SMT. CHANDRIKABEN NARANBHAI BHORANIA,MORBI vs. ITO, WARD-1 , MORBI

This assessee’s appeal for A.Y. 2015-16, arises from order of the CIT(A)-2, Rajkot dated 17-07-2019, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

The assessee has raised following ground of appeal:-

The only issue raised by the assessee is that the learned CIT (A) erred in confirming the addition of Rs. 4,98,040/- on account of unexplained cash credit under section 68 of the Act.

The facts in brief are that the assessee in the present case is an individual and engaged in the activity of tailoring/embroidery. The assessee for the 1st time filed her return of income for the year under consideration declaring total income at Rs. 2,49,110/-. The assessee in the statement furnished under section 131 of the Act has disclosed the cash on hand as on 31 March 2015 at Rs. 4,98,040/- which was treated as unexplained cash credit under section 68 of the Act. Thus the same was added to the total income of the assessee. 5. Aggrieved assessee preferred an appeal to the learned CIT (A) who also confirmed the order of the AO by observing as under: “Decision xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Having considered facts and circumstances of the case I find merit in, findings of Assessing Officer that the contentions of assessee are mere make believe story and not substantiated by any evidences. On the-one hand the assessee has contended that she was engaged in tailoring: and embroidery business and on the other hand she had denied having details for any of her client she had worked for. The claim of assessee that she does not maintain register of clients is not tenable because when the person is doing the business of stated kind, he or she would have some information about identity of the client and the charges received from them. It Is also noteworthy that the gssessee. has .claimed expenses for accounting fees, legal fees etc. In business of tailoring and embroidery which the assessee has claimed to have carried out, when the assessee has claimed to have not maintained books of accounts or the register of clients there would be no cause to incur expenses for accounting fees, legal fees etc, It can ;be reasonably inferred that contentions of assessee are concocted to explain the cash deposits. Considering the totality of the facts and circumstances of the case and rival contentions I find no merit in contentions of assessee that said cash In hand was from her past saving from business of tailoring/embroidery. The impugned addition is therefore confirmed, The ground of appeal is rejected.”

Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us.

The learned AR before us filed a paper book running from pages 1 to 18 and submitted that the cash balance shown as on 31 March 2015 cannot be treated as unexplained cash credit under section 68 of the Act. Therefore, the same cannot be added to the total income of the assessee. 8. On the other hand the learner DR vehemently supported the order of the authorities below. 9. We have heard the rival contentions of both the parties and perused the materials available on record before us. The 1st issue arises whether the provisions of section 68 of the Act can be attracted to the closing balance of cash shown by the assessee as on 31 March 2015. To our mind the answer stands negative. At this juncture we inclined to refer to the provisions of section 68 of the Act which reads as under: Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10.

In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed “while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken suo motu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

To sum up, the appeal of the assessee is allowed, and appeal of the Assessing Officer is dismissed. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.