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Facts
The assessee, an employee of North Eastern Karnataka Road Transport Corporation, failed to file his Income Tax Return for AY 2017-18. The AO initiated assessment proceedings based on information about a cash deposit of Rs. 92,53,780/- in a bank account linked to the assessee's PAN during the demonetization period. The assessee claimed the account belonged to the Government Depot and was erroneously linked to his PAN.
Held
The Tribunal held that the cash deposited in the Government depot's bank account, managed by the assessee in a fiduciary capacity as Depot Manager, cannot be treated as unexplained money in his hands. The Tribunal directed the AO to delete the addition of Rs. 92,53,780/-.
Key Issues
Whether the cash deposited in a bank account erroneously linked to the assessee's PAN, but belonging to the government depot managed by the assessee, can be treated as unexplained income of the assessee.
Sections Cited
250, 234A, 234B, 234C, 154, 133(6), 69A, 144, 246A
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 24.10.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1069926100(1)passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2017-18.
The assessee has raised the following grounds of appeal:
3. At the outset, the ld. A.R. of the assessee submitted that there was a delay of 682 days in filing the appeal before the ld. CIT(A)/NFAC and accordingly ld. CIT(A)/NFAC dismissed the appeal of the assessee in limine without condoning the delay. The ld. A.R. of the assessee also drew our attention to an affidavit dated 21.12.2024in original sworn before the notary public along with an application for condonation of delay filed before us, wherein the assessee had given the detailed reasons for filing the appeal before the ld. CIT(A)/NFAC belatedly which are reproduced below for ease of reference and record:
Rampur Laxamana Naik Ravishankar, Tumkur Page 11 of 17 5. On the other hand, the ld. D.R. submitted that there was delay of 682 days in filing the appeal before the ld. CIT(A)/NFAC, which is very inordinate delay and that too due to the negligent and inaction of the assessee in taking the remedial steps. Therefore, the ld. DR submitted that the delay may not be condoned, and the ld. CIT(A)/NFAC had rightly dismissed the appeal in limine by not condoning the delay.
We have heard the rival submissions and perused the materials available on record. In this case the assessment order was passed on 24.9.2019 and the appeal ought to have been filed before the ld. CIT(A)/NFAC on or before 24.10.2019 for the AY 2017-18 i.e. 30 days from the date of receipt of the order of AO. However, the assessee had filed the appeal before the ld. CIT(A)/NFAC on 5.9.2021 for the reasons as mentioned in his condonation application as above resulting in a delay of 682 number of days in filing the appeal before the ld. CIT(A)/NFAC which is dismissed in limine without condoning the delay.
6.1 We take note of the fact that the delay during the Covid period was 540 days i.e. from 15.3.2020 to 05.09.2021. The assessee need not explain this delay in view of the order of the Hon’ble Supreme Court in Miscellaneous Application No.21 of 2022 in Miscellaneous Application No.665 of 2021 in Suo Moto WP No.(C) No.3 of 2020 in Re: Cognizance of Limitation dated 10.1.2022. After excluding 540 days out of 682 days, the balance period of delay was only142 days, which assessee is required to explain. The assessee has explained that this delay was due to wrong professional advice wherein the assessee was advised to file a rectification application u/s 154 of the Act before the AO & not to file the statutory appeal.The assessee was pursuing the remedy u/s 154 of the Act. Upon failing to secure the remedy u/s 154 of the Rampur Laxamana Naik Ravishankar, Tumkur Page 12 of 17 Act, the assessee approached another consultant who although filed the appeal, failed to file the condonation of delay before the ld. CIT(A)/NFAC. Hence, there was a sufficient cause in filing the appeal belatedly before the ld. CIT(A)/NFAC. Thus, it cannot be said that the assessee is very callous in his approach in filing the appeal before the ld. CIT(A)/NFAC.
6.2 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 non-deliberate 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 legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Rampur Laxamana Naik Ravishankar, Tumkur Page 13 of 17 6.3 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 for injustice being done because of nondeliberate delay. In the case on our hand, the issue on merit is strongly in favor of the assessee. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. 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 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 notcondoned, 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. Therefore, in our opinion, by preferring the substantial justice, the delay of 142 days has to be condoned.
