266-day delay condoned in tax appeal due to bonafide mistake, flawed best judgment assessment overturned

ITAT Kolkata condoned a 266-day delay in filing appeal, finding no deliberate litigation strategy and recognizing bonafide mistake. The tribunal allowed the assessee's appeal on merits, holding that AO's best judgment assessment was flawed. The addition of bank debit balance as unexplained income under section 69C was deemed absurd without proper verification or cross-examination. AO failed to establish that bank withdrawals were unconnected to business activities. Additionally, the tribunal found AO's assumption regarding cash in hand of Rs. 24,00,490 incorrect, as actual cash was only Rs. 4,000 with remainder in accounts.

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Issues Involved:
1. Delay in filing appeal before the Tribunal.
2. Merits of the assessment order passed by the ld. Assessing Officer.

Summary:

Issue 1: Delay in filing appeal before the Tribunal
The present appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2016-17. The Registry pointed out a delay of 266 days in filing the appeal. The assessee explained the delay citing his age, engagement of Advocates, and lack of understanding leading to an ex-parte decision. The ld. D.R. contended that the assessee's failure to appear before revenue authorities and delay in filing the appeal showed negligence. The Tribunal referred to legal provisions allowing condonation of delay if sufficient cause is shown, emphasizing a liberal interpretation of the term "sufficient cause." Citing Supreme Court decisions, the Tribunal concluded that the delay was not deliberate and deserved to be condoned, allowing the appeal to proceed on merit.

Issue 2: Merits of the assessment order
The assessment order was non-speaking and sketchy, alleging unexplained expenses and cash credits based on bank account details. The ld. Assessing Officer treated debit balances as unexplained income under section 69C without proper verification or justification. The Tribunal found the assessment conclusions absurd and lacking cross-verification, leading to an incorrect assumption. The ld. Assessing Officer's observation regarding cash in hand was also deemed incorrect, with the Tribunal noting the actual cash in hand amount. Considering these facts, the Tribunal allowed the appeal and deleted both additions made by the ld. Assessing Officer. The appeal of the assessee was allowed, and the order was pronounced in open court on 11/01/2024.

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