SANDEEP KUMAR SINGH,LUCKNOW vs. INCOME TAX OFFICER-1(4), LUCKNOW

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ITA 591/LKW/2025Status: DisposedITAT Lucknow30 October 2026AY 2017-186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay of 50 days in filing the appeal, respectfully following the ratio laid down by the Hon'ble Supreme Court in Collector of Land Acquisition Vs. MST. Katiji & Ors, considering the unfortunate circumstances of the assessee's son's death. Regarding the merits, the Tribunal noted that there was no effective representation on behalf of the assessee before the lower authorities. The assessee claimed that the deposits were from daily sales of dairy products and that he earned only commission. The Tribunal observed that the assessee had provided a certificate and explained that out of Rs. 1.45 crores in sales, Rs. 1,40,87,605.17 was remitted to CP Milk and Food Product Pvt Ltd, with the balance representing commission and reimbursement for expenses. These facts required verification by the AO. Therefore, the Tribunal set aside the impugned orders and restored the assessment to the file of the AO for fresh assessment after giving adequate opportunity to the assessee. The grounds raised were allowed for statistical purposes.

What were the facts?

The assessee, Sandeep Kumar Singh, filed an appeal against the order of the Commissioner of Income-tax (Appeal)/National Faceless Appeal Centre, Delhi, dated 02.04.2025, for the assessment year 2017-18. The appeal was filed with a delay of 50 days. The assessee sought condonation of the delay, citing the serious illness and subsequent death of his son. The Revenue opposed the condonation. The original assessment was based on cash deposits made by the assessee during the demonetization period. The Assessing Officer (AO) made a best judgment assessment under Section 144 of the Income Tax Act, 1961, adding Rs. 98,59,900/- as unexplained cash deposits, as the assessee failed to comply with the notice under Section 142(1). The CIT(A) upheld this addition. The assessee is now in appeal before the ITAT.

What were the issues?

1. Whether the appeal filed by the assessee is barred by limitation, and if so, whether the delay should be condoned in light of the circumstances presented by the assessee (question of fact and law). The assessee argued that the delay was due to the unavoidable and unfortunate circumstances of his son's serious illness and death, seeking condonation in the interest of substantial justice. The Revenue contended that the facts did not warrant a liberal view and the appeal should have been filed within the prescribed time. 2. Whether the addition of Rs. 98,59,900/- as unexplained income under Section 69A of the Income Tax Act, 1961, was justified, considering the assessee's explanation that the deposits were from daily sales of dairy products as a distributor of CP Milk and Food Product Pvt Ltd, and that he earned only commission (mixed question of law and fact). The assessee argued that the lower authorities failed to appreciate the facts, treated business receipts as unexplained income, and that the amount collected as a distributor cannot be considered 'gross receipts' taxable in his hands. The Revenue supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 69A,Section 142(1),Section 144,Section 139(1)(b),Section 115BBE,Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW

Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY

PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeal) [Ld. CIT(A)]/National Faceless Appeal Centre (NFAC), Delhi dated 02.04.2025, pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: - “A. That the Impugned Order is liable to be set aside for being passed in violation of principles of Natural Justice. B. That the Impugned Order is illegal and arbitrary for upholding the addition u/s 69A of the Act as the Appellant had duly discharged its burden of proof explaining the nature and source of the money. C That the Ld. CIT(A) erred in holding that the Appellant was liable to get the accounts audited without considering that the Appellant worked on

ITA No.591/LKW/2025 Page 2 of 6 commission basis and it is trite that the amount collected as a distributor cannot be considered as 'gross receipts' taxable in the hands of the Appellant. Therefore, the addition made is non-est and without jurisdiction. D. That, without prejudice, the Ld. CIT(A) erred in including the complete sale proceeds to the income of the appellant without verifying whether there exists a principal-agent relationship in the present facts and circumstances. E. That the Ld. CITIA) erred in upholding the addition u/s 694 of the Act, without appreciating the explanation offered by the Appellant, solely on the ground that the books were not audited. In fact, Ld. CITIA) has not expressed any doubts, whatsoever, regarding the explanation provided. F. For that, without prejudice, Ld. CIT(A) having not disputed the evidence produced by the Appellant qua distributorship, the alleged income should have been treated as the business income in the hands of the Appellant and not as addition u/s 69A of the Act. G. For that, without prejudice, Ld. CITIA) while accepting the gross receipts of the Appellant at Rs. 1.45 Cr, as appearing in the ledger of the Appellant in the books of CP Milk, has arbitrarily ignored the entries of payments made by the Appellant to the principal, ie., CP Milk. It is trite law that the reliance placed on one half of a document while ignoring the other half, in the absence of any evidence indicating the contrary, is arbitrary. H. For that, without prejudice, Ld. CIT(A) has erred in considering the entire receipts as income of the appellant which is in violation of the settled law that, in the absence of any material to the contrary, gross receipts cannot be taxed as income of an assessee. I. That the Ld. CIT(A) erred in upholding the penalty u/s 271AAC of the Act even though there was no liability of the Appellant to file the return u/s 139(1)(b) of the Act. J. That similar notices were sent to multiple assessees, who are also engaged as distributors of CP Milk, on the ground of non-filing of return citing cash deposits made during demonetization period, who appeared before the Ld. AO to explain their case and no adverse order were passed. K. That, without prejudice, the Impugned Order is illegal and arbitrary as the Ld. CIT(A) to the extent that the tax liability u/s 115BBE has been computed at the rate of 60% as against the prescribed rate of 30% under the prevailing provision (u/s 115BBE) for the relevant period. L. That the Appellant craves leave to add/alter/modify any or all of the above-mentioned submissions taken without prejudice to one another. The Appellant further craves leave to file additional written submissions before or at the time of hearing.” 2. The present appeal is barred by limitation for 50 days. The assessee has filed petition seeking condonation of delay in filing the present appeal. The Ld. Counsel for the assessee reiterated the submissions as made in the petition seeking condonation of

