Condonation of Delay for incorrect legal advice allowed; revisionary power sustained directing de novo enquiries and possible additions.

Two issues were examined: condonation of a 543 day delay in filing an appeal and validity of a revisionary order directing de novo enquiries. The Tribunal accepted the assessee's sworn affidavit and corroborative consultant affidavit, treating incorrect legal advice and absence of negligence as a bona fide, sufficient cause to condone the delay. On merits, the Tribunal found the Assessing Officer's enquiries deficient-no cash book verification and inadequate probing of withdrawals and utilizations-and held the revisionary exercise justified to set aside the assessment and direct fresh inquiry, sustaining directions for further summons, examination and possible additions for unexplained deposits.

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Issues: (i) Whether the delay of 543 days in filing the appeal against the order passed under Section 263 of the Income-tax Act, 1961 should be condoned; (ii) Whether the order passed under Section 263 of the Income-tax Act, 1961 setting aside the assessment and directing de novo enquiries was justified.

Issue (i): Whether the delay of 543 days in filing the appeal should be condoned.

Analysis: The appeal record contains the assessee's sworn affidavit explaining that the delay resulted from incorrect advice by the original consultant and an affidavit by that consultant corroborating limited expertise and failure to advise filing the appeal. Precedents and prior ITAT decisions dealing with similar facts treating wrong legal advice as a sufficient cause for condonation were cited and considered. The respondent did not rebut the factual explanation and submitted authorities emphasizing consideration of length of delay and sufficiency of cause. The Tribunal evaluated plausibility, absence of negligence, and the existence of corroborative affidavits as constituting a bona fide and reasonable explanation.

Conclusion: Delay of 543 days is condoned; the assessee has demonstrated sufficient cause in favour of admission of the delayed appeal.

Issue (ii): Whether the revisionary order under Section 263 directing the Assessing Officer to make further inquiries and potentially make additions was justified.

Analysis: The revisionary order found the assessment erroneous and prejudicial because the Assessing Officer accepted the assessee's explanation for large cash deposits without verifying cash book or utilization, despite bank statements showing withdrawals funded by loans. The Tribunal examined the assessment record, noted absence of cash book and inadequate enquiries by the Assessing Officer, and considered the specific directions issued for summons, examination of cash book, inquiry into withdrawals and possible utilization including investment in property, and making additions under Section 68 if explanations are unsatisfactory.

Conclusion: The order under Section 263 is upheld; the revision and directions to the Assessing Officer for de novo enquiries are justified in favour of Revenue.

Final Conclusion: The Tribunal condoned the delay in admitting the appeal but, on merits, rejected the challenge to the revisionary order under Section 263 and dismissed the appeal, resulting in the upholding of the PCIT's directions for de novo assessment.

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