MAHESH HADAPAD,KALABURAGI vs. INCOME TAX OFFICER, WARD-1, KALABURAGI

PDF · subscribers
ITA 381/BANG/2026Status: DisposedITAT Bangalore02 September 2026AY 2018-197 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's reasons for non-compliance. The matter was restored to the Assessing Officer for de novo adjudication to provide the assessee with an opportunity to present its case and furnish supporting documents.

What were the facts?

The assessee filed an appeal with a significant delay, citing lack of knowledge of online proceedings and communication. The Assessing Officer had made additions under Section 68 for unexplained credits and differences in capital and loan balances. The CIT(A) upheld these additions as the assessee failed to provide submissions.

What were the issues?

Whether the delay in filing the appeal should be condoned and if the assessee should be granted another opportunity to present its case before the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL

PER SANDEEP SINGH KARHAIL, JUDICIAL MEMBER: The assessee has filed the present appeal against the impugned order dated 26/12/2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2018-19.

2.

At the outset, it is noticed from the appeal record that there is a delay of 336 days in filing the appeal before the Tribunal. Along with the appeal, the assessee has filed an application seeking condonation of delay duly supported by the affidavit of the assessee. In its application, the assessee submitted that he has no knowledge of the process of online communication and correspondence and was therefore unaware of the notices issued and served on the PAN-based online account. It is further submitted that the notices were not issued and served at the postal address. The assessee submitted that the tax advisor also did not update the assessee about notices received, replies filed and the assessment order. Thus, he was completely unaware of the proceedings for the year under consideration. It is further submitted that he was also completely unaware of the impugned order passed by the learned CIT(A). Accordingly, as per the assessee due to the aforesaid circumstances, the present appeal was filed after a delay, which is completely unintentional and beyond the control of the assessee.

3.

We find that the reasons stated by the assessee for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag vs. MST Katiji and others, reported in 1987 SCR (2) 387. It is well-established that the Rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the assessee does not stand to benefit from the late filing of the present appeal. In view of the above and having perused the application/affidavit filed by the assessee, we are of the considered view that there was sufficient cause which prevented the assessee from filing the present appeal within the limitation period. Therefore, we condone the delay in filing the appeal and proceed to decide the same.

4.

The Assessee has raised the following grounds of appeal:

1 On facts and circumstances of the Appellants case, the impugned order of the lower authorities are opposed to law, equity, weight of evidence and probabilities 2 On the facts and circumstances of the appellants case, the appellant denies himself liable to be assessed to total income of Rs.8,41,308/- and income tax liability determined thereon by making addition towards difference in capital balance and housing loan borrowed from State bank of India and disallowance of all the expenses incurred towards earning of income and deduction of exemptions 3 On the facts and circumstances of the appellants case, the learned assessing officer is not justified in passing the assessment order in gross violation of principles of natural justice in as much as the learned assessing officer did concluded the assessment proceedings hurriedly, without providing adequate opportunities for submission and explanations to the appellant. The actions of the assessing officer are against the principles of natural justice and equity. 4 On facts and circumstances of the Appellants case, the learned assessing officer erred in making the assessment purely on the basis of presumption, surmise and conjecture which is wholly impermissible in law and contrary to evidence on record and also biased to the fact and submissions. 5 On facts and circumstances of the Appellants case, the learned assessing officer erred at para No.5.1 to 5.3 of page No.2 and 3 of assessment order endorsing about addition of Rs.234026/- towards difference of Rs.185685/- in capital balance and difference of Rs.48341/- in term loan balance, treating as unexplained credit in the books of account under section 68 which is against the provisions of section 68.

