2015 (10) TMI 2781 - HC - Income Tax

High Court dismisses appeal due to delay & lack of evidence in undisclosed income case

The High Court declined to condone a significant delay in re-filing the appeal due to unconvincing reasons and disapproved the practice of filing ... Condonation of delay - extraordinary delay of 795 days in re-filing this appeal - HELD THAT:- Turning to the application the Court finds that the reasons adduced for the delay of 795 days (i.e. over two years and one month) is not convincing at all. The only explanation is that delay occurred in curing the defects pointed out by the Registry. By no stretch of imagination, can a delay of over two years and one month in curing defects be countenanced. The Court is, therefore, not inclined to condone the delay of 795 days in re-filing the appeal. This is one of several instances of the Revenue's appeals being re-filed with extraordinary delay ranging between one and three years. This Court has in certain other cases issued detailed directions on this aspect and it is expected that the Revenue will take corrective steps without delay. Search and seizure operation - Whether mere surrender of undisclosed income by Mr. Brij Mohan Gupta did not automatically establish the liability in the hands of the Assessee “unless he is evidently linked with the accounts of certain 'M.P. Gupta' in a third party search - HELD THAT:- Concurrent findings of fact have been rendered by the CIT (A) as well as by the ITAT. Nothing has been pleaded in the memorandum of appeal to persuade the Court to hold that those findings are perverse or contrary to the facts on record. Secondly, there is not a whisper in the order of the AO about any bag recovered from the premises of the Assessee during the search of the Assessee's premises on 22nd March 2006. There is no such averment even in the memorandum of appeal filed before this Court. The material referred to in the order of the AO is that which was recovered from the premises of Mr. Brij Mohan Gupta and nothing else. That material has been discussed threadbare in the order of the CIT (A). Detailed reasons have been given as to why that material was insufficient to link the Assessee with 'MP Gupta' whose name finds mention in the diary and the documents seized from the premises of Mr. Brij Mohan Gupta. The Court is not persuaded to permit the Revenue, for the first time, before this Court to set up an entirely different case of there having been a bag seized from the premises of the Assessee which according to the Revenue contained incriminating material against the Assessee. As regards the second plea, it is trite that the Revenue has to make out a case against each Assessee separately. The mere fact that the Revenue's appeal against Atul Gupta, the son of the Assessee, has been admitted cannot ipso facto mean that the appeal against the Assessee should also be admitted. The Revenue's case against the Assessee has to be substantiated by the material seized. For the reasons already noted, the Court finds no case made out for interference with the factual findings on the basis of the analysis of the said material in the impugned orders of the ITAT and the CIT (A). No substantial question of law arises for determination by the Court. Issues:1. Condonation of delay in re-filing the appeal.2. Merits of the appeal regarding undisclosed income and additions made by the AO.3. Assessment of evidence linking the Assessee with seized documents.4. Dismissal of the appeal based on delay and merits.Condonation of Delay:The High Court noted an extraordinary delay of 795 days in re-filing the appeal and disapproved the practice of counsel filing affidavits in support of applications. The reasons for the delay were found unconvincing, related to curing defects pointed out by the Registry. The Court declined to condone the delay, highlighting similar instances of delays in Revenue's appeals and emphasizing corrective steps needed.Merits of the Appeal - Undisclosed Income:The appeal examined the case of undisclosed income earned through hundi discounting and loans. The AO added a substantial amount to the Assessee's income, alleging undisclosed sources for earning interest income. However, the CIT (A) accepted the Assessee's plea, deleted the additions, and criticized the AO for not responding to remand reports. The ITAT upheld the CIT (A)'s decision, emphasizing the lack of evidence linking the Assessee with seized materials.Assessment of Evidence:The Court analyzed the evidence linking the Assessee with seized documents from another individual's premises. The CIT (A) and ITAT found insufficient evidence to establish the Assessee's connection with the seized diary and documents. The Revenue's appeal was dismissed based on the lack of material linking the Assessee with the named individual in the seized documents.Dismissal of Appeal:The Court dismissed the appeal due to the significant delay in re-filing and on merits. The Revenue's attempt to introduce new evidence of a bag seized from the Assessee's premises was rejected, as it was not part of the original case. The Court emphasized the need for separate cases against each Assessee and found no grounds to interfere with the factual findings of the CIT (A) and ITAT. No substantial question of law was found for determination, leading to the dismissal of the appeal.