1607-day delay in filing appeal condoned due to continuous ill health, financial stress, and legal troubles

ITAT Ahmedabad condoned a 1607-day delay in filing appeal, finding sufficient cause despite the significant delay period. The assessee demonstrated continuous ill health from 2008-2019, financial stress, insolvency, and legal troubles including police cases and cheque bouncing incidents. The tribunal emphasized that delay length becomes irrelevant when sufficient cause exists, citing precedent of 20-year delay condonation. Revenue's failure to file opposing affidavit supported the decision. The case was remanded to AO for fresh adjudication on merits regarding additions under section 69, with penalty under section 271(1)(c) deleted pending quantum determination.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition u/s 69 of the Act.
3. Penalty u/s 271(1)(c) of the Act.

Summary:

Condonation of Delay in Filing the Appeal:
The assessee filed the appeal with a delay of 1607 days, citing ill health, bankruptcy, and legal issues as reasons. The Tribunal noted that the delay was significant but emphasized that "length of the delay becomes insignificant if there was sufficient cause." The Tribunal referred to various judgments, including the Hon'ble Madras High Court in CIT v. K.S.P. Shanmugavel Nadai and Ors and the Hon'ble Supreme Court in Mst. Katiji (167 ITR 471), to conclude that substantial justice should be preferred over technicalities. The Tribunal found the assessee's reasons for the delay, including medical issues and financial stress, to be sufficient cause and condoned the delay.

Addition u/s 69 of the Act:
The assessee contested the addition of Rs. 54,23,290.00 u/s 69, arguing that the credits in the bank account were not properly evaluated. The Tribunal noted that the assessment order was ex-parte and that the AO did not consider the withdrawals from the bank. The Tribunal cited the Hon'ble Gujarat High Court in Principal Commissioner of Income-tax v. Shitalben Saurabh Vora, which held that deposits cannot be treated as income without considering withdrawals. The Tribunal set aside the addition and remanded the matter to the AO for fresh adjudication, directing the assessee to cooperate fully.

Penalty u/s 271(1)(c) of the Act:
The penalty of Rs. 24,57,460 u/s 271(1)(c) was contested by the assessee. The Tribunal noted that the quantum addition, which formed the basis for the penalty, had been set aside for fresh adjudication. Consequently, the penalty was deemed unsustainable and was deleted. The AO was given the liberty to reinitiate penalty proceedings based on the outcome of the fresh adjudication of the quantum addition.

Conclusion:
The appeal in ITA No. 192/AHD/2021 was allowed for statistical purposes, and the appeal in ITA No. 193/AHD/2021 was allowed. The order was pronounced on 28/03/2024 at Ahmedabad.

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