Tribunal Allows Appeal Post-Covid Delay, Quashes Pr.CIT's Order

The Tribunal condoned the delay in filing the appeal due to the Covid-19 pandemic and allowed the appeal of the assessee. The Tribunal found the Pr.CIT's order u/s.263 unsustainable as no specific additions were made on the issues raised, ultimately quashing the order passed u/s.263 of the Act.

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Issues Involved:
1. Condonation of Delay
2. Validity of the Order Passed u/s.263 of the Act

Issue-wise Detailed Analysis:

1. Condonation of Delay:

The appeal by the assessee was barred by 686 days. The assessee filed an application for condonation of delay, citing unavoidable circumstances due to the Covid-19 pandemic, including forced shutdowns, lockdowns, and travel restrictions, which hindered consultation and preparation of the appeal. The assessee referenced the Hon’ble Supreme Court’s decision in Suo Moto Writ (Civil) No.3 of 2020, which extended the period(s) of limitation due to the pandemic. The Tribunal found the reasons satisfactory, emphasizing that substantial justice should prevail over technicality. Consequently, the delay was condoned, and the appeal was admitted for hearing.

2. Validity of the Order Passed u/s.263 of the Act:

The assessee challenged the order passed u/s.263 of the Act by the Pr.CIT, which set aside the original assessment order for the limited purpose of conducting further enquiry/verification on five specific issues:

(a) Overstatement of liability and assets in the balance sheet due to cheques issued but not encashed.
(b) Non-receipt of a statement from Bank of Baroda, leading to unconfirmed and unreconciled balances.
(c) Low net profit rate of 0.17% on total receipts of Rs.43,38,39,099/-.
(d) Huge expenditure of Rs.2,26,06,601/- under "Transporting and Discounting Charges" not booked in the preceding year.
(e) Contradiction between the auditor’s note on non-depreciation of a shopping mall and the assessee’s claim of its operation commencement.

The Tribunal found that the Pr.CIT had not conducted any verification but had passed the responsibility back to the AO. The Tribunal noted that the consequential order did not result in any specific addition on the issues raised by the Pr.CIT. The Tribunal highlighted that if the Pr.CIT had verified the details provided by the assessee during the proceedings, the proceedings u/s.263 might have been dropped. The Tribunal concluded that the issues raised in the proceedings u/s.263 were unsustainable and quashed the order passed u/s.263 of the Act.

Conclusion:

The Tribunal condoned the delay in filing the appeal due to the Covid-19 pandemic and found that the Pr.CIT’s order u/s.263 was unsustainable as no specific additions were made on the issues raised. The appeal of the assessee was allowed, and the order passed u/s.263 of the Act was quashed.

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