Tribunal condones appeal delay due to health issues, sets aside disallowed purchases, directs 4% profit rate.

M/s Dedhia Housing Corporation Versus The DCIT Circle 22 (1), Mumbai

M/s Dedhia Housing Corporation Versus The DCIT Circle 22 (1), Mumbai - TMI Issues:
- Delay in filing the appeal by the assessee
- Disallowance of purchases by the CIT(A)

Delay in Filing the Appeal:
The appeal filed by the assessee was delayed by 1087 days due to the poor health of a partner who suffered a heart attack and was advised complete bed rest. Additionally, the resignation of the accountant and the subsequent recruitment of a new person who was unaware of the appeal also contributed to the delay. The assessee claimed that the delay was unintentional and beyond their control. The learned DR objected to the admission of the appeal, citing the extraordinary delay and failure to provide a satisfactory explanation. However, the Tribunal, considering various judicial pronouncements, including the Supreme Court cases of N Balakrishnan vs. M Krishnamoorthy and National Thermal Power Company Ltd. vs. CIT, decided to condone the delay and admit the appeal for adjudication.

Disallowance of Purchases by the CIT(A):
The appeal raised the issue of the disallowance of purchases amounting to &8377; 29,47,054 by the CIT(A). The assessee contended that the purchases were genuine and used in construction activities, with payments made through account payee cheques. The AO issued notices to verify these purchases from three parties, but the notices were returned un-served. The assessee voluntarily offered to add the purchase value to its total income, but later appealed against this addition. The CIT(A upheld the addition, stating that the appellant had voluntarily offered the addition and there was no coercion involved. However, the Tribunal found merit in the argument that the purchases were not bogus, as the parties were not declared as hawala parties by the sales tax department. Considering the facts and submissions, the Tribunal set aside the CIT(A)'s order, applying a gross profit rate of 4% and directing the Assessing Officer accordingly.

In conclusion, the Tribunal partly allowed the appeal, emphasizing that the total addition to the income of the assessee on account of the purchases from the three parties was not justified and could not be sustained. The decision was pronounced on 31st May 2018.