KAATYAAYINI STEELS PVT LTD,MUMBAI V. INCOME TAX OFFICER, WD-12(3)(1), MUMBAI

ITA 4397/MUM/2024

AI Insights

The case involves Kaatyaayini Steels Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2017-18. The primary issues in the appeal included the non-condonation of a 242-day delay in filing the appeal, the validity of a notice issued under section 148 of the Income Tax Act, and the additions made under section 68 concerning unexplained cash credits. The Tribunal noted the assessee's non-compliance during the assessment proceedings and the belated filing of the appeal, which the CIT(A) did not condone. However, considering the director's medical condition as a sufficient cause for the delay, the Tribunal directed the CIT(A) to reconsider the appeal on its merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473771 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: JAY THAKKAR
• Keywords: Set aside; Unexplained cash credit; Period of limitation; Reason to believe; Borrowed satisfaction; Bogus
• Section: 148; 142(1); 143(2); 68; 145(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JM AND SMT. RENU JAUHRI, AM ITA No.4397 & 4398/Mum/2024 (Assessment Year: 2017-18) Kaatyaayini Steels Pvt. Ltd. 413, Nav Vyapar Bhavan, 49, P. D. Mello Road, Carnac Bunder, Mashit (East), Mumbai – 400009. Vs. Income Tax Officer, Wd-12(3)(1) Room No. 129, 1st Floor, Aayakar Bhavan, M. K. Road, Mumbai – 400020. PAN/GIR No. AADCK0137C (Assessee) : (Respondent) Assessee by : Shri. Jay Thakkar Respondent by : Shri. Hemanshu Joshi (Sr. DR) Date of Hearing : 27.01.2025 Date of Pronouncement : 28.01.2025 O R D E R Per Kavitha Rajagopal, J M: These captioned appeals have been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18. 2. As the facts are common in both these appeals, we hereby take ITA No. 4398/Mum/2024 (A.Y. 2017-18) as a lead case. ITA No. 4398/Mum/2024 (A.Y. 2017-18) 3. The assessee has raised the following grounds of appeal: “1.0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred in not condoning the delay in filing the appeal of 242 days, though there exist bonafide reasons and compelling circumstances that had precluded the appellant to file the 1\" appeal in time; ITA No. 4397 & 4398/Mum/2024 (A.Y. 2017-18) Kaatyaayini Steels Pvt. Ltd. 2 2.0 On facts and circumstances of the case and in Law, Ld. CIT(A) ought to have held the notice issued u/s.148 as bad-in-law, since had been issued in absence of fresh tangible material and on the basis of borrowed satisfaction and without having reason to believe of alleged escapement of income; 3.0 On facts and circumstances of the case and in law, Ld. CIT(A) ought to have deleted the addition u/s.68 of the sum received from M/s Kasturi Commodities Pvt Ltd of Rs.3,25,00,000/- and sum paid to such party of Rs.5,89,00,000/-, totaling to Rs.9,14,00,000/-; 4.0 The Ld. CIT(A), before confirming the addition u/s.68 r.w.s 115BBE of disputed sum received/paid of Rs.9,14,00,000/- (3,25,00,000 + 5,89,00,000), ought to have considered the understated vital facts, being; a) The documentary evidences being Ledger, confirmation, purchase bill, sale bills, quantity tally, delivery challans, stock register, VAT audit report, bank statements and other documents are filed on record; b) The entire amounts had been received/paid only through banking channel by A/c payee cheques/RTGS; c) The Ld. AO has not rejected appellant's books of accounts u/s 145(3) of the Act; d) The copies of contrary material and statements of third parties and opportunity of cross examination had not been provided to the appellant; 5.0 Without prejudice, Ld. CIT (A) erred in not considering the fact that the sum paid by appellant to disputed party of Rs.5,89,00,000/- cannot be subject matter of addition u/s.68, since such sum is not found credited in appellant's books of account; 6.0 Without prejudice, the provisions of Sec. 115BBE charging the tax @ 60% shall apply only on the transactions entered on or after 15/12/2016, being the date of granting the assent of President of India.” 