2015 (10) TMI 2426 - AT - Income Tax

ITA overturns dismissal due to appeal delay, directs re-examination of unexplained cash credit, upholds interest charges.

The ITAT allowed the appeal for the assessment year 2006-07, overturning the dismissal by the CIT(A) due to delay in filing the appeal. The ITAT found ... Unexplained cash credits u/s 68 - Held that:- We are inclined to allow the assessee another opportunity only because the addition has been made by the Assessing Officer and upheld by the learned CIT(A) due to the lack of evidence put forth by the assessee. The purpose of assessment is to determine the correct income of the assessee and we are of the view that the assessee has realized his errors and has attempted to file additional evidence before us in an attempt to show that he had sufficient sources to explain the capital introduced in the year under consideration. In this view of the matter, we are of the opinion that the assessee must be afforded an opportunity to establish the same and not reject the said recourse on the ground that the assessee did not appear before the learned CIT(A) earlier. We, therefore, in the interest of equity and justice set aside the orders of the authorities below and restore the matter to the file of the Assessing Officer to consider afresh the matter relating to the addition of ₹ 31,00,000/- u/s 68 after affording the assessee adequate opportunity of being heard. We are not passing any order on the admission of additional evidence put forth by the assessee in terms of Rule 29. However, liberty is given to the assessee to produce before the Assessing Officer material/details/evidence in support of the claim of genuineness of the cash credit. The Assessing Officer shall also be at liberty to examine the matter afresh, gather such evidence, cause any enquiry to be made, etc. in order to verify the veracity of the assessee’s claim and to thereafter decide the matter in accordance with law. - Decided in favour of assessee for statistical purposes. Issues:1. Delay in filing the appeal before CIT(A)2. Addition of unexplained cash credit u/s 68 of the Act3. Charging of interest u/s 234A and 234B of the ActIssue 1: Delay in filing the appeal before CIT(A)The assessee filed an appeal before CIT(A) for the assessment year 2006-07, which was delayed by 146 days. The CIT(A) dismissed the appeal due to the delay, citing multiple adjournments requested by the assessee and non-compliance. The CIT(A) held that the appellant failed to provide justifications for the delay and did not discharge the onus of defending the case with evidence. The ITAT, however, after considering the explanation provided by the assessee, held that there was sufficient cause for the delay in filing the appeal. Referring to legal precedents, the ITAT vacated the CIT(A)'s order on the delay issue and allowed the appeal.Issue 2: Addition of unexplained cash credit u/s 68 of the ActThe Assessing Officer added Rs. 31,00,000 as unexplained cash credit u/s 68 of the Act since the assessee failed to provide evidence to establish the genuineness of the cash credit. The CIT(A) upheld this addition, stating that the assessee did not discharge the onus of proving the credits with evidence. The ITAT, however, observed that the assessee had submitted additional evidence, including ledger accounts, to support the source of the additional capital. The ITAT found that the assessee should be given another opportunity to explain the sources for the amount introduced as capital. The ITAT set aside the orders of the lower authorities, directing the matter to be reconsidered by the Assessing Officer after affording the assessee a chance to be heard and present evidence.Issue 3: Charging of interest u/s 234A and 234B of the ActThe assessee denied liability to be charged interest u/s 234A and 234B of the Act. The ITAT upheld the Assessing Officer's action in charging interest, citing legal precedent. However, the ITAT directed the Assessing Officer to re-compute the interest chargeable under these sections. The ITAT emphasized that the Assessing Officer has no discretion in charging interest, and the charging of interest is mandatory.In conclusion, the ITAT allowed the assessee's appeal for the assessment year 2006-07 on the grounds of delay in filing the appeal and directed a re-examination of the addition of unexplained cash credit, while upholding the charging of interest u/s 234A and 234B of the Act.