Assessee's Cross Objection dismissed for delay; unexplained cash credit reinstated.

The Tribunal dismissed the assessee's Cross Objection (CO) due to a time-barred delay of 683 days, rejecting the plea for condonation. The application under Rule 27 of the ITAT Rules, 1963, was deemed not maintainable as the issues were not raised before the CIT(A). The addition of Rs. 50,00,000/- as unexplained cash credit was reinstated, as the assessee failed to prove the identity of creditors, with the Tribunal upholding the AO's proper inquiry into the non-existence of the entities. The appeal by the Revenue was allowed, and the CO filed by the assessee was dismissed.

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Issues Involved:
1. Condonation of delay in filing the Cross Objection (CO) by the assessee.
2. Application under Rule 27 of the ITAT Rules, 1963.
3. Deletion of addition of Rs. 50,00,000/- made by the Assessing Officer (AO) on account of unconfirmed, unexplained, and unverified share capital.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Cross Objection (CO):
The assessee's CO was time-barred by 683 days. The assessee pleaded for condonation of delay, arguing that the delay was due to the previous counsel's incorrect advice and the assessee's lack of awareness of the technicalities of the Income-tax provisions. However, the Tribunal noted that no affidavit from the previous counsel was provided to substantiate this claim. The Tribunal referred to the binding judgment of the Hon'ble jurisdictional High Court in Surendra Boveja Vs CWT (2006) 287 ITR 52 (Delhi), which held that want of due care, ignorance of law, or failure to seek legal advice are not sufficient grounds for condonation of delay. Consequently, the Tribunal found no substance in the plea for condonation of delay and dismissed the CO as barred by time.

2. Application under Rule 27 of the ITAT Rules, 1963:
The assessee sought to support the CIT(A)'s order by challenging the validity of the assessment order under Rule 27 of the ITAT Rules, 1963. The Tribunal explained that Rule 27 allows the respondent to support the order appealed against on any ground decided against them. The assessee argued that the assessment order should be quashed because the search warrant was in a joint name, no incriminating material was found during the search, and the original assessment for the assessment year 2002-03 was already made u/s 143(3). However, the Tribunal noted that there was no adverse finding by the CIT(A) on these issues. The ground raised before the CIT(A) was a general one without specific limbs challenging the validity of the assessment order. Since these issues were not raised before the CIT(A), the Tribunal held that the application under Rule 27 was not maintainable.

3. Deletion of Addition of Rs. 50,00,000/-:
The AO made an addition of Rs. 50,00,000/- treating it as unexplained cash credit due to the assessee's failure to furnish complete details of share application money received from six corporate entities. During the appellate proceedings, the assessee provided details and supporting evidence, which were sent to the AO for a remand report. The AO reported that summons sent to the six entities were unresponded, and inquiries revealed that five companies did not exist at the given addresses, and the address of the sixth company was incomplete.

The Tribunal noted that the assessee failed to prove the identity of the creditors, as the addresses turned out to be fake or unavailable. The Tribunal referred to the Hon'ble Jurisdictional High Court's decisions in CIT Vs Nova Promoters and Finlease (P) Ltd. (2012) 342 ITR 169 (Delhi) and CIT Vs Empire Builtech Pvt. Ltd. (2014) 366 ITR 110 (Delhi), which upheld additions u/s 68 when the AO proved that the share applicants were non-existent. The Tribunal distinguished between cases where the AO conducted proper inquiry and proved non-existence of entities, and cases where the AO made additions based on information without inquiry. In this case, the AO conducted due inquiry and proved the non-existence of the companies. Therefore, the Tribunal set aside the CIT(A)'s order and restored the addition of Rs. 50,00,000/- made by the AO.

Conclusion:
The appeal by the Revenue was allowed, and the CO filed by the assessee was dismissed. The Tribunal pronounced the order in the open Court on 30/9/2014.

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