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Facts
The assessee did not file a return for AY 2011-12, but re-assessment proceedings were initiated due to cash deposits in bank accounts. The Assessing Officer (AO) made additions on account of unsecured loans and unexplained cash deposits. The Commissioner of Income-Tax (Appeals) deleted the addition on unsecured loans but upheld the addition on cash deposits.
Held
The Tribunal held that the addition on account of unsecured loans was not justified as the loans were from previous years and not utilized for deposits in the current year, citing jurisdictional High Court precedent. Regarding the addition for unexplained cash deposits, both parties agreed to a remand for fresh adjudication.
Key Issues
Whether the addition on account of unsecured loans and unexplained cash deposits made by the AO were justified, and whether the delay in filing the appeal should be condoned.
Sections Cited
143(3), 147, 148, 250, 253(5), 139
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 30.06.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 13.12.2018 passed by learned ITO, Jhabua [“AO”] u/s 143(3)/147 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2011-12, the assessee has filed this appeal on the grounds as mentioned in Form No. 36 (Appeal Memo).
The registry has informed that the present appeal is delayed and therefore time-barred. The assessee has filed an application/affidavit for
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condonation of delay; the same is re-produced below for an immediate
reference:
“Sub.: Prayer for condonation of delay in filing of the appeal. MAY IT PLEASE YOUR HONOURS! It is most humbly submitted as under: 1. I am an individual residing in the city of Jhabua, and I am regularly assessed to Income Tax under PAN: AINPJ0505E. 2. That, since during the previous year relevant to assessment year 2011-12, my total income was below the basic exemption limit, I was neither statutorily required, nor did I file any return of Income under the provisions of s. 139 of the Income Tax Act, 1961 (in short, "the Act"). 3. That, almost after an elapse of period of six years from the end of the relevant assessment year, the learned assessing officer initiated re- assessment proceedings in my case by issuing one notice under s.148 of the Act on 28-03-2018, requiring me to file a return of Income for the assessment year 2011-112. In response, I filed a return of income under s. 148 of the Act on 17-10-2018, declaring a total income of Rs.1,56,088/-, over the income tax portal, vide acknowledgment no.: 337935540171018. 4. That, subsequently, the Id. AO completed the assessment proceedings under s. 147 r.w.s. 143(3) of the Act vide his order dated 13-12-2018 determining my total income at Rs. 11,86,119/-, as against the returned Income of Rs. 1,56,090/-, thereby making impugned additions aggregating to a sum of Rs. 10,30,029/- on various counts. 5. That, against the aforesaid order of assessment, I through my ex-counsel, namely, Shri Suyash Bakliwal, preferred an appeal before the then Hon'ble CIT(A), Ujjain on 01-01-2019, by filing prescribed Form No. 35 electronically vide acknowledgement no.: 404257260010119. In such prescribed Form, there was one prescribed column requiring the appellant to confirm that 'Whether notices/communications may be sent on mail? In response to such question, I had categorically answered 'No'. It is submitted that being a semi- literate lady hailing from a tribal area 'Jhabua', I was neither a computer savvy nor well-versed with the use of electronic means. It is further submitted that in the prescribed Form No.35, the email address read as 'incometaxtka@gmail.com' mentioned does not belong to me but belong to my ex-counsel Shri Suyash Bakliwal only. However, at the column No.17, prescribed for address to which the notice be sent, I had clearly mentioned the address of my residence being 'House No.512, Near Railway Station, Megh Nagar, Distt. Jhabua'. 6.That, in furtherance of the appeal so preferred, 1, through my ex-counsel, had furnished my detailed written submissions along with necessary
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documentary evidences and after furnishing such details and documents, I could not receive any further communication from the Office of the learned CIT(A) regarding passing of any appellate order. Accordingly, I was constantly enquiring about passing of any appellate Order by the learned CIT(A) from my ex-counsel but every time I was apprised of that no order was passed. 7. That, meanwhile, an Order under s. 250 of the Income-Tax Act, 1961 came to be passed on 30-06-2023, by the learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi sustaining additions to the extent of Rs.8,01,029/- out of the total additions of Rs. 10,30,029/- made by the ld. AO. However, a copy of the order so passed was not served upon me at the address given in the Appeal Memo. It is submitted that if at all the Order so passed was communicated at the email address of my ex-counsel, then also, such passing of the Order could not come to my notice as my ex-counsel never apprised me of the Order so passed. 