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

PER KESHAV DUBEY, JUDICIAL MEMBER:

1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2 . The learned CIT[A] is not justified in refusing to condone the delay in filing the appeal without appreciating that the delay in filing

Page 2 of 15 the appeal was due to sufficient cause under the facts and in the circumstances of the appellant's case. 3. 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.

2.1 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. 3. 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.

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.

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4. 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.

Page 9 of 15 sufficient and reasonable cause on the part of the assessee in not filing this appeal within the prescribed time.

6.1 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.

6.2 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 Page 10 of 15 legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.

6.3 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”.

6.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When

Page 11 of 15 compared to 21 years, 98 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 98 days has to be condoned and accordingly we condone the delay and admit the appeal for adjudication.

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.

13.1 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. Therefore, notices u/s 142(1) dated 21.2.2018 and 10.5.2019, and show cause notices dated 11.6.2019 and 20.09.2019 and consequent order u/s 144 dated 10.10.2019 was never served upon me. It is only when the bankers during the month of March 2020 informed me about the bank attachment, I came to know about the assessment. As I was far away from India, I was not able to find any suitable authorized representative to represent my case as Covid 19 restrictions were in place and the tax demand was huge. Only in the month of March 2022, with the help of a well-wisher, I was able to find a Chartered Accountant who could take my case. The Chartered Accountant made me aware of the assessment order, consequent demand notice and penalty notices issued upon me. On gathering all the information and documents, with the help of the Chartered Accountant, I am finally able to file the appeal. As I am far away in Dubai, UAE I am not able to furnish an affidavit narrating the circumstances which resulted in an inordinate delay in filing this appeal. The affidavit will be submitted before your honour at the earliest. In view of the above, it is my humble request that your honour may be pleased to condone the delay and admit the appeal and favor me with an opportunity of being heard at the earliest.”

Page 14 of 15 13.2 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.

13.3 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.

Order pronounced in the open court on 16th Sept, 2025