2005 (6) TMI 474 - AT - Income Tax

Tribunal Allows Appeal Delay Due to Staff Error, But Upholds Rs. 31.5 Lakh Unexplained Cash Credit Addition.

The Tribunal condoned the 71-day delay in filing the appeal, attributing it to an omission by the Tax Consultant's staff, and found no mala fide intent. ... Appellate Tribunal - condonation of the delay - Unexplained Cash credits - HELD THAT:- In our opinion there is no mala fide imputable to the assessee. The delay in our considered opinion in filing the appeal is the result of some omission on the part of its Tax Consultant’s staff. It must be remembered that in every case of delay there can be some lapse of the litigant concerned. That alone is not enough to turn down the plea and to shut the doors against him. If the explanation does not smack of mala fide or it is not put forth as a part of dilatory strategy, the Courts must show utmost consideration to such litigant. As observed by the Hon’ble Supreme Court in the case of N. Balakrishnan [1998 (9) TMI 602 - SUPREME COURT] the length of delay is immaterial. It is the acceptability of the explanation. That is the only criteria before condoning the delay. Therefore, taking into consideration the overall circumstances we condone the delay in filing the appeal and proceed to decide it on merit. According to section 68 of the Act if any sum is found credited in the books of account of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of Assessing Officer then the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Therefore, for explaining the cash credit found to be recorded in the books of an assessee he is required to explain the source of such credit, identity of the creditors and genuineness of the transaction. This section contemplate that onus is upon the assessee to explain the availability of the cash in the books of account. Once the assessee discharged its primary onus it will be for the revenue to prove that evidence produced by the assessee are not reliable. In the present case assessee failed to discharge the primary onus put upon it. Even for the sake of arguments we ignore proceedings taken by the Assessing Officer u/s 133(6) for procuring information from the creditors or information gathered from the bankers u/s 131 then no other evidence is available justifying the claim of the assessee. As far as grant of opportunity of hearing is concerned. ld. First appellate authority has reproduced the written submission of the assessee in para 5 of his order. Ld. Assessing Officer has also granted sufficient opportunities but it is the assessee who failed to submit the requisite details. It did not choose to comply with the directions of the Assessing Officer in the assessment proceedings. When a specific finding of fact has been recorded against it, assessee did not rebut that finding by producing sufficient material, then did not bother to challenge the order of the ld. CIT(A) in time. Even before us did not file any paper book and failed to show us the alleged confirmation. Hence taking into consideration the overall casual approach of the assessee at every stage, more particularly keeping in view the stand of the assessee that creditors are family members of the directors from whom it can easily file confirmation etc. Therefore, in our opinion assessee cannot draw any benefit from both these decisions. We find no merit in this appeal. It is rejected. Issues Involved:1. Condonation of delay in filing the appeal.2. Confirmation of addition of Rs. 31,50,000 as unexplained cash credit.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing the Appeal:The appeal was time-barred by 71 days. The assessee explained the delay, stating that the Chartered Accountant misplaced the appeal papers, which was discovered only when the assessee received a recovery letter from the TRO. The assessee then promptly filed the appeal, supported by affidavits from the Chartered Accountant and the Director.The Tribunal considered the rival contentions and noted the principles laid down by the Hon'ble Supreme Court regarding 'sufficient cause' for condonation of delay. The Tribunal emphasized a liberal construction of 'sufficient cause' to advance substantial justice, citing cases such as State of West Bengal v. Administrator, Howrah Municipality and N. Balakrishnan v. M. Krishnamurthy. The Tribunal highlighted that the primary function of a court is to adjudicate disputes and advance substantial justice, not to penalize parties for procedural delays unless there is evidence of mala fide intent or dilatory tactics.In the present case, the Tribunal found no mala fide intent on the part of the assessee. The delay was attributed to an omission by the Tax Consultant's staff, and the explanation provided was deemed acceptable. Consequently, the Tribunal condoned the delay and proceeded to decide the appeal on merits.2. Confirmation of Addition of Rs. 31,50,000 as Unexplained Cash Credit:The assessee's return of income showed a share capital of Rs. 30 lakhs and an unsecured loan of Rs. 1,50,000. The Assessing Officer (AO) requested explanations and confirmations for these amounts. The assessee provided confirmations indicating that the funds were from family members of the directors. However, the AO found the confirmations lacking necessary details such as bank names, PAN numbers, and cheque numbers, making it impossible to verify the identity of the creditors and the genuineness of the transactions.The AO issued notices under section 133(6) to the alleged contributors, but received no responses. Efforts to gather information from the banks also failed to correlate the transactions. Despite multiple notices, the assessee did not appear before the AO. Consequently, the AO treated the amounts as unexplained cash credits and added Rs. 31,50,000 to the income.The CIT(A) upheld the AO's decision, and the assessee appealed to the Tribunal, arguing that proper opportunities for hearing were not granted and that the AO violated principles of natural justice by not confronting the assessee with the information gathered under section 133(6).The Tribunal noted that under section 68, the onus is on the assessee to explain the source of cash credits, the identity of the creditors, and the genuineness of the transactions. The assessee failed to discharge this primary onus. The Tribunal found that the assessee did not provide proper confirmations or rebut the findings of the AO and CIT(A). The Tribunal also noted that the assessee did not file any paper book or present the alleged confirmations before the Tribunal.The Tribunal distinguished the present case from the cases cited by the assessee, such as CIT v. Orissa Corporation (P.) Ltd. and CIT v. Steller Investment Ltd., noting that in those cases, the assessee had provided sufficient evidence to explain the cash credits, which was not the case here. The Tribunal concluded that the assessee's casual approach at every stage warranted the rejection of the appeal.In summary, the Tribunal rejected the appeal, upholding the addition of Rs. 31,50,000 as unexplained cash credit due to the assessee's failure to provide satisfactory explanations and evidence.