8. That, it was only on 15-01-2025, when my new counsel logged-in my account over the Income-Tax Portal for some other purposes, he found that the appellate proceedings for the A.Y. 2011-12 had got closed and upon further opening the e-tab of such appeal proceedings, my counsel found that an Order dated 30-06-2023 had already been passed by the Hon'ble CIT(A), National Faceless Appeal Centre, Delhi, allowing my appeal partially. 9. That, upon getting aware of the passing of the aforesaid Order, my new counsel had duly contacted me and accordingly, I decided to prefer a further appeal before this Hon'ble Income-Tax Appellate Tribunal, Indore Bench. 10. That, since the Appeal Order is dated 30-06-2023, the period of filing for the appeal got elapsed on 29-08-2023. However, I could not file the appeal within the above time frame for the very reason that the passing of the subject Order could come to my specific knowledge only on 15-01-2025. Thus, in such eventuality, I am conscious of the fact that there is a delay of 539 days in filing of the present appeal. However, in the interest of principles of natural law and justice it is most humbly prayed that, the delay may kindly be condoned by Your Honours as the delay is not attributable to me. 11. That, the entire delay caused in preferring the present appeal before this Hon'ble Bench is not attributable to me inasmuch I was not aware of passing of any Order by the learned CIT(A) prior to 15-01-2025. It is further submitted that by presenting the appeal belatedly, I am not gaining or deriving any benefit. It is further submitted that had the order of the learned CIT(A) been served upon my address as mentioned in the appeal memo, the delay would not have so caused. 12. Your Honours, I am an old lady, suffering from many medical ailments, inter-alia, of retinal disease and profound visual impairment in my left eye and am under medical consultancy and supervision in this regard from August, 2022. I have also got admitted in Macretina Hospital and underwent a surgery for the same during the month of August, 2022 and October, 2022.
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However, despite undergoing the surgeries, I could not resume a clear vision and am presently undergoing the treatment of Dr. Arun Bhargava from retina Speciality Hospital. In support of my assertion, I am submitting herewith the copy of medical certificate obtained by me from Dr. Parth Maliajan (Macretina Hospital); and Dr. Arun Bhargava (Retina Speciality Hospital) affirming my medical ailments. Further I am also a cancer patient undergoing hormonal treatment for the same. I am also furnishing herewith copies of medical prescription and reports in order to substantiate my genuine medical disability. Due to such medical ailments also, I could not vigorously keep a vigil over the passing of the appellate order by the learned CIT(A). 13. Your Honours, for the reasons stated in paras (8) to (12) above, I could not file the appeal within the prescribed time limit of 60 days and there has resulted an inadvertent delay of 539 days in filing the appeal before this Hon'ble Bench. In support of the assertions made hereinabove, I am submitting herewith an affidavit duly sworn before Notary Public. In view of the above, it is most humbly prayed that considering the reason for delay and, further, in order to meet the ends of justice, the delay so caused in filing the appeal may kindly be condoned and the present appeal may kindly be admitted and oblige.”
The averments made by assessee in above application, which are self-
explanatory and which do not require repetition, were discussed and the Ld.
DR for revenue does not have any objection if the bench condones delay and
accordingly left it to the wisdom of bench. We have considered the
explanation advanced by assessee and in absence of any contrary fact or
material on record, the assessee is found to have a “sufficient cause” for
delay in filing present appeal. We find that section 253(5) of the Act
empowers the ITAT to admit an appeal after expiry of prescribed time, if
there is a “sufficient cause” for not presenting appeal within prescribed time.
It is also a settled position by Hon’ble Supreme Court in Collector, Land
Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387
that whenever substantial justice and technical considerations are opposed
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to each other, the cause of substantial justice must be preferred by adopting
a justice-oriented approach. Thus, taking into account the facts of case, the
provision of section 253(5) and the decision of Hon’ble Supreme Court, we
take a judicious view, condone delay, admit appeal and proceed with
hearing.