6.4. In view of the above, we condone the delay of 142 days in filing the appeal before the ld. CIT(A)/NFAC.
Now brief facts of the case are that the assessee being an employee of North Eastern Karnataka Road Transport Corporation at Maski, Raichur Division in Karnataka State & working as Depot Manger did not filed his return of income for the assessment year 2017-2018 on an honest and Bonafide Rampur Laxamana Naik Ravishankar, Tumkur Page 14 of 17 belief that all the due taxes are deducted from his salary at source by his employer, however the AO had information that although the assessee had income above the taxable limit but he did not file his return of income. Further, on the basis of data analytics and information gathered during the phase of online verification under 'Operation Clean Money', the Income Tax Department gathered a list of assessee who had deposited substantial Cash in the bank accounts during the demonetization period (9th November, 2016 to 30th December, 2016), but have not filed Income tax Return for AY 2017-18.The data revealed that the assessee had deposited Cash of Rs. 92,53,780/- in his bank account during the demonetization period (9.11.2016 to 30.12.2016). Therefore, the assessee was asked to file the return of income and explain the sources of deposit into Bank Account. Upon verification of the bank statement called for u/s 133(6) of the Act by the AO, it was noticed that there was a cash credit aggregating to Rs. 92,53,780/- during the demonetization period. Since the assessee did not file any reply nor respond to the notices/letters as well as final show cause notice dated 04.09.2019, in the absence of any documentary evidence to substantiate the sources for cash deposit, a sum of Rs. 92,53,780/- was brought to tax as unexplained cash credit u/s 69A of the Act and thereby the AO concluded the assessment proceedings ex-parte under section 144 of the Act.
7.1 Thereafter, the assessee filed a rectification application under section 154 of the Act and accordingly the AO passed an order under section 154 on 03.09.2021 by rejecting the request for rectification on the ground that there is no mistake apparent on the record.The Rectification Order was served on 03.09.2021 and immediately an appeal challenging the Assessment Order Rampur Laxamana Naik Ravishankar, Tumkur Page 15 of 17 passed under section 144 dated 24.09.2019 was filed on 05.09.2021 before the learned Commissioner of Income Tax (Appeals)/NFAC under section 246A of the Act.
The ld. CIT(A)/NFAC dismiss the appeal of the assessee in limine by not condoning the delay in filing the appeal before the CIT(A)/NFAC.
Again, being aggrieved by the Order of the ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 13 pages containing therein the various documents/record in support of his case.
Before us, the ld. A.R. of the assessee furnished a detailed written submission and submitted that the assessee is a working employee of the North-Eastern Karnataka Road Transport Corporation and received Salary from the employer. Further the ld. AR submitted that the bank statement bearing number 62412153244 as called for u/s 133(6) of the Act by the AO does not pertain to the assessee and in fact the account actually belong to the Government Depot. Further the AR of the assessee clarified that the Bank account of the Government Depot was erroneously linked to the assessee’s personal PAN and accordingly prayed that the appeal may be allowed for the advancement of substantial cause of justice and equity.
The ld. D.R. strongly objected for the adjudication of this appeal on merits due to the utter negligence of the assessee in filing the appeal belatedly before the ld. CIT(A) and requested to dismiss the appeal of the assessee in limine.
Rampur Laxamana Naik Ravishankar, Tumkur Page 16 of 17 12. We have heard the rival submissions and perused the materials available on record. On going through the Form No.16 (Salary Certificate) submitted before us, we take a note of the fact that the assessee is an employee of North Eastern Karnataka Road Transport Corporation at Maski, Raichur Division in Karnataka State & received salary for working as Depot Manger. We take a note of the fact that while doing his duty as depot manager in Maski, the assessee was regularly collecting money from the bus conductors in the evening and remitting the same to a Bank account bearing No. 62412153244 which was opened in the name of “DEPOT MANAGER N E K R T C BUS DEPOT MASKI”. The bank account was of the Government depot & not of the assessee. However, the aforesaid bank account was inadvertently linked with the personal PAN of the assessee & for this reason the notices were sent to the assessee in his individual capacity & not in the name of the Corporation. Further we also take note of the fact that in response to the cash deposits made during the demonetization period i.e. 09/11/2016 to 31/12/2016, the assessee had categorically denied on the compliance portal of income tax Department stating that “The Accounts does not relate to this PAN”. Before us, the assessee has also produced a letter from the Divisional Controller, North Eastern Karnataka Road Transport Corporation, Raichur Division, Raichur in which it is categorically stated that the amount appeared in the personal PAN of the assessee for the period 2016-17 onwards belong to North Eastern Karnataka Road Transport Corporation, Maski depot of Raichur Division. Further, it is also stated by the Divisional Controller that while opening the bank account at Maski, the PAN of R L Ravishankar (Assessee) was linked instead of corporation which has caused the mess. Therefore, taking into consideration the Form-16 (Salary Certificate), assessee’s response on Compliance portal, Bank statement as well as letter of the Divisional Controller Rampur Laxamana Naik Ravishankar, Tumkur Page 17 of 17 we are inclined to hold that the cash deposited by the assessee in his fiduciary capacity as Depot Manger in the account of the Government depot bank account cannot be treated as unexplained money u/s 69A of the Act in the hands of the assessee and accordingly we direct the AO the delete the entire addition of Rs.92,53,780/-. It is ordered accordingly.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 22nd July, 2025