Loading judgment…
Facts
The assessee, a flower seller and part-time driver with no formal education, filed an appeal 357 days late against an ex-parte assessment under Section 144. The assessment added Rs. 41,54,001 as unexplained cash deposits during demonetisation, which was confirmed by the learned CIT(A). The assessee claimed unawareness of proceedings due to rural background and reliance on a consultant.
Held
The Tribunal condoned the delay in filing the appeal, considering the assessee's socio-economic background. It admitted additional evidence, including sale deeds and bank statements, which indicated the cash deposits originated from the sale of family property. The matter was remanded back to the Assessing Officer for a fresh examination of the additional evidence and a decision in accordance with the law.
Key Issues
1. Condonation of delay in filing appeal. 2. Admissibility and verification of additional evidence regarding the source of cash deposits during demonetisation.
Sections Cited
144, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI
This appeal is filed by Mr. Chandapura Thimmareddy Manjunath (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] dated 25.05.2024 wherein the appeal filed by the assessee against the assessment order passed u/s. 144 of the Income-tax Act, 1961 [the Act] dated 28.11.2019 by the ITO, 4(3)(5), Bangalore was dismissed.
The appeal of the assessee is late by 357 days. The facts show that the order of the ld. CIT(A) was passed on 25.5.2024, but the appeal was filed on 27.7.2024. The assessee preferred an application for condonation of delay stating that assessee is a flower seller earning a small daily income through door to door sales and he is also working as a part-time driver for educational institute. Coming from a rural background with no formal education and knowledge of tax laws, assessee was trying to meet both the ends, unable to understand the online communication. He remained unaware of tax proceedings and therefore he is dependent on the consultant. It was stated that there is no malafide intention in filing the appeal late. The background of the assessee itself says that delay is for sufficient cause and may be condoned.
The ld. AR reiterated the same reasons and further relied upon several judicial precedents for condonation of the delay.
The ld. DR vehemently objected to delay in filing of the appeal and submitted that it is not for sufficient cause and therefore should not be condoned.
I have carefully considered the rival contentions and perused the orders of the ld. lower authorities. I find that the affidavit of the assessee has not been disputed which says that he is a door to door flower seller and a driver in educational institute. Naturally he is not aware about the taxation provisions as he did not have any formal education and was from rural background. In view of the peculiar facts and situation of the assessee, I find the delay in filing of the appeal is for sufficient reason, hence I condone the same and admit the appeal.
The brief facts show that assessee has filed the return of income on 24.7.2017 at a total income of Rs.3,77,680. The return was picked up for limited scrutiny to examine the cash deposit during the demonetisation period and transaction in property. Notice u/s. 143(2) was also issued. Assessee was asked to submit e-response and to explain the source of cash deposit. Assessee could not respond to the same, therefore as per information available with the AO, he was of the view that so far as the cash deposit to the tune of Rs.41,54,001 during the demonetisation period in the assessee’s bank account remains unexplained and therefore assessment order u/s. 144 of the Act was passed on 28.11.2019 wherein addition of Rs.41,54,001 was made to the total income of the assessee.
Aggrieved with the same, the assessee preferred appeal before the ld. CIT(A) . During the course of appellate proceedings, the assessee was issued several notices, however no further details were produced and therefore the ld. CIT(A) considered the statement of facts furnished before him and confirmed the addition made by the ld. AO. Accordingly appeal of the assessee was partly allowed.
Aggrieved with the same, assessee is in appeal before me. The ld. AR submitted the brief synopsis and also the copies of notices issued during the course of assessment proceedings. He further filed an application for additional evidences wherein he submitted copies of 3
sale deeds dated 10.2.2012 & 11.11.2016 along with bank statement of the assessee and his wife. It was stated that these additional evidences could not be submitted earlier because of the reason of ill-health of the assessee and therefore the same may be admitted in the interest of justice. He explained the facts of the case and stated that addition made in the hands of the assessee is devoid of any merit.
The ld. DR vehemently supported the orders of the ld. lower authorities. It was submitted that nothing is produced before the ld. lower authorities, they did not have any proof, but to make addition on the basis of information available on record. He submitted that the additional evidences were not available with the AO and therefore now it cannot be adjudicated, but the issue needs to be sent back to the ld. AO where the assessee may substantiate his case.
I have considered the rival contentions and the orders of the ld. lower authorities. The facts show that assessee is an individual , filed his return of income of Rs.3,77,680. Selection for limited scrutiny of the case show that there are cash deposits during the demonetisation period and further cash deposits and transactions in property needs to be examined. As such, notice was issued to the assessee on 13.8.2018. Subsequently notice u/s. 143(2) of the Act was also issued on 28.9.2018. Notice u/s. 142(1) was also issued and further a show cause notice was also issued on 21.11.2019. As the assessee did not respond to any of the notices, it resulted into ex parte assessment order u/s. 144 of the Act.
The assessee submitted that according to the intimation passed on 20.11.2017, the jurisdictional AO was ITO Ward 2(2)(3), Bangalore. According to the notice u/s. 143(2) of the Act dated 13.8.2018 it was issued by the same ITO. However, notice u/s. 143(2) of the Act dated 29.8.2018 was issued by ITO, Ward 4(3)(5), Bangalore. Further a subsequent notice was issued by the ITO, 4(3)(5), Bangalore. A show cause notice was also issued by the same ITO. The assessee is not aware how the jurisdiction has been transferred from one ITO to another ITO without any intimation to the assessee. It clearly shows that assessee was not aware to which the ITO the case of the assessee was assigned to. With respect to the ld. CIT(A), it was submitted assessee could not respond to the notices for the reason that email id belonged to the tax consultant, who did not bring to the attention of the assessee about the proceedings going on. Therefore it resulted into assessment proceedings and appellate proceedings ex parte.
On the additional evidences, he submitted that the assessee has sold some properties which were joint family property of the assessee which clearly show the sale of the property. The sale of the property is belonging to the mother of the assessee who did not have a bank account and hence cash received was deposited in the bank account of assessee. As the sale proceeds are documented in the sale deed and further source of such cash deposit is sale of the property, the same could not have been added in the hands of the assessee. As the additional evidence furnished by the assessee needs to be verified and the source of cash deposit also requires to be explained by the assessee,
I restore the whole matter back to the file of the ld. AO with a direction to the assessee to explain the details of cash deposit in the bank account. The ld. AO may examine the same and decide the issue afresh in accordance with the law.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 27th day of October, 2025.