The background facts leading to present appeal are such that the
assessee-individual did not file any return of AY 2011-12. The AO, on the
basis of AIR information, came to know that the assessee had deposited
cash of Rs. 12,48,000/- in her a/c with SBI. Accordingly, the AO issued
notice dated 28.03.2018 u/s 148 to make assessment of assessee u/s 147.
In response to notice, the assessee filed return declaring a total income of Rs.
1,56,090/- (consisting of rental income of Rs. 31,500/- from house property
+ business income of Rs. 10,556/- from PO Agency + long-term capital gain
of Rs. 11,650/- from shares + Interest and other income of Rs. 1,02,382/-
from other sources) and agricultural income of Rs. 85,220/-. The AO issued
notices u/s 143(2)/142(1) which the assessee complied with. The assessee
made submissions to explain the sources of deposits in bank a/c and filed
certain documents including the Balance-Sheet as on 31.03.2010 (for
preceding AY 2010-11), which the AO considered. The AO, upon
consideration of assessee’s submission, observed that the assessee was
having four bank a/cs, viz. (i) Bank of Baroda, branch Devigarh, (ii)
Narmada Jhabua Gramin Bank, branch Thandla, (iii) Narmada Jhabua
Gramin Bank, branch Mehnagar, and (iv) SBI, branch Thandla. Ultimately,
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the AO made three-fold additions, namely (i) Addition of Rs. 2,29,000/- on
account of recovery from opening debtors, shown by assessee in Balance-
Sheet as on 31.03.2010, (ii) Addition of Rs. 3,99,429/- on account of
unexplained unsecured loans, shown by assessee in Balance-Sheet as on
31.03.2010, and (iii) Addition of Rs. 4,01,600/- on account of unexplained
cash deposits in bank a/cs. Aggrieved, the assessee carried matter in first-
appeal whereupon the CIT(A) deleted first addition of Rs. 2,29,000/- but
upheld other two additions. Still aggrieved, the assesse has come in next
appeal before us contesting other two additions made by AO and upheld by
CIT(A).
In so far as the addition of Rs. 3,99,429/- on account of unexplained
loans is concerned, Ld. AR for assessee at first carried us to the relevant
portion of AO’s order where this addition has been made:
“9.2 Addition on account of un-secured loans:- “I- Further she has declared un-secured loan of Rs 399429/- taking from 24 persons as on 01.04.2010. On examination of these un-secured loans, it is noticed that all loans are taken in cash, all loans are below Rs 20,000/- each, all loans are paid during the year, no interest was paid on these loans. She was requested to produce the same for verification. Considering the above mentioned facts it is not justified that she had taken any loan. Further she has not produced the loan provider for verification. Therefore all the unsecured loans of Rs 399429/- is considered bogus one and added to the income of the assessee.” [underlined by us] 6. Thereafter, Ld. AR carried us to the documents filed by assessee to AO,
copies placed in Paper-Book. In particular, he drew us to the Balance-Sheet
as on 31.03.2010 (Page 26 of Paper-Book) to demonstrate that the assessee
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was having unsecured loans of Rs. 3,99,429/- taken on 31.03.2010. Thus,
the loans were not taken on 01.04.2010 as noted by AO, they were taken in
earlier years and only opening balance was brought forward from
31.03.2010. He also submitted that the assessee has never explained the
impugned loans as source for making deposits in bank a/cs of current year,
in fact the funds received from those loans were utilized/exhausted in
earlier year itself which is clearly evident from small cash balance of Rs.
81,558/- held by assessee in the very same Balance-Sheet as on 31.03.2010.
He referred the Cash Flow Statement filed by assessee to AO (Page 176 to
178 of Paper-Book) and insisted forcefully that the source of deposits in four
bank a/cs were either the withdrawals made from those very banks or the
amounts received from constituents under PO Agency activity carried on by
assessee. In nutshell, he argued that neither the impugned loans were taken
in current year nor claimed as a source for deposits made in current year in
bank a/cs, hence no addition could legally be made in AY 2011-12 on
account of unexplained loans. Per contra, Ld. DR for revenue relied upon
orders of lower authorities.
