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Facts
The assessee filed a return of income declaring a loss. The AO received information about cash deposits during demonetization and initiated reassessment proceedings. Despite notices, the assessee failed to provide explanations, leading to an ex-parte assessment.
Held
The Tribunal condoned the 442-day delay in filing the appeal, citing the assessee's advanced age and health issues. On merits, the Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication, imposing a cost on the assessee for non-compliance.
Key Issues
Whether the delay in filing the appeal can be condoned due to the assessee's health and age, and whether the matter should be remanded for fresh adjudication despite non-compliance.
Sections Cited
142(1), 144, 148, 68, 253(5)
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 29.02.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
1. On the Facts and Circumstances of the case and in Law, Hon. NFAC, erred in rejecting appellant's repeated requests for seeking adjournments on the Ground that their Accounts were required to be re-written on the basis of the ledger printouts and trial balance available on records, but without the help of the staff.
Without Prejudice to the aforesaid Ground of Appeal ; Without Prejudice to the aforesaid Ground of Appeal; 2. On the facts and circumstances of the case and in law, Hon. NFAC 2. On the facts and circumstances of the case and in law, Hon. NFAC
2. On the facts and circumstances of the case and in law, Hon. NFAC has erred in ignoring the fact that Faceless Assessment Unit had not has erred in ignoring the fact that Faceless Assessment Unit had not has erred in ignoring the fact that Faceless Assessment Unit had not responded to appellan responded to appellant's Grievances and Comments submitted in t's Grievances and Comments submitted in response to the Notices u/s 142(1) of the Act. Therefore, the response to the Notices u/s 142(1) of the Act. Therefore, the response to the Notices u/s 142(1) of the Act. Therefore, the allegations made about non allegations made about non-compliance/non-cooperation are totally cooperation are totally incorrect and in violation of Natural justice. incorrect and in violation of Natural justice. Without Prejudice to the aforesaid Without Prejudice to the aforesaid ground of appeal,
3. On the facts and circumstances of the case and in law, Hon. NFAC
3. On the facts and circumstances of the case and in law, Hon. NFAC
3. On the facts and circumstances of the case and in law, Hon. NFAC has erred in ignoring the fact that Faceless Assessment Unit had has erred in ignoring the fact that Faceless Assessment Unit had has erred in ignoring the fact that Faceless Assessment Unit had erred in not giving the Reasons Recorded for reopening the erred in not giving the Reasons Recorded for reopening the erred in not giving the Reasons Recorded for reopening the assessment. Without Prejudice to the aforesaid Without Prejudice to the aforesaid grounds of appeal,
4. On the facts and circumstances of the case and in law, Hon. NFAC
4. On the facts and circumstances of the case and in law, Hon. NFAC
4. On the facts and circumstances of the case and in law, Hon. NFAC has erred in ignoring the fact that Faceless Assessment Unit had has erred in ignoring the fact that Faceless Assessment Unit had has erred in ignoring the fact that Faceless Assessment Unit had erred erred in in making making addition addition of of Rs.25,56,500/- Rs.25,56,500/ as as appellant's appellant's Undisclosed Income. Income.
2. Briefly stated, facts Briefly stated, facts of the case are the assessee filed his the assessee filed his original return of income on 01.08.2017 declaring a total loss of original return of income on 01.08.2017 declaring a total loss of original return of income on 01.08.2017 declaring a total loss of ₹72,40,746/-. Subsequently, the Assessing Officer received specific . Subsequently, the Assessing Officer received specific . Subsequently, the Assessing Officer received specific information regarding cash deposits aggregating to ₹ ₹25,56,500/- in information regarding cash deposits aggregating to the assessee’s bank account during the period of demonetisation. bank account during the period of demonetisation. bank account during the period of demonetisation. Based on such information, he recorded reasons to believe that Based on such information, he recorded reasons to believe that Based on such information, he recorded reasons to believe that income chargeable to tax had escaped assessment and issued income chargeable to tax had escaped assessment and issued income chargeable to tax had escaped assessment and issued notice under Section 148 of the Income notice under Section 148 of the Income-tax Act, 1961 (hereinafter tax Act, 1961 (hereinafter referred to as “the Act”) on 30.03.2021. e Act”) on 30.03.2021.
