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Facts
The assessee's appeal was delayed by 450 days due to issues with his consultant. The cash deposits made during the financial year 2016-17, including during demonetization, were not properly verified by the AO.
Held
The Tribunal condoned the delay of 450 days, citing the need for substantial justice and referencing Apex Court judgments on delay condonation. The issue of cash deposits was remitted back to the AO for fresh consideration with an opportunity for the assessee to be heard.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the cash deposits made during demonetization were adequately examined by the lower authorities.
Sections Cited
250, 69A, 234A, 234B, 271AAC, 271(1)(b), 271F, 144, 253(5)
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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 16.8.2023 vide DIN & Order No.ITBA/NFAC/S/250/2023-24/1055156951(1) dated 16.8.2023 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the AY 2017-18.
The assessee has raised the following grounds of appeal:
Abdul Hakeem, Gulbarga Page 3 of 14 3. At the outset, the ld. A.R. of the assessee submitted that there is a delay of 450 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee also drew our attention on application for condonation of delay dated 3.1.2025 along with an affidavit in original sworn before the notary public which are reproduced below for ease of reference and record:
Abdul Hakeem, Gulbarga Page 9 of 14 4. On going through the application for condonation, we find that the assessee could not file the appeal in time for the reason that the assessee had approached the consultant and gave all the details and documents. However, the consultant had filed the appeal before the CIT(A) but did not take any action regarding the submissions. The assessee was completely unaware of the order passed by the ld. CIT(A). 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 and submitted that the assessee had neither appeared before the AO nor before the ld. CIT(A) which clearly demonstrate the careless attitude of the assessee.
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 appeals within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing these appeals within the prescribed time. We have gone through the reasons explained by the assessee in which the assessee alleged that his consultant did not take any action regarding the submission before the ld. CIT(A) and the assessee was completely unaware of the order passed by the ld.CIT(A). It is only after the attachment of the bank account, the assessee came to 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 legalise 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 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 Abdul Hakeem, Gulbarga Page 11 of 14 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 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 compared to 21 years, 450 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by Abdul Hakeem, Gulbarga Page 12 of 14 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 450 days has to be condoned and accordingly we condone the delay and admit the appeal for adjudication.
Before us, both the parties fairly conceded that the order of AO as well as ld. CIT(A) are ex-parte. Further, we also take a note of the fact that the total cash deposits made during the financial year 2016-17 in the bank account with the ICICI bank was to the extent of Rs.76,10,500/- including cash deposit of Rs.18,74,700/- during the demonetization period. The assessee claimed to have earned the commission while dealing with the agricultural products but he could not substantiate his case by producing any documents/evidences/information before the authorities below. Further with regard to cash deposits, we are of the opinion that it is required to be examined in the light of various circulars issued by the CBDT in this regard. Admittedly, the issue herein is with regard to deposit of cash during the financial year 2016-17 including during the demonetization period which were not verified by the AO in accordance with the CBDT circulars wherein the various instructions have been issued by the CBDT dated 21.2.2017, 3.3.2017, 15.11.2017 and 9.8.2019. We are of the opinion that these CBDT instructions gives hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. We are aware of the fact that not every deposit during the demonetization period would fall under the category of unaccounted cash, however, the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash.
Abdul Hakeem, Gulbarga Page 13 of 14 7.1 Since the assessee has neither appeared before any of the tax authorities below nor the AO had verified the cash deposits in accordance with the CBDT circulars & therefore taking into consideration totality of the facts of the case as well as in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we are of the view that the assessee may be provided with an opportunity to represent his case before the AO. Since the assessee was delinquent and lethargic in pursuing his matter before the tax authorities we impose a cost of Rs.5000/- (Five Thousand) upon the assessee which shall be paid to the credit of the income tax department as “other fees” within one month from the date of receipt of this order.
7.2 The AO shall verify all the cash deposits in accordance with the CBDT circulars after calling for the details/evidences /information/submission/record from the assessee based on the above directions and consider the claim made by the assessee. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. Accordingly, with the above observations, the issue in dispute is remitted back to the file of AO for fresh consideration in accordance with law.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.