BHOR UTKARSHA NAGRI CO OPERATIVE CREDIT SOCIETY LIMITED,MUMBAI vs. ASSESSING OFFICER, MUMBAI

Dismissal in Limine and Refusal to Condon the Delay (Section 249(3)) On the facts and circumstances of the case and in law, the learned CIT(A) erred by refusing to condone the delay in filing the first appeal and by dismissing the appeal in limine. The discretion under section 249(3) was not exercised judiciously, nor in a manner that advances substantial justice.

Liberal Interpretation of “Sufficient Cause” The learned CIT(A) failed to apply established law which requires the expression “sufficient cause” to be interpreted liberally, especially when no mala fides are alleged and denial of condonation prevents adjudication on merits. Reliance is placed on several Supreme Court judgments, including Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (SC); N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123; State of Nagaland v. Lipok Ao (2005) 3 SCC 752; Vedabai v. Shantaram Baburao Patil (2001) 9 SCC 106; and Improvement Trust, Ludhiana v. Ujagar Singh (2010) 6 SCC 786. 3. Absence of Prejudice to Revenue and Substantial Prejudice to Appellant The delay in filing the appeal before CIT(A) was 120 days, not excessive. Condoning this delay would not prejudice the Revenue, whereas refusal deprives the Appellant of the statutory right of first appeal and causes substantial prejudice, particularly when a large demand has been raised and the assessment was completed ex-parte.

Principle of Natural Justice and Effective Opportunity The learned CIT(A) erred by dismissing the appeal without ensuring an effective opportunity for the Appellant, despite the assessment itself being completed ex-parte and the Appellant, a co-operative society, facing transition in authorized personnel and portal handling. The impugned order is vitiated for breach of natural justice. The Appellant relies on the principle that a litigant should not suffer for no deliberate lapse, and matters should be decided on their merits, as recognized in Rafiq v. Munshilal (1981) 2 SCC 788. 5. Denial of the Statutory Right of First AppealThe learned CIT(A) erred in not admitting the appeal and in failing to adjudicate the substantive grounds on merits. The Appellant prays that the impugned order under section 250 be set aside and the matter be restored to the file of the learned CIT(A) with directions to admit the appeal by condoning the delay and to decide it on merits after granting proper opportunity.

Invalidity of Ex-Parte Assessment (Without Prejudice)On the facts and in law, the assessment order under section 147 read with sections 144 and 1448 dated 01/16/2024 is unsustainable due to the lack of effective opportunity and for P a g e | 3 A.Y. 2019-20 Bhor Utkarsha Nagri Cooperative Credit Society Limited being completed without examining primary books and evidence. This is contrary to the scheme of faceless assessment and the principle established in Sangram Singh v. Election Tribunal (AIR 1955 SC 425) that procedural rules must serve the cause of justice.

Addition under Section 69A of 1,16,68,000 (Without Prejudice)On the facts and in law, the learned Assessing Officer erred in making an addition of ₹1,16,68,000 under section 69A solely based on aggregate cash deposits reflected in bank data, without examining the Appellant's books, audit records, member ledgers, cash book, and the business nature of receipts. The addition based on gross deposits is arbitrary and deserves to be deleted. Alternatively, the matter requires verification on merits based on primary records.

Bank Passbook/Statement Not Considered as Books of the Assessee (Without Prejudice)The learned Assessing Officer proceeded mechanically on bank data without correlating it with the Appellant's books of account. The Appellant relies on the principle that a bank passbook or statement is not the assessee's books of account and that an addition cannot be made merely on such material without proper inquiry, as held in CIT v. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom), which applies to relevant facts.

Discretionary Nature of Deeming Provisions (Without Prejudice) The learned Assessing Officer failed to appreciate that sections 69 and 69A employ the expression “may be deemed,” which requires a judicious evaluation of facts and explanations. Reliance is placed on CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC).

Gross Receipts/Deposits Cannot Be Treated as Income (Without Prejudice) Without prejudice, the Appellant submits that the entire gross deposits cannot be treated as income. At most, the nature and source should be examined from the books of account, and only the real income, if any, should be brought to tax. This principle is recognized, among others, in CIT v. President Industries (2002) 258 ITR 654 (Guj). 11 Interest under Sections 234A and 234B and Fee under Section 234F (Without Prejudice)Interest under sections 234A and 234B and fee under section 234F are consequential and should be reduced or deleted in accordance with the law upon granting relief on the quantum issues.

In this case, as per information, the AO found that the assessee had done certain high value transaction, though, no ITR had been filed by for the relevant year. A perusal of the information available revealed that the assessee had deposited cash amounting to Rs. 1,16,68,000/- in one or more accounts (other than a current account and time deposit) in P a g e | 4 A.Y. 2019-20 Bhor Utkarsha Nagri Cooperative Credit Society Limited Mumbai District Central Co. Op. Bank Ltd. during the relevant financial year and which was added under section 69A of the Act.

Aggrieved by the assessment order, the assessee filed appeal before the ld.CIT(A) who noticed that the same was delayed by 120 days. Further, the provisions of Section 249(3) of the Act lay down that an appeal may be admitted after the expiration of the said period, if the CIT(A) is satisfied that the appellant had “sufficient cause” for not presenting the appeal within that period. Before him, it was explained that the income tax assessment for the AY 2019-20 of the assessee Society was completed vide order dated 16th January 2024 and the time for filing of the appeal before the CIT (A) was to expire on 16th February 2024.However, the Authorised Person Shri Dhariya Bardhade (Chairman) had expired on 14/06/2021. After his death, there was no competent person to take the decision and file the Appeal with in due date. Sameway society conducted AGM and Election in November 2022 and December 2022 and therefore appeal could not be filed well within the stipulated time. The reasons adduced were not found sufficient cause by the appellate authority who dismissed the appeal without condoning the delay in limine as the appeal was not maintainable, without any discussion on merits or on any other aspect.

On careful consideration of the submissions of the assessee,we are of the view that the delay was not intentional but due to unavoidable and sufficient cause. In this connection, reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late……..Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated….Any appeal or any application, other than an P a g e | 7 A.Y. 2019-20 Bhor Utkarsha Nagri Cooperative Credit Society Limited application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period…. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.” We therefore, condone the delay in fling of the appeal before the appellate authority.

Before us, the ld.AR requested to send back the entire matter to the he ld.CIT(A0 for framing appellate order de novo. It is assured that necessary compliance will be made before him. The ld.DR did not oppose the request.

We have heard the rival parties and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of delayed filing of the appeal before him. He failed to adjudicate the issues raised in the grounds of appeal and did not examine the materials available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear. However, it is equally true that it is P a g e | 8 A.Y. 2019-20 Bhor Utkarsha Nagri Cooperative Credit Society Limited the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities although in the instant case, there appears to be justifiable reasons for the delay. As the ld. AR has requested before us that the assessee may be accorded one more opportunity and this request which was not objected by the ld.DR, in such a scenario, we are of the opinion that the scales of justice demand that the matter should be verified and revisited at the level of ld.CIT(A) and accordingly, we are of the considered view that the matter should be remanded back to him for de novo adjudication by him while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee. The ground of appeal is therefore, allowed for statistical purposes.

In the result, the appeal stands allowed for statistical purposes. Order pronounced in the open court on 24/06/2026. AMIT SHUKLA PRABHASH SHANKAR (न्यातयक सदस्य/JUDICIAL MEMBER) ((लेखाकार सदस्य/ACCOUNTANT MEMBER)