity to the assessee. In the result the assessee's appeal is treated as partly allowed to the above extent."

In obeyance to the High Court order, a letter has been issued by the AO to the assessee on 28.12.2021 quoting the order of the Hon'ble High Court of Madras to submit the reply or representation if any within a period of 30 days from the date of receipt of copy of Hon'ble High Court order. In response to the notice, the assessee’s AR submitted his reply on 03.01.2022 and furnished the

At the outset, we observed that the ld.CIT(A) dismissed the appeal filed by the assessee in limine due to the assessee has filed an appeal with inordinate delay of 1,362 days. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us.

The ld.AR submitted that the assessee had explained the details of delay in filing the appeal before the ld.CIT(A) in Form 35 itself. Further, the ld.AR submitted the copies of death certificate of the then MD, his wife and the wife of the present MD during the hearing. Hence, the assessee could not file the appeal in the prescribed statutory time limit. In view of the above, the ld.AR prayed that the Tribunal may be pleased to condone the delay and set aside the order of ld.CIT(A) and remit the issues to the file of ld.CIT(A). Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the AO to complete the assessment proceedings effectively.

Per contra, the ld.DR submitted that the appeal was to be filed before the ld.CIT(A) by the assessee within 30 days of the service, but the assessee has filed an appeal with delay of 1362 days. The assessee has been negligent in filing an appeal within the time limit provided and hence prayed for confirming the order of the ld.CIT(A).

We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the AO has passed penalty orders by considering the information available with the department and submission made by the assessee and on appeal the same have been dismissed in limine by the ld.CIT(A), NFAC without condoning the delay in filing of the appeals before the first appellate authority. Since, the assessee has failed to file an appeal within stipulated time limit before the first appellate authority, we levy the cost of Rs.25,000/- to be paid to State Legal Aid Authority, Hon’ble High Court of Madras within 30 days from the date of receipt of this order and the assessee shall satisfy the payment of cost before the authorities.

In view of the foregoing facts and circumstances, and in order to advance the cause of substantial justice, we are inclined to grant one more opportunity to the assessee. Accordingly, the delay in filing the appeal before the ld. CIT(A) is hereby condoned, as the assessee has duly set out the reasons for such delay in Form No. 35, which, in our considered opinion, constitutes sufficient cause. Consequently, the impugned order of the ld. CIT(A) is set aside, and the matter is restored to the file of the ld. CIT(A) with a direction to adjudicate the appeal afresh on merits, in accordance with law, after affording a reasonable opportunity of being heard to the assessee. The assessee is also directed to extend full cooperation and to furnish necessary written submissions and relevant evidence, as may be called for, in a timely manner.

In the result, appeal filed by the assessee is allowed for statistical purposes.