MOHAMMED FAROOQ,HASSAN vs. INCOME TAX OFFICER, WARD-2, HASSAN

The learned CIT[A]/NFAC erred in upholding the addition of Rs.62,26,000/being cash deposited during the financial year treated as unexplained money u/s.69A of the Act under the facts and in the circumstances of the appellant's case.

1 The learned CIT[A]/NFAC erred in rejecting the explanation of the appellant that the source of the cash deposited in the appellant's bank account was from out of known and explainable sources under the facts and in the circumstances of the aopellant's case.

The learned CIT[A]/NFAC is not justified in upholding the tax imposed under the provisions of section 115BBE at the rate of 60% under the facts and in the circumstances of the appellant's case. 4. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234-A, 234-B and 234-C of the Act, under the facts and in the circumstances of the appellant's case. 5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.

At the outset, the ld. A.R. of the assessee submitted that there is a delay of 98 days in filing the appeal before this Tribunal. Further, the ld. A.R. of the assessee also drew our attention to an application for condonation of delay dated 24/03/2022 stating the cause for such delay, which is reproduced below for ease of reference and record: Sri Mohammed Farooq, Hassan

On going through the above application for condonation, we find that the assessee filed the appeal with a delay of 98 days for the reason that the assessee, being a driver working in Dubai for the past 7 years, was not conversant with the emails and other electronic means of communication and required the assistance of a third person to access his emails, and therefore he was not aware of the order passed by the ld. CIT(A). The assessee was under the bonafide impression that the said appeal was pending disposal. His C.A. Shimoga informed him about the DTVSV Scheme, 2024, over the phone, and thereafter, when the assessee logged into his e-filing portal, he noticed that the appeal filed against the order u/s 144 of the Act was already dismissed by the ld. CIT(A) dated 25.10.2024, which resulted in a delay of 98 days in filing the appeal before this Tribunal, and requested that this delay may be condoned on account of circumstances beyond his control as explained above. The ld. A.R. also submitted that the delay is unintentional and no benefit can be attributed to the assessee in filing the appeal belatedly. He thus prayed to condone the delay and requested to consider the issues raised by the assessee on merits.

On the contrary, the ld. D.R. vehemently objected for granting the condonation of delay.

We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly before us. It is to be noted that u/s 253(5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation, therefore, becomes relevant to determine whether the same reflect Sri Mohammed Farooq, Hassan

1 While considering a similar issue, the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. 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. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right for injustice being done because of nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to Sri Mohammed Farooq, Hassan

3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.

4 7. Now, the brief facts of the case as submitted by the AR of the assessee are that the assessee was engaged in the business of trading in fruits. Fruits were sold directly to the retailers, for which consideration was received in cash. This cash was deposited into the bank for making payments to suppliers. It is submitted that since the goods are highly perishable, the margin of profit earned ranges from 3% to 4% and sometimes it falls to 1% during non-seasonal periods. As the assessee had not filed his return of income for the assessment year 2017-18, a notice u/s 142(1) of the Act was issued by the AO calling for the filing of the return of income. However, there was neither any compliance nor any response to the said notices. During the course of assessment proceedings, the AO found that the assessee had maintained an account with Canara Bank in which the assessee had deposited cash during the period from 1.4.2016 to 31.3.2017, amounting to Rs.62,26,000/-. The AO completed the assessment proceedings u/s 144 of the Act to the best of his judgment, and the entire cash deposit made during the financial year 2016-17 was treated as unexplained money of the assessee and brought to tax u/s 69A of the Act under the head “income from other sources” and held taxable under the provision of section 115BBE of the Act. Sri Mohammed Farooq, Hassan

Aggrieved by the order passed by the AO passed u/s. 144 of the Act dated 10/10/2019, the assessee preferred an appeal before the ld. CIT(A)/NFAC. 9. The ld. CIT(A)/NFAC dismissed the appeal of the assessee by not condoning the inordinate delay of 865 days by holding that the mere submission of a condonation of delay without any documentary evidence cannot be considered by him & accordingly did not condone the delay. 10. Again, being aggrieved by the order of the ld.CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal. 11. Before us, the ld. A.R. of the assessee vehemently submitted that the assessee was engaged in the business of trading in fruits. The fruits were sold directly to retailers, for which consideration was received in cash. This cash was deposited into the bank for making payments to suppliers. It is submitted that since the goods are highly perishable, the margin of profit earned ranges from 3% to 4% and sometimes it falls to 1% during non-seasonal periods. 11.1 The ld. AR further submitted that the ld.CIT(A)/NFAC failed to appreciate that there existed sufficient cause for filing the appeal belatedly before the ld.CIT(A)/NFAC. Further, the ld. A.R. of the assessee submitted that as the assessee could not represent his case before both the authorities below, and accordingly prayed that one more opportunity may be granted before the AO to represent his case to substantiate his claim. 12. The ld. D.R. on the other hand strongly opposed for remitting the matter back to the file of AO as the assessee is very callous in his approach in filing appeal not only before the ld.CIT(A)/NFAC but also Sri Mohammed Farooq, Hassan

1 The assessee submitted the following reasons for the delay in filing of the appeal before the ld. CIT(A): “I was carrying on the business as wholesaler in fruits during the year 2016-17. The business was carried on near Ricemill, Megge, Alur Taluk, Hassan. I was under financial crisis during that year. After incurring heavy losses, I left India on 28.12.2018 to Dubai. The house in which I was residing was also vacated. My wife shifted to her parent’s residence.

2 Perused the record and having heard learned counsel for the respective parties, it is perceived that the explanation offered in the condonation application is plausible and sufficient cause has been shown by the assessee, which prevented him from filing the appeal within the specified period before the ld. CIT(A)/NFAC, and accordingly, we are inclined to condone the delay in filing the appeal before the ld. CIT(A)/NFAC.

3 It is an undisputed fact that the assessee could not represent his case before the AO, accordingly the AO passed an ex- parte order u/s 144 of the Act and the entire cash deposit of Rs.62,26,000/- was treated as unexplained money u/s 69A of the Act. It is also an undisputed fact that ld. CIT(A)/NFAC without condoning the delay of 865 days in filing the appeal before him, dismissed the appeal in limine in view of provisions contained u/s 249(3) of the Act. This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue in dispute to the file of AO to decide afresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce all the documents/records/ financials/reports/information to substantiate his claim. We make it clear that in case of further default, the assessee shall not be entitled to any leniency. It is ordered accordingly. Sri Mohammed Farooq, Hassan

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 16th Sept, 2025 (Waseem Ahmed) Accountant Member (Keshav Dubey) Judicial Member

The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file