2.1Despite issuance of statutory notices under Sections 142(1) and Despite issuance of statutory notices under Sections 142(1) and Despite issuance of statutory notices under Sections 142(1) and 144 of the Act, the assessee did not furnish any explanation or 144 of the Act, the assessee did not furnish any explanation or 144 of the Act, the assessee did not furnish any explanation or supporting material. . A final show-cause notice under Section 144 cause notice under Section 144 dated 04.03.2022, specifically callin dated 04.03.2022, specifically calling upon the assessee to explain g upon the assessee to explain the source of the cash deposits, also remained uncomplied with. the source of the cash deposits, also remained uncomplied with. the source of the cash deposits, also remained uncomplied with. Consequently, the Assessing Officer completed the assessment ex Consequently, the Assessing Officer completed the assessment ex Consequently, the Assessing Officer completed the assessment ex parte under Section 144 of the Act and added the sum of parte under Section 144 of the Act and added the sum of parte under Section 144 of the Act and added the sum of ₹25,56,500/- as unexplained cash credit u as unexplained cash credit under Section 68 of the nder Section 68 of the Act by order dated 29.03.2022. Act by order dated 29.03.2022.
2.2 The assessee carried the matter in appeal before the learned The assessee carried the matter in appeal before the learned The assessee carried the matter in appeal before the learned CIT(A). The ld CIT(A) issued several notices fixing the matter for CIT(A). The ld CIT(A) issued several notices fixing the matter for CIT(A). The ld CIT(A) issued several notices fixing the matter for hearing on different dates. The record reveals that while on some hearing on different dates. The record reveals that while on some hearing on different dates. The record reveals that while on some occasions adjournments were sought, on other dates there was ccasions adjournments were sought, on other dates there was ccasions adjournments were sought, on other dates there was complete absence of compliance. Importantly, no documentary complete absence of compliance. Importantly, no documentary complete absence of compliance. Importantly, no documentary evidence was ever filed to substantiate the claim regarding the evidence was ever filed to substantiate the claim regarding the evidence was ever filed to substantiate the claim regarding the source of cash deposits. source of cash deposits. A detail notices issued is reproduced as is reproduced as under:
“ Date of Notice Date of Notice Compliance Date Remarks 3rd November, November, 10th November, No details furnished, No details furnished, 2023 2023 petition for adjournment petition for adjournment was received on 11 th th November, 2023. 14th November, November, 21st November, No details furnished, No details furnished, 2023 2023 petition for adjournment petition for adjournment was received on - following dates: 26th November, 26th November, 1. 2023 31st December, 31st December, 20th February, 20th February, 27th February, No details furnished nor No details furnished nor 2024 2024 any petition for adjournment petition for adjournment was received.
The conduct of the Appellant, as inferred from The conduct of the Appellant, as inferred from the aforesaid table, the aforesaid table, evidences that the Appellant is not interested in prosecuting the evidences that the Appellant is not interested in prosecuting the evidences that the Appellant is not interested in prosecuting the Appeal.” 2.3 The learned CIT(A), after noting the repeated non The learned CIT(A), after noting the repeated non The learned CIT(A), after noting the repeated non-compliance, held that the assessee had failed to discharge the onus cast upon held that the assessee had failed to discharge the onus cast upon held that the assessee had failed to discharge the onus cast upon him under Section 68 of the Act to establish the nature and source him under Section 68 of the Act to establish the nature and source him under Section 68 of the Act to establish the nature and source of the cash credits. The explanation offered in grounds of appeal of the cash credits. The explanation offered in grounds of ap of the cash credits. The explanation offered in grounds of ap was found unsubstantiated, and even the plea of violation of was found unsubstantiated, and even the plea of violation of was found unsubstantiated, and even the plea of violation of principles of natural justice was rejected on the ground that ample principles of natural justice was rejected on the ground that ample principles of natural justice was rejected on the ground that ample opportunities had been provided both at the assessment as well as opportunities had been provided both at the assessment as well as opportunities had been provided both at the assessment as well as the appellate stage. Accordingly, the addition was confirmed and the appellate stage. Accordingly, the addition was confi the appellate stage. Accordingly, the addition was confi the appeal was dismissed by order dated 29.02.2024. The relevant the appeal was dismissed by order dated 29.02.2024. the appeal was dismissed by order dated 29.02.2024. finding of ld CIT(A) is reproduced as under finding of ld CIT(A) is reproduced as under:
