KAATYAAYINI STEELS PVT LTD,MUMBAI vs. INCOME TAX OFFICER, WD-12(3)(1), MUMBAI

1. 4. Briefly stated the assessee is engaged in the business of manufacturing and trading of non-ferrous, ferrous metals, steels, alloys and related goods and has filed its return of income for the year under consideration dated 31.10.2017, declaring total income at Rs. 6,45,650/-. Pursuant to the search action conducted in the case of M/s Kasturi Commodities Pvt Ltd. which is alleged to be a bogus entity providing accommodation entries to various concerns, information received stated that the assessee was one of the beneficiaries of accommodation entry amounting to Rs. 9,14,00,000/- in the nature of & 4398/Mum/2024 (A.Y. 2017-18) Kaatyaayini Steels Pvt. Ltd. bogus sales/purchases. The learned Assessing Officer (‘ld. AO’ for short) reopened the assessee’s case vide notice u/s. 148 dated 31.03.2021, which was duly issued and served upon the assessee. The assessee filed its return of income in response to the notice u/s. 148 and notice u/s. 143(2) of the Act and notice u/s. 142(1) were also issued and served upon the assessee. It is observed that the assessee has been non-compliant during the assessment proceeding and the ld. AO passed the assessment order dated 20.03.2022, u/s. 147 r.w. 144 r.w.s. 144B of the Act, being the best judgment assessment, thereby determining total income at Rs. 9,20,45,650/- after making addition/disallowance of Rs. 9,14,00,000/- as unexplained cash credit u/s. 68 of the Act.

We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has been non-compliant before the ld. AO during the assessment proceeding and has failed to substantiate the impugned transaction with sufficient documentary evidence. During the first appellate authority, the assessee has filed the appeal belatedly with a delay of 242 days which was not condoned by the ld. CIT(A) for the reason that the assessee has failed to explain that there was ‘sufficient cause’ for the said delay.

Upon perusal of the rival contentions, it is observed that the assessee company had cited reasons of medical illness of the director of the assessee company which was the reason for the delay in filing the appeal before the first appellate authority along with the medical reports. The ld. CIT(A) considered the same to be not a ‘sufficient cause’. In our view, there are various decisions of the Hon'ble High Court and Hon’ble Apex Court which has held that liberal view has to be taken in case of delay condonation, where the assessee has substantiated delay with ‘sufficient cause’. In the present case in hand, we deem it fit to hold that the assessee had bonafide reason for not filing the first appeal within the prescribed period of limitation and we therefore direct the ld. CIT(A) to condone the delay and to decide the issue on the merits of the case. We therefore remand this issue back to the file of the ld. CIT(A) for deciding the issue on the merits and in accordance with law. We also direct the assessee who has been non- compliant before the ld. AO to adhere to the proceeding before the ld. CIT(A) without any undue delay from the assessee’s side.

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

The finding recorded in for A.Y. 2017-18 shall apply mutatis mutandis to this appeal also.

In the result, both the appeals filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 28.01.2025 Sd/- Sd/- (RENU JAUHRI) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 28.01.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,