DHAMAKA STORE PRIVATE LIMITED,BANGALORE vs. INCOME TAX OFFICER, BANGALORE

The present appeal is delayed by 240 days. Along with the appeal, the assessee has filed an application seeking condonation of the delay. As per the assessee, during the relevant period, its Director was suffering from serious medical complications and was incapacitated, as a result of which he was unable to attend to day-to-day affairs and monitor official correspondence. It is further submitted that since the Director’s personal details were registered on the Income-tax Portal, the assessee remained unaware of the notices issued and the proceedings conducted by the learned CIT(A), which ultimately culminated in the impugned order being passed ex parte. In support of its contention, the assessee has also furnished copies of the medical records of the Director. Further, in support of the applications seeking condonation of delay, the assessee has also filed the affidavits of all its Directors. Accordingly, it is submitted that the delay was neither intentional nor deliberate but occurred due to the circumstances beyond the control of the assessee.

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, Ananth Nag 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 did not stand to benefit from the late filing of the present appeal. In view of the above and having perused the application and affidavits filed by the assessee, we are of the considered view that there exists sufficient cause for not filing the present appeal within the limitation period, and therefore, we condone the delay in filing the appeal by the assessee, and we proceed to decide the appeal.

In this appeal, the assessee has raised the following grounds: - 1. The learned Commissioner of Income Tax (Appeals) [“CIT(A)”] erred in rejecting the grounds of appeal and upholding the impugned assessment order. The order is bad in law and liable to be quashed on the following grounds: • Lack of Jurisdiction. • Erroneous assumption of jurisdiction. • Failure to comply with the principles of natural justice. 2. The Ld. CIT(A) has erred in confirming the assessment order which is bad in law for violation of principles of natural justice for lack of issuance of a physical notice during the proceedings. 3. The Ld. CIT(A) has erred in confirming the assessment order which has been passed without following proper procedure laid down by the CBDT before deciding the issue. 4. The Ld. CIT(A) erred in confirming the assessment order wherein addition of Rs.15,00,000/- has been made for the cash deposited during the period u/s 69A of the Act. 5. The Ld. CIT(A) erred in confirming the assessment order wherein addition of Rs. 49,07,350/- has been made on account of cheque/transfer in bank account during the period u/s 69A of the Act. 6. The Ld. CIT(A) erred in confirming the assessment order wherein addition of Rs. 10,00,000/- in respect of capital introduction and Rs. 99,96,890/- in respect of borrowings has been made u/s 68 of the Act. 7. The Ld. CIT(A) erred in confirming the assessment order wherein addition of Rs. 90,67,371/- in respect of disallowance of business expense has been made without rejecting the books of accounts.

The brief facts of the case are that the assessee is engaged in the sale of crackers and fireworks on the E-Portal. For the year under consideration, the assessee filed its return of income on 31.10.2017, declaring a total loss of Rs. 90,21,735/-. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and 142(1) were issued and served on the assessee. During the assessment proceedings, it was noticed that the assessee had deposited a total cash amount of Rs 15 lakh in its bank account maintained with IndusInd Bank. Accordingly, the assessee was asked to furnish the details regarding the source of the cash deposit. In response, the assessee mainly stated that the cash was deposited out of crackers sales. Since as per the financials of assessee, revenue from operations was only Rs. 27,600/- and the assessee did not file any other details regarding the source of cash deposit, the Assessing Officer (“AO”) vide order dated 16.12.2019 passed under section 143(3) of the Act treated the entire cash deposit of Rs. 15 lakh as unexplained money under section 69A of the Act and added the same to the total income of the assessee. Further, it was noticed that there are total deposits amounting to Rs. 49,07,350/- through cheque/bank transfer in the bank account of the assessee. As the assessee failed to substantiate the source of the cheque deposit, the entire deposit of Rs. 49,07,350/- was added to the total income of the assessee under section 69A of the Act. It was also noticed that the assessee has introduced share capital of Rs. 10 lakh and long-term borrowings of Rs. 99,96,890/-. Again, in the absence of any documentary evidence regarding the source of share capital and long-term borrowings, the AO added the same to the total income of the assessee under section 68 of the Act. The AO also disallowed the expenditure of Rs. 90,67,371/- claimed by the assessee as business expenditure in the absence of any documentary evidence supporting such a claim.

In the appellate proceedings before the learned CIT(A), despite the grant of multiple opportunities, the assessee failed to comply with the hearing notices and did not bring any material/evidence in support of its case, contrary to the findings of the AO. Accordingly, the learned CIT(A) upheld the additions made by the AO and dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us.

We have considered the submissions of both sides and perused the material available on record. In the present appeal before us, the assessee is duly represented by the learned Authorised Representative (“learned AR”) and wishes to pursue the litigation against the additions made by the AO. During the hearing, the learned AR submitted that, given an opportunity, the assessee will submit all the details in support of its case.

Accordingly, in view of the facts and circumstances as noted above, we deem it appropriate to grant another opportunity to the assessee. Therefore, we restore the matter to the file of the jurisdictional AO for de novo adjudication, with a direction to the assessee to file all the details in support of its claim for necessary verification. We further direct the assessee to fully cooperate in the assessment proceedings and furnish any other information/documents as may be sought by the AO for complete adjudication of the issue involved. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee. With the above directions, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open court on 21-July-2026 Sd/- Sd/- (PRASHANT MAHARISHI) (SANDEEP SINGH KARHAIL) VICE PRESIDENT JUDICIAL MEMBER Bangalore, Dated, the 21st July, 2026. *VM* Copy to: DHAMAKA STORE PRIVATE LIMITED, DEEPAK PADMANABHAN, 1 NO. 51/7/1, CHITRAKOOT, RATNA AVENUE, RICHMOND ROAD, BANGALORE – 560025, KARNATAKA INCOME TAX OFFICER, WARD 2(1)(1), BMTC BUILDING 2 KORAMANGALA, BENGALURU-560095, KARNATAKA 3 THE PCIT / CIT, 4 THE D.R., ITAT, BANGALORE BENCH 5 GUARD FILE BY ORDER