“6.4 It is noticed that the appellant has not explained the sources of 6.4 It is noticed that the appellant has not explained the sources of 6.4 It is noticed that the appellant has not explained the sources of cash deposits/credits in his bank accounts by way of supporting cash deposits/credits in his bank accounts by way of supporting cash deposits/credits in his bank accounts by way of supporting evidences either during the assessment proceedings or in the evidences either during the assessment proceedings or in the evidences either during the assessment proceedings or in the appellant proceedings before this office. The conduct of the appellant proceedings before this office. The conduct of the appellant proceedings before this office. The conduct of the appellant during the assessment proceedings as well as appellate appellant during the assessment proceedings as well as appellate appellant during the assessment proceedings as well as appellate proceedings clearly reveals that he simply wants to drag the case, proceedings clearly reveals that he simply wants to drag the case, proceedings clearly reveals that he simply wants to drag the case, without addressing the core issue at hand. thout addressing the core issue at hand. 6.5 Even though no submissions have been filed in the appellate 6.5 Even though no submissions have been filed in the appellate 6.5 Even though no submissions have been filed in the appellate proceedings except for statement of facts and grounds of appeal, the proceedings except for statement of facts and grounds of appeal, the proceedings except for statement of facts and grounds of appeal, the issue at hand and grounds of appeal are decided, based on details issue at hand and grounds of appeal are decided, based on details issue at hand and grounds of appeal are decided, based on details available with t available with this office. 6.6 In the Ground of appeal no. 1, it is claimed by the appellant that 6.6 In the Ground of appeal no. 1, it is claimed by the appellant that 6.6 In the Ground of appeal no. 1, it is claimed by the appellant that faceless unit has erred in not responding to appellants grievances faceless unit has erred in not responding to appellants grievances faceless unit has erred in not responding to appellants grievances and comments submitted. It is further claimed that therefore the and comments submitted. It is further claimed that therefore the and comments submitted. It is further claimed that therefore the allegations made about non allegations made about non-compliance/non-co- operation are operation are totally incorrect and in violation of natural justice. totally incorrect and in violation of natural justice. The ground of appeal raised by the appellant is considered, The ground of appeal raised by the appellant is considered, The ground of appeal raised by the appellant is considered, however it is noticed that the claim made is not backed by way of however it is noticed that the claim made is not backed by way of however it is noticed that the claim made is not backed by way of supporting evidences. It is also evident from the assess supporting evidences. It is also evident from the assess supporting evidences. It is also evident from the assessment order passed that apart from notice u/s 148 of the Act issued, the passed that apart from notice u/s 148 of the Act issued, the passed that apart from notice u/s 148 of the Act issued, the assessee was issued statutory notices u/s 142(1) from time to time assessee was issued statutory notices u/s 142(1) from time to time assessee was issued statutory notices u/s 142(1) from time to time and even a show and even a show- cause notice was issued, prior to passing the cause notice was issued, prior to passing the assessment order. Contrary to the claims made, the app assessment order. Contrary to the claims made, the app assessment order. Contrary to the claims made, the appellant has not furnished the required details called for in these notices issued. not furnished the required details called for in these notices issued. not furnished the required details called for in these notices issued. As such, the grounds of appeal no. 1, raised by the appellant is As such, the grounds of appeal no. 1, raised by the appellant is As such, the grounds of appeal no. 1, raised by the appellant is found to be misplaced found to be misplaced and disposed.” 2.4 The Ld. CIT(A) in his order dated 29.02.2024 dismissed the The Ld. CIT(A) in his order dated 29.02.2024 dismissed the The Ld. CIT(A) in his order dated 29.02.2024 dismissed the grounds on merit also. n merit also. The impugned order of the learned CIT(A) The impugned order of the learned CIT(A) was appealable within 60 days of its receipt. However, the present was appealable within 60 days of its receipt. However, the present was appealable within 60 days of its receipt. However, the present appeal was filed before this Tribunal only on 14.02.2025, entailing a appeal was filed before this Tribunal only on 14.02.2025, entailing a appeal was filed before this Tribunal only on 14.02.2025, entailing a delay of 442 days.
