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Facts
The assessee, a farmer, deposited Rs. 15 lakhs in cash during the demonetization period. He did not file an income tax return and was unaware of the proceedings. The Assessing Officer passed an ex-parte assessment order u/s 144, treating the deposit as unexplained income. The appeal before the CIT(A) was dismissed due to a delay of 89 days.
Held
The Tribunal condoned the delay of 89 days, holding that the assessee's status as a farmer and his lack of awareness of tax laws constituted sufficient cause. On merits, the Tribunal found that the cash deposit likely originated from agricultural income, supported by withdrawal details from other bank accounts and proof of sugarcane sales.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was condonable on the grounds of sufficient cause, and whether the cash deposit of Rs. 15 lakhs represented unexplained income.
Sections Cited
144, 133(6), 142(1), 69A, 115BBE, 234
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Income Tax Appellate Tribunal, “SMC” BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI
O R D E R
This appeal is filed by Appasab Avadanna Lavate (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 11.12.2024 wherein the appeal filed by the assessee against the assessment order passed u/s. 144 of the Income- tax Act, 1961 [the Act] dated 16.11.2019 by the ITO, Ward 2, Bijapur was dismissed in limine.
The assessee is aggrieved with the appellate order and preferred appeal before the ITAT raising the following grounds of appeal :-
“1. The Id. CIT(A) erred in confirming the exparty order passed in the manner which he did .
2. The Ld.CIT(A) ought to have appreciated that the non- compliance of notices, on account of reasonable cause and however the Appellant is a farmer and not aware of the income tax proceeding and moreover he stays in the village. The information about order passed was given by one of his friends to go and meet the auditor to file an appeal. The Ld. CIT(A) ought to have given further opportunity to the Appellant for giving the reasonable cause for delay in filing the appeal. Thus, the ex-parte order as passed is opposed to law and liable to be set aside.
2. The Id. CIT(A) erred in confirming the addition of Rs. 15,00,000/- under section 69A of the Act on the ground that the cash deposits during the period of demonetization and not explained the source of cash deposit, without providing the opportunity to the Appellant.
The ld. CIT(A) ought to have appreciated that the Appellant has filed return of income declaring the income and paid the taxes, without giving an opportunity to explain the addition cannot be made. The Appellant would have explained the source of income if the opportunity was given and these deposits were made out of the business income and same is explainable. Thus, the addition confirmed u/s 69A of the Act is bad in law.
4. The Id. CIT(A) ought to have appreciated that the Appellant is a private limited company engaged in chit business and deposits were made out of business income, the said income is not taxable u/s 69A of the Act when the source is explained and the said addition ought to be deleted.
5. The Id. CIT(A) further ought to have appreciated that the Appellant is not having taxable income, the cash deposits has been computed under section 69A of the Act and hence confirming additions under section 69A of the Act and taxed u/s 115BBE of the Act merely on suspicion is bad in law.
Without prejudice the addition is excessive arbitrary and unreasonable and liable to be reduced substantially.
7. The learned assessing authority erred in levying the interest us 234 of the Act.
For these and other grounds that may urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.” 3. The brief facts of the case show that assessee, an individual, who was found to have deposited cash of Rs.15 lakhs in his account with SBI, but has not filed return of income. Therefore notice u/s. 142(1) of the Act was issued to the assessee, but no compliance was made. Accordingly the ld. AO issued notice u/s. 133(6) of the Act on 28.8.2019 to the SBI calling for bank statement, details of cash deposits made during FY 2016-17 and details of cash deposit during the demonetisation period of 9.11.2016 to 30.12.2016. On the basis of information available, ld. AO noted that cash deposit made by the assessee is of Rs.15 lakhs during the demonetisation period in old currency note. As the assessee has not provided any explanation, according to the AO, the above cash deposit remains unexplained. Accordingly the same was added u/s. 69A of the Act, taxed @ 60% under the provisions of section 115BBE and assessment order u/s. 144
of the Act was passed determining the total income of assessee at Rs.15 lakhs.
