MANSOOR ALI,DAVANGERE vs. INCOME TAX OFFICER, WARD-1, DAVANGERE

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 anothers, 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 affidavit filed by the assessee, we are of the considered view that there exists sufficient cause for not filing a 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:- I. The order of the learned Faceless Appeal Centre(hereinafter referred to as the “FAC”)and learned Assessing Officer is opposed to the law, facts and circumstances of the case. II. The learned FAC, erred in law and on facts in dismissing the appeal filed by the appellant on the sole ground of delay without appreciating the bona fide and genuine circumstances which prevented timely filing. III. The learned FAC failed to consider that the delay of only 27 days was neither deliberate nor mala fide and occurred due to circumstances beyond the control of the appellant including technical issues and lack of adequate access to professional assistance of the relevant time. IV. The learned FAC has erred in ignoring the spirit of liberal interpretation of limitation laws laid down by the Hon’ble Supreme Court in multiple decisions, especially in the context of genuine individual taxpayers without tax expertise or representation. V. The learned FAC erred in holding that the delay was not supported by “sufficient cause” under Section 249(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). The dismissal of the appeal on a mere technical ground without adjudicating appeal on merits amounts to denial of justice and defeats the very purpose of the appellate process under the Act. VI. The learned Assessing Officer has failed to consider or controvert the explanation submitted by the Appellant during the assessment proceedings. VII. The learned Assessing Officer erred in law and on facts in completing the assessment under Section 144 without affording proper opportunity and without verifying the source of bank deposits which arose from business turnover and included explained amounts.

In his affidavit filed in support of the petition seeking condonation of delay before us, the assessee has also explained the circumstances which resulted in the delayed filing of the appeal before the learned CIT(A). During the hearing, the learned AR submitted that the entire credit in the assessee’s bank account, either in cash or through cheque, is on account of the assessee’s business as a wholesale dealer of Nandini Milk and its products. The learned AR further submitted that the amount received by the assessee from its customers was ultimately transferred to the Karnataka Cooperative Milk Producers Federation Limited after retaining its commission as a dealer, which is at a thin margin of 3%. Accordingly, the learned AR submitted that there is no basis for treating the entire turnover of Rs. 1,29,78,305/- in the assessee’s bank account as unexplained money under section 69A of the Act. The learned AR submitted that, given an opportunity, the assessee shall furnish all the details in support of its claim, which could not be furnished before the lower authorities due to the circumstances beyond its control. In this regard, the learned AR referred to the bank statement of the assessee and the license issued to the assessee as distributor of Nandini Milk products, which forms part of the paper book from pages 3 - 23.

Having considered the submissions of both sides and perused the material available on record, we deem it appropriate to restore this issue to the file of the Jurisdictional AO for de novo adjudication with the direction to the assessee to furnish all the details/submissions in support of its claim. Further, the assessee is directed to cooperate in the assessment proceedings and furnish any other information as may be sought by the AO. Needless to mention, no order shall be passed without affording a reasonable 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 25th June, 2026