3. Before us, the assessee filed an applicat the assessee filed an application for condonation of ion for condonation of delay supported by an affidavit. delay supported by an affidavit. In the application and affidavit, the n the application and affidavit, the assessee explained that due to his advanced age and multiple assessee explained that due to his advanced age and multiple assessee explained that due to his advanced age and multiple chronic chronic chronic health health health conditions, conditions, conditions, including including including hypertension, hypertension, hypertension, cardiac cardiac cardiac complications, and severe mobility restric complications, and severe mobility restrictions, he was unable to tions, he was unable to attend to day-to-day affairs or pursue the appellate remedy in time. day affairs or pursue the appellate remedy in time. day affairs or pursue the appellate remedy in time. It was further submitted that the delay was neither deliberate nor It was further submitted that the delay was neither deliberate nor It was further submitted that the delay was neither deliberate nor intentional but was occasioned by circumstances beyond his intentional but was occasioned by circumstances beyond his intentional but was occasioned by circumstances beyond his control. The relevant part of his aff The relevant part of his affidavit is reproduced as under: idavit is reproduced as under:
“1. I am the Appellant in the matter ITA No.: 4486/MUM/2025 for 1. I am the Appellant in the matter ITA No.: 4486/MUM/2025 for 1. I am the Appellant in the matter ITA No.: 4486/MUM/2025 for assessment year 2017 assessment year 2017-2018.
I confirm that there has been a delay of 442 days in filing the 2. I confirm that there has been a delay of 442 days in filing the 2. I confirm that there has been a delay of 442 days in filing the appeal before the Hon'ble ITAT due to my advanced age, multiple appeal before the Hon'ble ITAT due to my advanced age, multiple appeal before the Hon'ble ITAT due to my advanced age, multiple health issues, and circumstances explained in the accompanying lth issues, and circumstances explained in the accompanying lth issues, and circumstances explained in the accompanying application.
I state that the delay was neither deliberate nor intentional, but 3. I state that the delay was neither deliberate nor intentional, but 3. I state that the delay was neither deliberate nor intentional, but solely due to unavoidable reasons beyond my control. solely due to unavoidable reasons beyond my control.
I respectfully pray that the delay may kindly be condoned 4. I respectfully pray that the delay may kindly be condoned 4. I respectfully pray that the delay may kindly be condoned in the interest of justice. justice.” 4. We have heard rival submissions of the We have heard rival submissions of the parties on the issue of parties on the issue of condonation of the delay of 442 days in filing the appeal. It is well condonation of the delay of 442 days in filing the appeal. condonation of the delay of 442 days in filing the appeal. settled that the Tribunal, being vested with powers under Section settled that the Tribunal, being vested with powers under Section settled that the Tribunal, being vested with powers under Section 253(5) of the Act read 253(5) of the Act read with Section 5 of the Limitation Act, 1963, with Section 5 of the Limitation Act, 1963, may condone the delay if “sufficient cause” is demonstrated. The may condone the delay if “sufficient cause” is demonstrated. The may condone the delay if “sufficient cause” is demonstrated. The expression “sufficient cause” is to be construed liberally to advance expression “sufficient cause” is to be construed liberally to advance expression “sufficient cause” is to be construed liberally to advance the cause of substantial justice rather than to defeat it on the cause of substantial justice rather than to defeat it on the cause of substantial justice rather than to defeat it on technicalities.
4.1 In the present case, the assessee has placed on record an In the present case, the assessee has placed on record an In the present case, the assessee has placed on record an affidavit affirming his precarious health condition during the affidavit affirming his precarious health condition during the affidavit affirming his precarious health condition during the relevant period. The circumstances explained appear plausible and relevant period. The circumstances explained appear plausible and relevant period. The circumstances explained appear plausible and consistent with the delay caused. Importantly, the Revenue has not consistent with the delay caused. Importantly, the Revenue has n consistent with the delay caused. Importantly, the Revenue has n placed any material to controvert the assessee’s medical difficulties placed any material to controvert the assessee’s medical difficulties placed any material to controvert the assessee’s medical difficulties or to show that the delay was deliberate. or to show that the delay was deliberate. The Hon’ble Supreme The Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (1987) 167 ITR 471 (SC) has held that when substantial justice and technical (SC) has held that when substantial justice and te (SC) has held that when substantial justice and te considerations are in conflict, the cause of substantial justice considerations are in conflict, the cause of substantial justice considerations are in conflict, the cause of substantial justice deserves to prevail, since the other side cannot claim to have a deserves to prevail, since the other side cannot claim to have a deserves to prevail, since the other side cannot claim to have a vested right in injustice being done because of a non-deliberate vested right in injustice being done because of a non vested right in injustice being done because of a non delay. Respectfully following the ratio, we are satis Respectfully following the ratio, we are satisfied that the Respectfully following the ratio, we are satis assessee has demonstrated sufficient cause. Accordingly, the delay assessee has demonstrated sufficient cause. Accordingly, the delay assessee has demonstrated sufficient cause. Accordingly, the delay of 442 days in filing the present appeal stands condoned and of 442 days in filing the present appeal stands condoned of 442 days in filing the present appeal stands condoned proceeded to adjudicate proceeded to adjudicate the matter on merits.