The assessee filed appeal before the ld. CIT(A) who passed an order on 11.12.2024 wherein the appeal was delayed by 89 days. Assessee failed to show sufficient cause and therefore the appellate authority did not condone the delay of 89 days and appeal was dismissed.
Before the CIT(A), the assessee submitted that yes there is a delay in filing of appeal and cause for the delay is that assessee is a farmer, not aware of the I.T. Act and was also not filing any return of income and therefore is not aware about the limitation and hence it has caused delay. The ld. CIT(A) held that assessee failed to furnish evidences of its claim when opportunity is granted. Accordingly delay was not condoned. The ld. CIT(A) also considered the Hon’ble Supreme Court of 125 STC 375 (SC) wherein the Hon’ble Court has held that the court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause”, the principle of advancing substantial justice is of prime importance and the expression “sufficient cause” should receive liberal construction. The ld. CIT(A) held that the issue before the Hon’ble Supreme Court was for condonation of 76 days and the delay before him is for 89 days. He relied on the decision of ITAT Delhi. It was further held that appeals having merit should not be thrown away because there some delay in filing of the appeal. It was further held that appellant was well aware of the factual and technical aspects of the case, he was never in dark
and never seems to be ignorant about the law. Thus appeal of the assessee was not admitted. The assessee is aggrieved and in appeal before the Tribunal.
6. The ld. AR submitted that the delay caused before the CIT(A) was merely of 89 days and reason for this is that the assessee was a farmer not filing any return of income and was also not aware about the Income-tax provisions. Therefore he was not aware about compliance before the AO as well as before the ld. CIT(A). The assessee is from a very small place, agriculturist, not filed his return of income, not aware about Income-tax proceedings and only when the demand was raised and asked for payment, the assessee came to know about the procedure to file the appeal and immediately filed the appeal. All these factors lead to sufficient cause which are beyond the control of the assessee and therefore there was delay in filing of appeal. It was submitted that the ld. CIT(A) despite noticing the decision of the Hon’ble Supreme Court in 125 STC 375 and of Mst. Katiji did not condone the delay. She referred to para 5.9 of the ld. CIT(A)’s order and stated that the finding of the ld. CIT(A) that “the Appellant was well aware of the factual and technical aspects of the case, the Appellant was never in dark, never seems to be ignorant of the law”, is devoid of any facts. She stated that these observations of the ld. CIT(A) are without any basis, more particularly when assessee has not appeared before the ld. CIT(A) and did not furnish any information.
On the merits of the case, she submitted that in the Statement of Facts, it is submitted that assessee is a farmer, having inherited lands and crop is sugarcane. The sugarcane is sold in the factory and the sale consideration is deposited into bank. The assessee submitted the bills of co-operative society and its statement. Accordingly the sum of Rs.15 lakhs deposited in the bank account is out of agricultural income of the assessee. She submitted a paperbook containing 15 pages, submitting a copy of the letter dated 18.2.2019 of the ld. AO and copy of the statement of the assessee from Indian Suar Mfg. Co. Ltd. where the assessee has sold the agricultural produce. It was submitted that assessee has sold 563.479 tons of sugarcane @ Rs.1973 having total billing of Rs.11,11,744 received from Karnataka Bank Ltd. in A/c. No.1722500100432901. She also submitted a Syndicate Bank account passbook of the assessee of A/c No.xxxxxx4580 wherein there is a huge cash withdrawal made by the assessee and same was deposited with SBI. She also submitted that assessee has also withdrawn cash from SBI itself on earlier occasion and deposited cash of Rs.15 lakhs with SBI on 02.12.2016. Therefore cash deposit by the assessee of Rs.15 lakhs is from the source of agricultural income by the assessee. Therefore the addition on merits is also wrong.
8. The ld. DR vehemently submitted that assessee has filed the appeal late by 189 days and also did not submit any explanation before the ld. CIT(A). Therefore no fault can be found with the orders of ld. lower authorities.
