RAGHUVIRSINH PARMAR,AHMEDABAD vs. THE ITO, WARD-3(2)(1), AHMEDABAD

The brief facts of the case are that the assessee is an individual engaged in agricultural activities and also carrying on business in trading - 3– of food grains and dairy products, who filed his return of income for A.Y. 2020-21 declaring total income of Rs. 4,34,110/-. Subsequently, based on information received through the Insight Portal under the e-Verification Scheme, 2021, the Assessing Officer noticed that the assessee had entered into a high-value transaction viz. purchase of immovable property amounting to Rs. 76,01,100/-. Accordingly, the Assessing Officer reopened the case of the assessee by issuance of notice under section 148 of the Act. During the course of assessment proceedings, the Assessing Officer observed that the assessee had purchased rural agricultural land situated at Village Bakrana, Taluka Sanand, District Ahmedabad jointly with his brother, wherein the assessee’s share was 50% amounting to Rs. 38,00,550/-. The Assessing Officer asked the assessee to explain the source of investment in such land. Although the assessee submitted replies along with certain details which included bank statements, ledger accounts and purchase deed, the Assessing Officer held that the assessee failed to satisfactorily substantiate the source of investment. The primary reasoning adopted by the Assessing Officer was that there was mismatch in the names appearing in the bank statements vis-à-vis the names of sellers in the purchase deed and that the ledger reflected payments to “Lilaben Pasaji Thakor & Others” whereas the bank entries reflected different names. Further, the Assessing Officer observed that the said investment was not reflected in the balance sheet of the assessee’s proprietorship concern, M/s Visat Meldi Trading Co., and therefore the Assessing Officer held that the investment remained unexplained. On these premises, the Assessing Officer treated the amount of Rs. 38,00,550/- as unexplained investment under section 69 of the Act and added the same to the total income of the assessee.

Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(Appeals) with a delay of 23 days. The assessee submitted that the delay occurred on account of his absence due to religious travel to Prayagraj (Mahakumbh) and inability to check email communications during that period, and requested for condonation of delay on the principles of natural justice. The assessee also raised detailed grounds on merits, contending that the investment in land was duly explained through own funds, loans from Lion Credit Society and relatives, and that all payments were made through banking channels duly reflected in bank statements and corroborated by purchase deed and ledger accounts. It was further contended that the Assessing Officer erred in not appreciating that the land was a personal investment and not required to be reflected in the books of the proprietorship concern.

The CIT(Appeals), however, rejected the application for condonation of delay holding that participation in religious activities cannot constitute “sufficient cause” for delay in filing appeal and that in the digital era, the assessee was expected to remain vigilant regarding statutory communications. The CIT(Appeals) observed that the delay, though of 23 days, was not supported by convincing and reasonable explanation and relied upon judicial precedents to emphasize that even short delays cannot be condoned in absence of sufficient cause. Accordingly, the delay was not condoned and the appeal was dismissed in limine as non-admissible without adjudicating the issues on merits, despite the assessee having filed written submissions and supporting evidences.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival submissions and carefully perused the entire material available on record, including the assessment order, the order of the learned CIT(Appeals), and the detailed written submissions along with documentary evidences furnished by the learned counsel for the assessee. The controversy before us lies in a narrow compass, namely, whether the learned CIT(Appeals) was justified in refusing to condone the delay of 23 days and dismissing the appeal in limine, thereby depriving the assessee of adjudication on merits in respect of addition made under section 69 of the Act.

On a careful appreciation of facts, it emerges that the assessee had purchased rural agricultural land jointly with his brother, wherein his share of investment was Rs. 38,00,550/-. The Assessing Officer has not disputed either the factum of purchase or the extent of ownership. The addition has been made solely on the premise that the assessee allegedly failed to correlate the payments made through banking channels with the names of the sellers mentioned in the purchase deed and further on the ground that such investment was not reflected in the balance sheet of the assessee’s proprietorship concern. However, from the detailed submissions placed before us, it is evident that the assessee had furnished the purchase deed clearly identifying the co-owners and sellers, bank statements evidencing payments made to such persons, and ledger accounts wherein narrations specify the names of the payees. The explanation of the assessee that the ledger account was maintained in a consolidated name for accounting convenience, while individual payments are reflected in narration matching with bank entries and purchase deed, has not been properly examined by the Assessing Officer.

