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Facts
The assessee's income tax return for AY 2017-18 was selected for scrutiny due to large cash deposits during demonetization and abnormal sales. The Assessing Officer made additions for disallowances and unexplained cash credit under Section 68, leading to an assessed income of Rs.14,23,860/-, which the CIT(A) upheld after the assessee failed to furnish information. The assessee then filed an appeal to the ITAT with a 177-day delay, which was condoned due to medical reasons.
Held
The Tribunal condoned the delay in filing the appeal. To ensure natural justice, it set aside the CIT(A)'s order and remitted the matter back to the CIT(A) with directions to provide the assessee another opportunity to present their case, with a caution for prompt cooperation.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the CIT(A) erred in dismissing the appeal without adequately considering the assessee's claims and providing sufficient opportunity for hearing, leading to additions under various sections including Section 68.
Sections Cited
143(1), 143(2), 142(1), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2017-2018 Arun Kumar Gupta,…………………...…………Appellant 8H, Krittibash Mukherjee Road, Ultadanga, Kolkata-700067 [PAN:AGLPG7580J] -Vs.- Income Tax Officer,………………….…………...Respondent Ward-44(2), Kolkata, 3, Government Place (West), Kolkata-700001 Appearances by: Shri Abhisek Bansal, A.R., appeared on behalf of the assessee Shri Kallol Mistry, JCIT, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: April 23, 2025 Date of pronouncing the order: April 25, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 5th June, 2023 passed for Assessment Year 2017-18.
The appeal is time barred by 177 days in filing the appeal by the assessee. However, the assessee filed a condonation petition (A.Y. 2017-2018) Arun Kumar Gupta dated 11th January, 2024 saying that due to serious illness of his son and to take care of son’s medical attention, he was not aware of the order passed by the ld. CIT(Appeals). When the assessee came to know about the order passed by the ld. CIT(Appeals), the assessee approached the ld. A.R. to prefer an appeal, due to that there was a delay of 177 days in filing the appeal before the Tribunal. Therefore, he pleaded to condone the delay.
Considering the facts and circumstances of the case, I am of the view that the assessee was prevented in filing the appeal within the stipulated time. Therefore, I am inclined to condone the delay of 177 days. Hence the delay is condoned.
Brief facts of the case are that the assessee filed his return of income electronically declaring total income of Rs.4,37,030/- for the assessment year 2017-18. The case was duly processed under section 143(1) and thereafter selected for scrutiny through CASS with the reasoning that “large value of cash deposited during the demonetization period and abnormal increase in sales with decrease in profitability compared to the preceding previous year”. Accordingly notices under section 143(2) and 142(1) were issued and served upon the assesese in time through ITBA requiring various details particularly regarding the sources of such cash deposit. The assessee in reply stated that during demonetization period, cash of Rs.9,87,000/- was deposited in the Bank in the mixture of old and new currency notes and it is a normal course of business activity and no illegal currency was involved. The assessee was asked to explain regarding the increase of sale during (A.Y. 2017-2018) Arun Kumar Gupta the year as compared to the previous year and also asked to furnish the details of cash purchase and the details of sundry debtors. In reply, the assessee stated that the transactions are done via brokers to various small shops, for which the brokerage charges are paid. Not being satisfied the ld. Assessing Officer proceeded to disallow Rs.1,15,420/- and added to the total income of the assessee. The assessee was asked to furnish the details of expenditure alongwith necessary evidences. The assesese furnished the ledger account of carriage outward and inward expenses, labour charges etc. but failed to furnish the evidences, such as bills, vouchers etc. The ld. Assessing Officer disallowed Rs.22,130/- i.e. 5% of such expenditure of Rs.4,42,607/- and added to the total income of the assessee. During the assessment proceedings, the assessee was asked to explain the sources of capital introduction of Rs.8,49,287/-, but the assessee failed to substantiate the mode of such introduction into the capital account, therefore, the ld. Assessing Officer treated this amount as unexplained cash credit under section 68 of the Income Tax Act. Finally, ld. Assessing Officer assessed income of the assessee at Rs.14,23,860/-.
Being not satisfied, the assessee preferred an appeal before the ld. CIT(Appeals).
The ld. CIT(Appeals) has given several opportunities to the assesese to substantiate his claim, but the appellant neither filed the written submission nor represented the case before the ld.
On being aggrieved, the assessee preferred an appeal before the ITAT.
At the time of hearing, ld. Counsel for the assessee argued before the Bench that the impugned order be set aside and remitted back to the file of ld. CIT(Appeals) for deciding it afresh.
At the outset, ld. D.R. brought to my notice that the assessee did not produce the relevant documents as asked by the ld. Assessing Officer during the assessment proceedings. Therefore, the ld. Assessing Officer passed the assessment order assessing the taxable income at Rs.14,23,860/-. Thereafter the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) has given many opportunities to the assessee and the assessee neither filed written submission nor any evidence before the ld. CIT(Appeals). He further submitted that before the ITAT, the assessee did not substantiate its claim. Therefore, he pleaded to uphold the order passed by the CIT(Appeals).
I have heard both the sides and perused the material available on record. Considering the facts and circumstances of the case, I am inclined to set aside the order passed by the ld. CIT(Appeals) in order to meet the principle of natural justice, and remit the matter back to the file of ld. CIT(Appeals) with a direction to provide one more opportunity of being heard to the assessee. At (A.Y. 2017-2018) Arun Kumar Gupta the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the Ld. CIT(Appeals) failing which the Ld. CIT(Appeals) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 25/04/2025.