We have carefully considered the rival contentions and perused the orders of ld. lower authorities. In this case, an assessment order was passed on 16.11.2019. The assessee received the above order on 16.11.2019. However, the appeal got filed on 16.7.2020 thereby delay of 89 days was reported in col. 14 in Form 35. The assessee also explained the cause stating that assessee is a farmer, not aware about I.T. Act, did not file any return of income as his income is not taxable at all, therefore unaware about the notice issued, also did not respond to the AO to various notices which resulted into assessment order passed u/s. 144 of the Act. As soon as assessee came to know about the tax liability and on immediate advice, filed appeal before the ld. CIT(A) on 16.7.2020. It was reported that the amount of deposit made in the bank account is his agricultural income and, he has sold such agricultural produce to the other party and sale proceed of that was deposited in one bank account, withdrawn from there and deposited in SBI. This delay was also explained to CIT(A) as per Form 35. There is no reference of notice issued by the ld. CIT(A) to the assessee. It merely states that the assessee was given an opportunity but did not attend. Though CIT(A) in para 5.6 of his order held that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance, but he did not find the delay of 89 days because of sufficient cause. In para 5.9, he held that appellant was well aware of the factual and technical aspects of the case, he was never in dark and never seemed to be ignorant about the law. I fail to understand that to negate the existence of sufficient cause, on what basis the ld. CIT(A)
has made this observation, when assessee did not avail any opportunity of hearing before him. Surprisingly, the delay of 89 days was termed as extra-ordinary delay by the ld. CIT(A). I find that looking to the status of the assessee, his background as a farmer, not filing any ITR as no income is chargeable to tax, is sufficient to show that he is not aware about the tax laws of I.T. Act. Accordingly, the ld. CIT(A) was not correct in not condoning the delay of 89 days which according to me, is for sufficient cause. This is so because the ld. CIT(A) supported his order where delay was not condoned by ITAT of 1663 days. No doubt the length of delay, delay condoned in some other cases, does not make any impact in deciding the sufficient cause in the case of an assessee. It is to be seen on a stand-alone basis in case of that assessee only. In this case, I find that there is sufficient cause in filing the appeal late by 89 days which would have been condoned by the ld. CIT(A). Therefore, the order of the ld. CIT(A) in not condoning the delay of 89 days is reversed and the delay is condoned.
Coming to the facts on merits of the case, I find that assessee is an agriculturist, sugarcane grower, received money from the Indian Sugar Manufacturing Co. Ltd. on sale of sugarcane which was deposited by him in Syndicate Bank and then withdrawn in cash and later on also deposited with SBI. The cash of Rs.15 lakhs was deposited on 02.12.2016 in the SBI a/c. The source of the fund is that assessee has a. withdrawn cash of Rs.4,94,000 from the same bank account in the month of Aug. & Sept. 2016.
b. Rs. 2 Lakhs was also withdrawn from the same bank in the month of Jan. 2016. c. sum of Rs.4,60,000 was withdrawn from Syndicate Bank on 8.8.2016. d. Rs.3,25,000 was withdrawn on 8.7.2016. e. In February 2016, from the same bank account assessee has withdrawn Rs.10 lakhs.
Looking at all such withdrawals, I find that , unless there is evidence with the Revenue that the above withdrawal is used for different purpose, source of fund of deposit of Rs.15 lakhs in cash is clearly the withdrawal of the same from 2 different bank accounts. Further by submitting the proof of sale of sugarcane, assessee has also proved that he is a farmer earning agricultural income. Therefore, it cannot be the case that the amount deposited in cash by the assessee during the demonetisation period of Rs.15 lakhs with SBI can be unexplained income of the assessee chargeable to tax u/s. 69 of the Act.
However, as these details were not before the lower authorities, as the ld. AO passed an order u/s. 144 of the Act and the ld. CIT(A) did not look into the evidences produced by not admitting the appeal, I restore the whole issue back to the file of ld. AO with a direction to the assessee to submit the above details before him, he may examine the same and decided the issue on merits in accordance with law, after giving opportunity of hearing to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on this 18th day of June, 2025.