4.2 On merits, it is undisputed that the assessee remained non On merits, it is undisputed that the assessee remained non On merits, it is undisputed that the assessee remained non- compliant before the Assessing Officer as well as before the learned t before the Assessing Officer as well as before the learned t before the Assessing Officer as well as before the learned CIT(A). However, it is equally true that the addition under Section CIT(A). However, it is equally true that the addition under Section CIT(A). However, it is equally true that the addition under Section 68 was made purely for want of explanation and evidence. The 68 was made purely for want of explanation and evidence. The 68 was made purely for want of explanation and evidence. The assessee has now sought one more opportunity to substantiate his assessee has now sought one more opportunity to substantiate his assessee has now sought one more opportunity to substantiate his claim by producing relevant records and explanations regarding the laim by producing relevant records and explanations regarding the laim by producing relevant records and explanations regarding the source of cash deposits. source of cash deposits.. We are of the considered view that the We are of the considered view that the issue relates to cash deposits during demonetisation—a matter issue relates to cash deposits during demonetisation issue relates to cash deposits during demonetisation which requires factual verification of the assessee’s claim regarding which requires factual verification of the assessee’s claim reg which requires factual verification of the assessee’s claim reg availability of cash, past withdrawals, or other sources. These availability of cash, past withdrawals, or other sources. These availability of cash, past withdrawals, or other sources. These aspects go to the root of the addition and cannot be adjudicated in aspects go to the root of the addition and cannot be adjudicated in aspects go to the root of the addition and cannot be adjudicated in the absence of primary evidence. In the interest of justice, it is the absence of primary evidence. In the interest of justice, it is the absence of primary evidence. In the interest of justice, it is desirable that the assessee be afforded one final opportunity to desirable that the assessee be afforded one final desirable that the assessee be afforded one final place his case on record so that the matter is decided on merits place his case on record so that the matter is decided on merits place his case on record so that the matter is decided on merits rather than on technical defaults. rather than on technical defaults. Accordingly, while condoning the Accordingly, while condoning the delay, we set aside the impugned order of the learned CIT(A) and delay, we set aside the impugned order of the learned CIT(A) and delay, we set aside the impugned order of the learned CIT(A) and restore the matter to his file for fresh adjudication. However, restore the matter to his file for fresh adjudication. However, restore the matter to his file for fresh adjudication. However, considering the repeated non considering the repeated non-compliance on the part of the compliance on the part of the assessee in earlier proceedings, we assessee in earlier proceedings, we impose a cost of impose a cost of ₹25,000/- to be deposited in the Prime Minister’s Relief Fund within 30 days of deposited in the Prime Minister’s Relief Fund within 30 days of deposited in the Prime Minister’s Relief Fund within 30 days of receipt of this order. The learned CIT(A) shall verify the payment of receipt of this order. The learned CIT(A) shall verify the payment of receipt of this order. The learned CIT(A) shall verify the payment of such cost before proceeding further. The assessee shall be entitled such cost before proceeding further. The assessee shall be entitled such cost before proceeding further. The assessee shall be entitled to file all necessary evidence and submissions in support of his y evidence and submissions in support of his y evidence and submissions in support of his claim, which the learned CIT(A) shall consider in accordance with claim, which the learned CIT(A) shall consider in accordance with claim, which the learned CIT(A) shall consider in accordance with law and after affording due opportunity to both parties. law and after affording due opportunity to both parties. law and after affording due opportunity to both parties.
4.3 In view of the above, the delay of 442 days is condoned. The In view of the above, the delay of 442 days is condoned. The In view of the above, the delay of 442 days is condoned. The appeal is restored to the f appeal is restored to the file of the learned CIT(A) for de novo ile of the learned CIT(A) for de novo adjudication on merits subject to the aforesaid condition. The adjudication on merits subject to the aforesaid condition. adjudication on merits subject to the aforesaid condition. ground No. 1 and 2 of the appeal of the assessee are accordingly ground No. 1 and 2 of the appeal of the assessee are accordingly ground No. 1 and 2 of the appeal of the assessee are accordingly allowed. The ground on merit are rendered academic at this stage allowed. The ground on merit are rendered academic at this stage allowed. The ground on merit are rendered academic at this stage and therefore not require and therefore not required to be adjudicated.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.