We have considered rival submissions of both sides. After a careful
consideration, we find sufficient merit in the submissions of Ld. AR for
assessee. We find that the loans have not been taken in current year; rather
the AO has himself recorded a contrary finding in assessment-order stating
that “all loans are paid during the current year”. This factual finding by AO
himself goes in favour of assessee. The Hon’ble Jurisdictional High Court
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has clearly held in Commissioner of Income-tax vs M/s Pukhraj Telecom Pvt.
Ltd. (ITA 82/2015) as under:
“The view taken by the Appellate Authority and the Tribunal is in consonance with the settled legal position that credits introduced in Assessment Year 2008-09 cannot be taxed in subsequent Assessment Year. Counsel for the respondent has also relied on the decision in the case of Commissioner of Income Tax vs. Lakshman Swaroop Gupta & Bros. Reported in (1975) 100 ITR 0222. This being the settled legal position, we reject this appeal, which raises that issue as substantial question of law.” Therefore, we direct the AO to delete the impugned addition of Rs. 3,99,429/-. This issue is accordingly allowed.
In so far as the addition of Rs. 4,01,600/- on account of unexplained
cash deposits is concerned, the Ld. AR drew us to following portion of
assessment-order where the AO has made this addition:
“9.3 Unexplained Cash deposit in bank: - I- The assessee has submitted that agriculturist of the village and surrounding area are selling their product to businessmen other than assessee and the assessee paid to these agriculturist for selling agriculture crop to other businessman. Then the assessee collect cash from such other businessmen. Above contention of the assessee is not considerable because she has not provided any documentary evidence for such activity. She also fails to produce them for verification as required vide order sheet dated 07.12.2018. Further she couldn't justify her activity, why she is providing cash to agriculturist and Collecting cash from other businessmen without any personal interest or any income. Therefore cash payment of Rs 4,01,600/- is not genuine and added to income of the assessee.” 9. Thereafter, there was a deliberation of facts by learned
Representatives of both sides. Ld. AR for assessee iterated the very same
submission (as made in preceding issue) that the Cash Flow Statement filed
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by assessee to AO (Page 176 to 178 of Paper-Book) clearly shows that the
source of deposits in four bank a/cs were either the withdrawals made from
those very banks or the amounts received from constituents under PO
Agency activity carried on by assessee. He also referred Page No. 27 of
Paper-Book where a statement giving details of 27 persons for whom the
assessee did transactions of PO Agency activity, filed to AO is placed. He
also pointed an important fact that the assessee has declared business
income of Rs. 10,556/- from the activity of PO Agency which forms part of
total income of Rs. 1,56,090/- disclosed by assessee in the return of income
and stands assessed by AO in assessment-order. With these submissions,
Ld. AR prayed for deletion of addition made by AO. Per contra, Ld. DR for
revenue submitted that there are deposits in four bank a/cs and it appears
that the AO has not dealt this issue adequately. Hence, he suggested to
remand this issue to the file of Jurisdictional Assessing Officer (JAO) for a
fresh adjudication. Ld. AR for assessee agreed to the suggestion given by Ld.
DR.
We have considered above submissions of learned Representatives. We
do not repeat the same for the sake of brevity and to avoid duplication.
Suffice it to say that the AO has made this addition without adequately
examining the deposits deposits in bank accounts and their respective
sources explained by assessee in Cash Flow Statement. The assessee also
claims to have filed supporting materials to AO which was not adequately
considered at assessment stage. Since the issue involves a factual matrix
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requiring detailed examination, both of the learned Representatives were ad
idem that the matter deserves a fresh and thorough adjudication by the JAO.
Accordingly, we accept the consensus arrived by both sides and remand this
particular issue to Jurisdictional Assessing Officer (JAO) for a de novo
adjudication. Needless to mention that the exercise of JAO shall be confined
only to this issue and the JAO shall give full opportunity to assessee and
pass a judicious order without being influenced by his previous order in any
manner. The assessee is also directed to make all submissions before JAO
and extend full co-operation without seeking unnecessary adjournments.
This issue is allowed for statistical purposes.
Resultantly, this appeal is partly allowed for statistical purposes.
Order pronounced in open court on 17/04/2026
Sd/- Sd/- (PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 17/04/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
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