ITA No.591/LKW/2025 Page 3 of 6 delay and also the contents of the supporting affidavit. It was submitted that the impugned order of the Ld. CIT(A) dated 02.04.2025 was received by the assessee on the same day. It was further submitted that the assessee's son was seriously ill and had been admitted to the hospital, where he was undergoing tests for cancer detection. He was discharged from the hospital on 04.04.2025 but was again admitted on 07.04.2025 due to deterioration in his health. Unfortunately, his son passed away on 11.04.2025. Deeply affected by his young son’s untimely death. Consequently, could not file the appeal within the prescribed period of limitation. It was, therefore, submitted that the delay in filing the appeal was neither intentional nor deliberate but occurred due to the aforesaid unavoidable and unfortunate circumstances beyond the control of the assessee. Accordingly, it was prayed that the delay in filing the appeal may kindly be condoned in the interest of substantial justice.

3.

On the other hand, the Ld. Departmental Representative for the Revenue opposed the submissions and contended that the assessee ought to have filed the appeal within the prescribed time. It was further submitted that the facts of the case do not warrant for taking a liberal view in the matter.

4.

We have heard the Ld. Representatives of the parties and perused the materials available on records. It was submitted that the impugned order of the Ld. CIT(A) dated 02.04.2025 was received by the assessee on the same day. It was further submitted that the assessee's son was seriously ill and had been admitted to the hospital, where he was undergoing tests for cancer detection. He was discharged from the hospital on 04.04.2025 but was again admitted on 07.04.2025 due to

ITA No.591/LKW/2025 Page 4 of 6 deterioration in his health. Unfortunately, his son passed away on 11.04.2025. We, therefore, respectfully following the ratio laid down by the Hon'ble Supreme Court in the case of Collector of Land Acquisition Vs. MST. Katiji & Ors 167 ITR 471 (SC) hereby condone the delay and admit the appeal for hearing on merits

5.

The facts in brief are that in this case, the case was taken up for scrutiny on the basis of cash deposits made by the assessee during the demonetization period in his bank account maintained with the State Bank of India, Kalyanpur Branch, Ring Road, Lucknow. The authorities below noted that although the assessee had filed the return of income, there was no compliance with the notice issued under section 142(1) of the Income Tax Act, 1961 (“Act”, for short) dated 13.02.2018. The Assessing Officer (“AO”, for short), therefore, proceeded to make best judgment u/s 144 of the Act on the basis of material available on record. Hence, he made an addition of Rs.98,59,900/- cash deposited in the bank account. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A) who also sustained the addition. Now, the assessee is in appeal before this Tribunal.

6.

Apropos to the grounds of appeal, the learned Counsel for the assessee contended that there was no effective opportunity to the assessee. Further, the lower authorities failed to appreciate the facts in right perspective. He further submitted that the assessee is engaged in the business of distributor of M/s. CP Milk and Food Product Pvt Ltd and the amount deposited in the bank account by the assessee was made out of daily sales of the dairy products. Therefore, the lower authorities have committed and error of fact by treating the assessee’s business receipts as

ITA No.591/LKW/2025 Page 5 of 6 unexplained income. The assessee is receiving only commission from M/s. CP Milk and Food Product Pvt Ltd. The Ld. Counsel further submitted that the assessee may be given an opportunity in the interest of principles of natural justice and explained the source of deposits.

7.

On the other hand, the Ld. CIT-DR opposed the submissions and supported the orders of the lower authorities.

8.

We have heard the Ld. Representatives of the parties and perused the material available on record. It is seen from the record that there was no effective representation on behalf of the assessee before the lower authorities. The Assessing Authority treated the cash deposits in the bank account as unexplained income. However, the case of the assessee is that he is only earning a commission out of the sales of dairy products of M/s. CP Milk and Food Product Pvt Ltd. In support of his claim, the assessee has also filed a certificate issued by the concerned entity. Looking to the facts on record and the explanation tendered by the assessee, particularly that during the relevant period, there was sale of Rs.1.45 crores of which Rs.1,40,87,605.17 was remitted to M/s. CP Milk and Food Product Pvt Ltd and out of balance sum the appellant had received commission amounting to Rs.1,80,344/- and reimbursement for transportation, leakage, etc amounting to Rs.2,33,796/-. These facts would need verification at the end of the AO. We, therefore, set aside the impugned orders and restore the assessment to the file of the Assessing Officer to make assessment afresh, after giving adequate opportunity to the assessee. Needless to say that the assessee would co-operate in the assessment proceedings and furnish the requisite supporting

ITA No.591/LKW/2025 Page 6 of 6 evidences as may be called for by the AO. The grounds raised in this appeal are allowed for statistical purposes.

9.

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

Order pronounced in the open Court on 30/10/2026.

Sd/- Sd/- [ननखखल चौिरी] [कुल भारत] [NIKHIL CHOUDHARY] [KUL BHARAT] लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष/VICE PRESIDENT ददनांक/DATED: 30/10/2026 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File VIJAY Digitally signed by VIJAY PAL PAL SINGH Date: 2026.11.02 SINGH 10:51:18 +05'30' By order Sr. Private Secretary

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