The assessee preferred an appeal against the order passed by the National Faceless Appeal Centre for Assessment Year 2019-20, arising out of reassessment proceedings completed under section 147 read with sections 144 and 144B of the Income-tax Act, 1961. The grievance of the assessee was confined to the action of the Assessing Officer in treating purchases amounting to ₹36,12,300 as bogus and making a 100 percent addition, which was sustained solely on account of dismissal of the first appeal on the ground of limitation.

The assessee contended that both the assessment proceedings and the appellate proceedings were conducted ex-parte without effective service of notices. It was submitted that the registered email address and mobile number on the income-tax portal belonged to the assessee’s erstwhile tax consultant, and due to the consultant’s ill health, advanced age, and lack of technical proficiency, the statutory notices remained unattended. Consequently, the assessment was completed ex-parte, and the assessee became aware of the same only upon receipt of the notice of demand.

There was a delay of 295 days in filing the appeal before the Commissioner (Appeals), for which the assessee filed a detailed petition for condonation of delay supported by a sworn affidavit explaining the circumstances leading to such delay. The learned CIT(A), however, dismissed the appeal solely on the ground that the appeal was barred by limitation, without condoning the delay.

The Tribunal observed that the explanation furnished by the assessee disclosed sufficient cause for the delay. The assessee was a lay individual dependent on professional assistance, and the failure to respond to statutory notices could not be regarded as deliberate or contumacious. The Tribunal further noted that once the delay was condoned, the addition on account of alleged bogus purchases required reconsideration, as it is a settled principle that where purchases are recorded in the books of account, payments are made through banking channels, and corresponding sales exist, a 100 percent addition cannot be made mechanically without proper verification.

In the present case, the Assessing Officer had made a blanket addition of the entire purchase amount without undertaking a holistic examination of the books of account and supporting material. In the interest of justice, the Tribunal condoned the delay of 295 days, set aside the impugned appellate order, and restored the matter to the file of the Assessing Officer for fresh adjudication on merits after affording due and effective opportunity of being heard to the assessee.

Accordingly, the appeal of the assessee was allowed for statistical purposes.

Source Link- https://itat.gov.in/public/files/upload/1768213776-EUVxfy-1-TO.pdf

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