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Facts
The assessee, engaged in retail liquor business, filed his income for AY 2017-18 declaring Rs. 19,93,540. His case was selected for scrutiny due to cash deposits during demonetisation. The AO added Rs. 20,00,000 on account of unexplained cash deposits made by the assessee from his mother's alleged agricultural income.
Held
The Tribunal condoned the delay of 741 days in filing the appeal due to the assessee's serious medical condition. It held that the assessee could not properly present his case before the lower authorities due to his medical issues and the assessment/appellate proceedings were completed without effective participation.
Key Issues
Whether the delay in filing the appeal is condonable on account of the assessee's medical condition and whether the matter should be restored to the Assessing Officer for fresh adjudication.
Sections Cited
68, 142(1), 250
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The present appeal has been instituted by the assessee against the order passed by the Ld. CIT(A) u/s 250 of the Act dated 04.07.2023 for AY 2017-18.
The assessee in the memorandum of appeal has raised several grounds. However, for the sake of brevity and convenience, the same are not reproduced here. The grounds raised by the assessee are interconnected and relate to the addition made on account of cash deposits treated as unexplained money under section 68 of the Act.
The brief facts of the case are that the assessee, an individual, is engaged in the business of retail sale of liquor. For the relevant assessment year, the assessee filed his return of income declaring total income of Rs. 19,93,540.00 only. The case of the assessee was selected for scrutiny under CASS for the purpose of verification of cash deposits made during the demonetisation period.
During the course of assessment proceedings, the Assessing Officer issued notice under section 142(1) of the Act. In response, the assessee submitted that he, along with his mother, was engaged in agricultural activities. It was explained that the assessee’s mother had been earning agricultural income over a long period of time and had accumulated cash from such activities. After the announcement of demonetisation, the mother handed over the cash to the assessee for the purpose of depositing the same in the bank account. The cash was handed over to the assessee by the mother because she did not operate any bank account and, due to her old age and lack of literacy, could not visit banks and deal with the procedures involved during the demonetisation period.
4.1 However, the Assessing Officer did not accept the explanation of the assessee. According to the Assessing Officer, there was no mention of agricultural income in the return of income of the assessee or any of his family members. In the absence of supporting evidence, the .
Assessing Officer treated the cash deposits as unexplained and made an addition of Rs. 20,00,000 under section 68 of the Act.
Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). However, during the appellate proceedings the assessee failed to respond to the notices issued by the learned CIT(A). Accordingly, the learned CIT(A) passed an ex-parte order dismissing the appeal and upheld the addition made by the Assessing Officer.
Aggrieved by the order of the learned CIT(A), the assessee has filed the present appeal before the Tribunal. Before us, the learned AR submitted that the present appeal has been filed with a delay of 741 days. The learned AR explained that the delay occurred due to serious medical issues faced by the assessee. It was submitted that the assessee was suffering from lumbar spondylosis with neuropathy and accelerated hypertension, due to which his physical mobility and functional capacity were severely impaired. The assessee was medically advised to take complete rest and to avoid travel, strenuous work and stressful occupational activities. In support of the above contention, the learned AR has placed on record a medical certificate along with relevant medical documents forming part of the paper book. The learned AR therefore prayed that the delay in filing the appeal may kindly be condoned in the interest of justice and the matter may be admitted for adjudication on merits.
The learned DR strongly opposed the condonation of delay in filing the present appeal. It was submitted that the assessee has filed . the appeal before the Tribunal with a substantial delay of 741 days and the explanation furnished for such an inordinate delay is not satisfactory. It was submitted that merely producing a medical certificate cannot automatically justify such a long delay, particularly when the assessee has not demonstrated that he was completely prevented from pursuing the legal remedies available to him during the entire period of delay.
We have heard the rival submissions and carefully perused the materials available on record. At the outset, we note that the present appeal has been filed with a delay of 741 days. The assessee has filed an application seeking condonation of delay along with a medical certificate and supporting documents explaining the circumstances which led to the delay. The assessee has submitted that he was suffering from lumbar spondylosis with neuropathy and accelerated hypertension, due to which his physical mobility and functional capacity were severely impaired, and he was medically advised to take complete rest and avoid travel and strenuous work.
8.1 After considering the explanation furnished by the assessee and the medical documents placed on record, we are of the view that the delay in filing the appeal was not intentional or deliberate. The assessee has placed sufficient material demonstrating that he was suffering from serious health issues which affected his ability to pursue the appellate remedy within the prescribed time. It is a settled principle of law that a litigant should not be denied an opportunity of hearing on technical grounds when sufficient cause has been shown for the delay.
8.2 While considering a similar issue, the Hon’ble Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji reported in 1987 taxmann.com 1072/[1987] 28 ELT 185/66 STC 228 (SC)/(167 ITR 471 ) laid down six principles. For the purpose of convenience, the principles laid down by the Hon’ble 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.
8.3 The Hon’ble Supreme Court has repeatedly observed that refusal to condone delay in appropriate cases may result in perpetuating injustice on purely technical grounds, even when the appellate authority is otherwise competent to correct the error. Hence, if the application for condonation of delay is rejected despite the existence of reasonable cause, it would amount to allowing an injustice to continue merely on account of technicalities.
8.4 Considering the facts of the present case and the medical condition explained by the assessee, we are satisfied that the assessee was prevented by reasonable cause from filing the appeal within the prescribed time. Accordingly, in the interest of justice, the delay of 741 days in filing the present appeal is condoned and the appeal is admitted for adjudication on merits.
8.5 Further, on perusal of the record, we also find that the assessment as well as the appellate proceedings before the learned CIT(A) were completed without effective participation from the assessee. In view of the circumstances explained by the assessee and the medical condition placed on record, it appears that the assessee could not properly present his case before the lower authorities. Therefore, in the interest of justice and fair play, we deem it appropriate to restore the matter to the file of the Assessing Officer. The Assessing Officer is directed to provide the assessee a reasonable opportunity of being heard and to examine the explanation furnished by the assessee. With these . directions, the issue is restored to the file of the Assessing Officer for fresh adjudication. Accordingly, the ground of appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in court on 11th day of March, 2026