a) Section 68 : Where any sum is found credited in the books of assessee for any previous year, the same may be charges to income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof, is in the opinion of the Assessing Officer, not satisfactory. 6 On facts and circumstances of the Appellants case, the learned assessing officer erred by quantifying the profit at Rs. 6,07,282/- (378633 Plus 228649) out of gross receipts of Rs. 614920/-, the rate of profit works out to 98.76% of gross receipts which is not existing in this world of business in the present scenario of business and conditions of business and also against the business standards of real estate business. 7 On facts and circumstances of the Appellants case, the learned assessing officer ought to have brought to tax the profit earned instead of gross receipts of Rs.614920/-, profit estimated by disallowing all expenses and assessed to income tax, as entire gross receipts would not be income but only net profit would be subjected to tax and further states that such estimate of income has to be rational. The amount of gross receipts by itself can not represent the income of the assessee who has not disclosed the receipts. The receipts only represented the price received by the service provider towards the contract work for hair dressing of which assessee has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the gross receipts. 8 On facts and circumstances of the Appellants case, the assessing officer has neither comparable cases nor any documents nor any basis to support additions to the returned income. In this regard, the appellant places reliance on the following judicial precedents: 9 On facts and circumstances of the Appellants case, the assessing officer erred by disallowing deduction claimed towards interest of Rs.49,850/- on housing loan borrowed for construction of house from State bank of India which is, by oversight, claimed as deduction under chapter VIA in the statement of computation of total income otherwise eligible for deduction under section 24. 10 On facts and circumstances of the Appellants case, the learned assessing officer is not justified in levying interest u/s 234A, u/s 234B and u/s 234C of the Act on the facts and circumstances of the case and further the quantum, period and rate are not discernible from the assessment order. 5. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an individual and for the year under consideration filed its return of income on 03/08/2018, declaring a total income of INR 3,78,633, after claiming deduction under Chapter VI-A of the Act. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it was noticed that the assessee, in its return of income, has declared proprietor’s capital at INR 15,62,460. However, in its reply during the assessment proceedings, the amount of proprietor’s capital was declared at INR 13,76,775. As the assessee could not explain the difference of INR 1,85,685, the Assessing Officer (“AO”) vide order dated 23/02/2021 passed under section 143(3) read with section 143(3A) and section 143(3B) of the Act, treated the difference as unexplained credit in the books of the assessee under section 68 of the Act. Further, it was noticed that the assessee has availed secured loans of INR 4,60,991. Since the assessee only provided the details in respect of a loan of INR 4,12,650 received from SBI Housing Loan, the balance amount of INR 48,341 was added to the total income of the assessee under section 68 of the Act.

6.

In its appeal before the learned CIT(A), despite grant of multiple opportunities, the assessee did not file any submission/documents against the additions made by the AO under section 68 of the Act. Accordingly, the learned CIT(A) upheld the additions made by the AO and dismissed the grounds raised by the assessee. Being aggrieved, the assessee is in appeal before us.

7.

Having considered the submissions of both sides and perused the material available on record, in the present case, it is evident that due to insufficient documentary evidence regarding the discrepancies noted by the AO, additions under section 68 of the Act were made vide assessment order. Further, it is evident that the assessee did not respond to multiple notices issued by the learned CIT(A) and failed to file the written submissions in support of its case. On perusal of the application seeking condonation of delay in filing the present appeal, we find that the assessee has attempted to explain the reasons for non-compliance with notices issued during the assessment and appellate proceedings.

8.

Accordingly, in view of the facts and circumstances as noted in the foregoing paragraphs, we deem it appropriate to grant one more opportunity to the assessee to represent its case and furnish all the details/documents. Thus, in the interest of justice and fair play, we restore the matter to the file of the jurisdictional AO for de novo adjudication with a direction to the assessee to furnish all the details in support of its case. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee. As the matter has been restored to the file of the AO for consideration afresh, we further direct the assessee to fully cooperate in the assessment proceedings and furnish any other details as may be sought by the AO. With the above directions, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes.

9.

In the result, appeal by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 02-Sept-2026. Sd/- Sd/- (PRASHANT MAHARISHI) (SANDEEP SINGH KARHAIL) VICE PRESIDENT JUDICIAL MEMBER Bangalore, Dated, the 02-Sept-2026 *VM* Copy to: MAHESH HADAPAD, MAHESH HAIR DRESSING SALOON 1 DHANAGARGALLI, KALABURAGI, KALABURGI-585103, KARNATAKA INCOME TAX OFFICER, WARD-1, AYAKAR BHAVAN BUILDING, SEDAM 2 ROAD, KALABURAGI, KALABURGI-585105, KARNATAKA 3 THE PCIT / CIT, 4 THE D.R., ITAT, BANGALORE BENCH 5 GUARD FILE BY ORDER

ASSISTANT REGISTRAR I.T.A.T., BANGALORE

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Latest GST High Court judgments

Search GST case law →