4. Briefly stated the assessee is engaged in the business of manufacturing and trading of non-ferrous, ferrous metals, steels, alloys and related goods and has filed its return of income for the year under consideration dated 31.10.2017, declaring total income at Rs. 6,45,650/-. Pursuant to the search action conducted in the case of M/s Kasturi Commodities Pvt Ltd. which is alleged to be a bogus entity providing accommodation entries to various concerns, information received stated that the assessee was one of the beneficiaries of accommodation entry amounting to Rs. 9,14,00,000/- in the nature of ITA No. 4397 & 4398/Mum/2024 (A.Y. 2017-18) Kaatyaayini Steels Pvt. Ltd. 3 bogus sales/purchases. The learned Assessing Officer (‘ld. AO’ for short) reopened the assessee’s case vide notice u/s. 148 dated 31.03.2021, which was duly issued and served upon the assessee. The assessee filed its return of income in response to the notice u/s. 148 and notice u/s. 143(2) of the Act and notice u/s. 142(1) were also issued and served upon the assessee. It is observed that the assessee has been non-compliant during the assessment proceeding and the ld. AO passed the assessment order dated 20.03.2022, u/s. 147 r.w. 144 r.w.s. 144B of the Act, being the best judgment assessment, thereby determining total income at Rs. 9,20,45,650/- after making addition/disallowance of Rs. 9,14,00,000/- as unexplained cash credit u/s. 68 of the Act. 5. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 17.07.2024, dismissed the appeal filed by the assessee on the ground that the assessee has filed the appeal before the first appellate authority with a delay of 242 days beyond the period of limitation which was not condoned by the ld. CIT(A). 6. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has been non-compliant before the ld. AO during the assessment proceeding and has failed to substantiate the impugned transaction with sufficient documentary evidence. During the first appellate authority, the assessee has filed the appeal belatedly with a delay of 242 days which was not condoned by the ld. CIT(A) for the reason that the assessee has failed to explain that there was ‘sufficient cause’ for the said delay. ITA No. 4397 & 4398/Mum/2024 (A.Y. 2017-18) Kaatyaayini Steels Pvt. Ltd. 4 8. Upon perusal of the rival contentions, it is observed that the assessee company had cited reasons of medical illness of the director of the assessee company which was the reason for the delay in filing the appeal before the first appellate authority along with the medical reports. The ld. CIT(A) considered the same to be not a ‘sufficient cause’. In our view, there are various decisions of the Hon'ble High Court and Hon’ble Apex Court which has held that liberal view has to be taken in case of delay condonation, where the assessee has substantiated delay with ‘sufficient cause’. In the present case in hand, we deem it fit to hold that the assessee had bonafide reason for not filing the first appeal within the prescribed period of limitation and we therefore direct the ld. CIT(A) to condone the delay and to decide the issue on the merits of the case. We therefore remand this issue back to the file of the ld. CIT(A) for deciding the issue on the merits and in accordance with law. We also direct the assessee who has been non- compliant before the ld. AO to adhere to the proceeding before the ld. CIT(A) without any undue delay from the assessee’s side. 9. In the result, the appeal filed by the assessee is allowed for statistical purpose. ITA No. 4397/Mum/2024 (A.Y. 2017-18) 10. The assessee has challenged the penalty levied u/s. 271AAC(1) of the Act, amounting to Rs. 70,81,997/- pertinent to the addition made u/s. 68 of the Act. As we have remanded the quantum addition to the file of the ld. CIT(A), the consequential penalty is also to be set aside to the file of the ld. CIT(A) for deciding afresh based on the merits of the case after duly condoning the delay of 65 days in filing the appeal before first appellate authority. ITA No. 4397 & 4398/Mum/2024 (A.Y. 2017-18) Kaatyaayini Steels Pvt. Ltd. 5 11. The finding recorded in ITA No. 4398/Mum/2024 for A.Y. 2017-18 shall apply mutatis mutandis to this appeal also. 12. In the result, both the appeals filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 28.01.2025 Sd/- Sd/- (RENU JAUHRI) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 28.01.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "