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Facts
The Assessee declared income for AY 2017-18 and a cash deposit of INR 11,00,000 was made in her bank account. The Assessing Officer added this amount under Section 68 as the Assessee failed to provide supporting documents. The CIT(A) dismissed the Assessee's appeal ex-parte.
Held
The Tribunal condoned the delay in filing the appeal, citing a reasonable cause and emphasizing substantial justice over technicalities. The Tribunal set aside the CIT(A)'s order and restored the issue to the Assessing Officer for fresh adjudication after considering the Assessee's submissions and documents.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the addition under Section 68 is justified without proper adjudication on merits.
Sections Cited
143(3), 68, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H (SMC
order : 27.05.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order dated 28/11/2023, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’], whereby the Ld. CIT(A) had dismissed the appeal of the Assessee against the Assessment Order, dated 05/12/2019, passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year 2017-2018.
2. The Assessee has raised following grounds of appeal : “The appellant objects to the order dated 28 November 2023 passed under Section 250 of the Income tax Act by the Commissioner of Income tax (Appeals), National Faceless Appeal Center [CIT(A)] for Assessment Year 2017-2018 the aforesaid assessment year on the following among other grounds: “1. The learned CIT(A) erred in passing ex-parte order.
2. The learned CIT(A) erred in confirming the addition of INR 11,00,000 made under Section 68 of the Income tax Act. The learned CIT(A) erred in not appreciating that the cash amounts aggregating to INR 11,00,000 deposited in the bank account during demonetisation period were out of her past savings and current income.
3. The Appellant prays to set aside the order passed by the CIT(А). ”
3. The Assessee, an individual, had filed return of income for the Assessment Year 2017-2018 on 25/07/2017 declaring total income at INR.2,99,530/-. The case of the Assessee was selected for scrutiny. During the assessment proceedings the Assessee was asked to explain the source of cash deposit of INR.11,00,000/- made by her in the bank account maintained with Vijaya Bank, Mahim, Mumbai. In response, the Assessee vide submission, dated 15/07/2019, submitted that the said cash was sourced from cash-in- hand generated from savings made current as well as from preceding years. Since no supporting documents were filed by the Assessee to explain the nature and source of cash deposits, notice dated 27/11/2018, was issued to the Assessee to file response. However, the aforesaid notice was not complied with. As the assessment proceedings were getting time barred, the Assessing Officer passed Assessment Order, dated 05/12/2012, under Section 143(3) of the Act making an addition of INR.11,00,000/- under Section 68 of the Act.
4. Being aggrieved, the Assessee preferred appeal before the CIT(A) challenging the above addition. The said appeal was dismissed by the CIT(A) vide order, dated 28/11/2023, observing that (a) the Assessee had not filed any submission/documents in support of grounds raised
in appeal even though notices issued on various
2. Assessment Year 2017-2018 occasion were duly served on Email, and (b) as the Assessee has not availed benefit of the opportunities provided to make representation, it was clear that the Assessee was not interested in pursuing the appeal.
Being aggrieved, the Assessee had preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above along with application seeking condonation of delay in filing the present appeal of about 404 days in filing the present appeal.
We have heard both the sides.
The Assessee has filed affidavit explaining reasons for delay in filing the appeal wherein it has been stated as under:
“I, Rajani Harish Shetty, at present residing at Flat No. 11, Building No. 8, Pushpanjali Society, Shiv Road, Near Gopal Hospital, Dattawadi, Ulhasnagar, Thane-421001, hereby solemnly state, declare and affirm as follows:
1. 1. I (the assessee) am a resident of India and assessed to income tax under PAN-ANUPS1265J in India.
2. I am a house wife and I filed my Income tax return declaring income of INR 2,99,525 from other sources for the Assessment Year 2017-18.
3. My case was selected for scrutiny for the Assessment Year 2017-18 on the basis of cash deposit of INR 11,00,000 made in the bank account during the demonetization period. During the assessment proceedings I filed the bank statement for the relevant period and submitted that the cash deposited in the bank account was out of my previous years' and current year income and past savings. However, the assessing officer passed the assessment order by making addition of INR 11,00,000 under Section 68 in the absence of providing the nature of cash receipts, Balance sheet, capital account and cash flow statement.
3 Assessment Year 2017-2018
On filing the appeal against the said assessment order before the CIT(A), the CIT(A) dismissed the appeal by passing ex-party order without deciding the case of merits.
5. It appears that the CIT(A) has passed the order on 28 November 2023. I would like to bring to your notice that there is a delay of approx. 400 days occurred in filing the appeal before the Income tax Appellate Tribunal (ITAT) against the CIT(A). This is because I was away from my house in Ulhasnagar for a long time more than a year and stayed in my home town in Karnataka and the communication received from income tax department in the form of email-id and mobile with regard to the issuance of the order by the CIT(A) could have been unnoticed by me. When I got the demand recovery notice from the tax department on 6 January 2025, I came to know about the passing of order by the learned CIT(A) on 28 November 2023. 6. In view of the above reasons, there is a delay of approx. 400 days occurred in filing the appeal before the Income tax Appellate Tribunal (ITAT) against the CIT(A) and this delay was unintentional. 7. I request the Hon'ble ITAT to kindly condone the delay occurred while filing the appeal before the ITAT against the order passed by the CIT(A) for the Assessment Year 2017-18 and decide the matter on merits. I make the above statements conscientiously believing the same to be true, at Mumbai, this 28 February 2025.” 8. During the course of hearing, by placing reliance on the above affidavit, it was explained by the Ld. Authorised Representative for the Assessee that the Assessee was not regularly staying at her residence at the relevant time and was staying in Karnataka for about a year. The communication sent to her in electronic form went unnoticed and she only acquired knowledge of the impugned order having been passed by the CIT(A) on 06/01/2025. Thereafter, she took steps and the present appeal got filed on 10/03/2025. It was further submitted that Assessee could not make proper 4 Assessment Year 2017-2018 representation before the authorities below, and therefore, it was prayed that another opportunity be granted to the Assessee to make proper representation. On the other hand, it was submitted by the Learned Departmental Representative submitted that the Assessee had been non-compliant during the assessment as well as the appellate proceedings. Therefore, the order passed by the Ld. CIT(A) did not call for interference. Even the delay in filing the present appeal was caused on account of negligence of the Assessee and therefore, the delay should not be condoned and appeal be dismissed.
Having given thoughtful consideration to the rival submissions and on perusal of record, we are of the view that there is nothing on record to cast doubts about the bonafides of the explanation offered by the Assessee. In the case of Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 (SC) the Hon’ble Supreme Court has, while dealing with the issue of condonation of delay, emphasized that substantial justice should prevail over technical considerations. Every day’s delay must be explained does not mean that a pedantic approach should be taken and that the aforesaid doctrine must be applied in a rational common sense and pragmatic manner, more so in circumstances where a litigant does not stand to benefit by lodging the appeal late (as is the case in appeal before us). Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Accepting the explanation given by the Assessee to be reasonable, we hold that in the present case the Assessee was prevented by the sufficient cause from filing the present appeal before the Tribunal within the prescribed time. Accordingly, we condone the delay of 404 days in filing the present appeal.
5 Assessment Year 2017-2018
During the course of hearing an opportunity was sought on behalf of the Assessee to make proper representation. We note that the CIT(A) has confirmed the addition of INR.11,00,000/- made in the hands of the Assessee under Section 68 of the Act on account of failure of the Assessee to furnish details/documents to support the nature and source of deposits. The Assessee has set up a case that the aforesaid amount was sourced from savings of the relevant previous year and the preceding years. However, the supporting documents/details were not filed by the Assessee. We note that the Assessee has filed return of income of declaring income of INR.2,99,525/- for the Assessment Year 2017-2018. The details of the return filed for the preceding assessment years were not considered by the authorities below. The submissions made by the Assessee were rejected for want to supporting documents. Now the Assessee is seeking to furnish documents and make proper representations. Keeping in view the overall facts and circumstances of the case and to meet ends of justice, we deem it appropriate to set aside the order, dated 26/03/2024, passed by the Learned CIT(A) and restore this issue back to the file of the Assessing Officer with the direction to adjudicate the same afresh after taking into consideration the submissions of the Assessee and the documents/details to be furnished by the Assessee in support of the claim. The Assessee is also directed to co-operate in the assessment proceedings and forthwith file details, documents & submission in support of its claims/contentions before the Assessing Officer. It is clarified that the Assessing Officer shall grant reasonable opportunity of being heard to the Assessee. The Assessee is directed to be vigilant and track the assessment proceedings through Income Tax Business Application Portal. In case the Assessee fails to enter appearance and/or fails to file details/documents/submission in response to notice of hearing issued by the Assessing Officer, the Assessing Officer shall be at liberty to decide the issues on merits on 6 Assessment Year 2017-2018 the basis of material on record. In terms of the aforesaid, Ground No. 1 to 3 raised by the Assessee are treated as allowed for statistical purposes.
In result, the present appeal preferred by the Assessee is treated as allowed for statistical purposes.