Further, the assessee has specifically demonstrated the source of investment by way of own funds, loans from Lion Credit Society, and borrowings from relatives, duly supported by confirmations and bank entries. The contention of the Assessing Officer that the investment was not reflected in the balance sheet of the proprietorship concern is also prima facie misconceived, as the investment is personal in nature and not an asset of the business. These crucial factual aspects, which go to the root of the addition under section 69 of the Act, have neither been properly appreciated by the Assessing Officer nor examined by the learned CIT(Appeals), who dismissed the appeal on a technical ground of limitation.

Coming to the issue of condonation of delay, we find that the delay involved is only of 23 days. The assessee has explained that the delay occurred due to his absence on account of religious travel and consequent inability to access electronic communication. While the explanation may not be perfect, it cannot be said to be mala fide or lacking in bona fides. In such circumstances, the learned CIT(Appeals), in our considered view, ought to have adopted a liberal and justice-oriented approach rather than a hyper-technical one.

The Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (SC) has held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, and that a litigant should not be denied adjudication on merits for a slight delay. Similarly, in N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, the Hon’ble Supreme Court has held that the length of delay is not material and that Raghuvirsinh Parmar vs. ITO - 7– refusal to condone delay may result in meritorious matters being thrown out at the threshold.

Applying the above settled legal position to the facts of the present case, we find that the delay of 23 days is marginal and the explanation offered by the assessee does not reflect any deliberate negligence or mala fide intent. On the contrary, the assessee has demonstrated that he has substantive grounds on merits supported by documentary evidences, which require proper adjudication. Denial of such opportunity would result in grave prejudice to the assessee, particularly when an addition of Rs. 38,00,550/- has been made under section 69 of the Act.

Coming to the merits of the addition under section 69 of the Act, we find that the addition of Rs. 38,00,550/- represents the assessee’s 50% share in the purchase of agricultural land jointly acquired with his brother for a total consideration of Rs. 76,01,100/-. The factum of purchase, the identity of co-owners and the quantum of investment attributable to the assessee are not in dispute. The addition has been made primarily on the ground that the assessee allegedly failed to correlate the payments with the sellers and that such investment was not reflected in the balance sheet of the proprietorship concern.

However, from the detailed evidences placed on record, it is evident that the assessee has discharged the initial onus cast upon him under section 69 of the Act by satisfactorily explaining the nature and source of investment. The source of investment of Rs. 38,00,550/- stands explained as under:

These funds have been routed through the assessee’s bank account maintained with Punjab National Bank, and payments have been made to the respective land owners, namely Lilaben Pasaji Thakor and other co- owners, as evidenced from the registered purchase deed. The discrepancy pointed out by the Assessing Officer regarding variation in names is found to be superficial inasmuch as the ledger account is maintained in a consolidated name for accounting convenience, whereas the narration and bank entries clearly identify the individual payees, which correspond with the names mentioned in the purchase deed.

Further, the objection of the Assessing Officer that the investment was not reflected in the balance sheet of the proprietorship concern is legally untenable, since the land in question is a personal investment of the assessee and not an asset of the business. It is a settled proposition that Raghuvirsinh Parmar vs. ITO - 9– an individual is not required to reflect personal investments in the books of a proprietorship concern, and therefore such reasoning cannot form the basis for invoking section 69 of the Act.

In light of the above factual position, we are of the considered view that the assessee has satisfactorily explained the source of investment of Rs. 38,00,550/- with cogent documentary evidences. The addition made by the Assessing Officer under section 69 of the Act is thus based on misappreciation of facts and cannot be sustained.

However, considering that certain evidences require verification at the level of the Assessing Officer in the interest of completeness and to afford full opportunity to both sides, we deem it appropriate to set aside the issue to the file of the Assessing Officer for limited verification of the documentary evidences already placed on record.

Accordingly, the impugned order of the learned CIT(Appeals) is set aside, the delay is condoned, and the matter is restored to the file of the Assessing Officer with a direction to verify the evidences furnished by the assessee in support of the source of investment and decide the issue afresh in accordance with law after providing adequate opportunity of being heard.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 24/04/2026 (ANNAPURNA GUPTA) JUDICIAL MEMBER Ahmedabad; Dated 24/04/2026 TANMAY, Sr. PSITA No. 210/Ahd/2026 - 10–

""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER,