Verification of bank records required before ex parte best judgment additions, and short filing delays may be condoned.

A brief ten day delay in filing an appeal was condoned due to the legal representative's inability to obtain records after the assessee's death, permitting the appeal to proceed. On the merits, additions of Rs. 32,59,450 by way of ex parte best judgment assessment in a reopened assessment were held unsustainable because the Assessing Officer failed to verify bank records or examine the origin and renewal history of fixed deposits before making the addition; accordingly the addition was deleted and the appeal allowed.

---

---

Issues: (i) Whether delay of 10 days in filing the appeal to the Tribunal should be condoned; (ii) Whether the addition of Rs. 32,59,450 (being unexplained time deposits and interest) made by the Assessing Officer by way of an ex-parte assessment under Section 144 read with Section 147 is sustainable.

Issue (i): Whether the brief delay in filing the appeal before the Tribunal should be condoned.

Analysis: The delay arose after the death of the original assessee and was attributed to the legal representative's inability to promptly collect complete details and to procedural difficulties. The factual narrative shows incapacity of the legal heir to access information and comply within time. The delay was short and explained by circumstances that impeded timely filing.

Conclusion: Delay of 10 days is condoned in favour of the assessee.

Issue (ii): Whether the addition of Rs. 32,59,450 on account of unexplained fixed deposits and interest, made by an ex-parte order under Section 144 read with Section 147, is justified.

Analysis: The Assessing Officer made additions based on information without obtaining bank records or examining the history of original deposits and renewals. The statement of facts shows pre-existing deposits originating from retirement benefits and successive renewals, with bank transactions explaining the figures. The AO failed to perform basic enquiries from the bank and proceeded by best judgment in an ex-parte assessment, without verifying whether the deposits represented unexplained income.

Conclusion: The addition is not sustainable and is deleted in favour of the assessee.

Final Conclusion: The Tribunal condoned the delay and on merits allowed the appeal, setting aside the addition of Rs. 32,59,450; the ex-parte best judgment addition under the reopened assessment was found unjustified and deleted.

Ratio Decidendi: Where additions in a reopened assessment are based on information of bank deposits, the Assessing Officer must verify bank records and the origin of deposits before making ex-parte best-judgment additions; failure to do so renders such additions unsustainable.

---