Appeal allowed for delay, case remanded on merits for proper verification of alleged business activity.

The Vice President allowed the appeal for statistical purposes, condoning the delay in filing the appeal before CIT(A) due to a plausible reason for the delay. The case was examined on merits as the AO did not verify facts before assuming business activity, leading to restoration of the issue to the AO for re-adjudication regarding the alleged business activity with Reliance Communications Ltd. Both orders were set aside, emphasizing the need for specific findings before estimating income, without impairing the AO's case or prejudicing the appellant's defense.

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Issues:
Delay in filing appeal before CIT(A) - Condonation of delay - Addition made by AO - Assessment order - Rectification application under Section 154 - Appeal time-barred - Merits of the case not adjudicated - Restoration of the issue to the Assessing Officer for re-adjudication.

Analysis:
The appellant appealed against the CIT(A)'s order for Assessment Year 2008-09, with three grounds, out of which ground no.3 was a general ground not requiring specific findings and was rejected. The main grievance involved in grounds 1 & 2 was the delay of 157 days in filing the appeal before the CIT(A) and the subsequent addition of Rs. 6,98,050 made by the AO. The AO had issued a notice under Section 148 based on information from Form No.26AS showing a receipt of Rs. 17,45,119 with TDS deposited, but no return filed. The AO assumed business activity, estimated profit, and made the addition. The appellant contended that no business was conducted, and someone misused its PAN data. The CIT(A) did not condone the delay, leading to the time-barred appeal.

The Vice President found that the appellant had a plausible reason for the delay as it needed a finding from the AO regarding the alleged business activity with Reliance Communications Ltd. The AO should have verified the facts before concluding on business activity. The appellant's decision to file an appeal against the assessment order instead of the Section 154 order was justified due to wider scope in challenging the assessment order. The delay was condoned, and the case was examined on merits. The CIT(A) did not adjudicate on merits due to the time-barred appeal, leading to the restoration of the issue to the AO for re-adjudication.

The Vice President noted that remitting the issue to the CIT(A) would lead to more litigation. The AO needed to establish if business was conducted with Reliance Communications Ltd before estimating income. Without specific findings on the business activity, estimating income directly was unjustifiable. Thus, both orders were set aside, and the issue was restored to the AO for re-adjudication. The decision did not impair the AO's case or prejudice the appellant's defense. Ultimately, the appeal was allowed for statistical purposes, with the order pronounced on 5th February 2020 at Ahmedabad.

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