MANDADI VIJAYA LAKSHMI,HYDERABAD vs. ITO., WARD-7(1), HYDERABAD

Succinctly stated, the AO, based on information gathered under “Operation Clean Money”, observed that though the assessee had made cash deposits of Rs. 33,08,717/- in her bank account during the period relevant to Assessment Year: 2017-18, which comprised of cash deposits of Rs. 23,33,500/- made during the demonetisation period, i.e., 09.11.2016 to 31.12.2016, but had not filed her return of income, issued notices issued under section 142(1) of the Act which either remained uncompiled with by the assesse or were returned unserved. Also, the summons issued by the AO under section 131 of the Act was returned unserved. Accordingly, the AO, in the absence of any explanation regarding the nature and source of the deposits, held the entire amount of cash deposits of Rs. 33,08,717/- as the assessee’s unexplained money under Section 69A of the Act and framed the assessment vide his order under section 144 of the Act, dated 03.12.2019.

The assessee, being aggrieved with the CIT(A) order, has carried the matter in appeal before us.

We have heard the Ld. Authorised Representatives of both parties, perused the orders of lower authorities and the material available on record.

Shri. Pavan Kumar Gorti, Chartered Accountant - Ld. Authorised Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the present appeal involves a delay of 191 days. Elaborating on the reasons leading to the delay in filing the appeal, the Ld. AR submitted that the assessee’s husband, who passed away in 2000, was engaged in a waste management business and had advanced various loans in cash. After his death, the business was carried on by her son and the deceased husband’s brother. The Ld. AR submitted that the subject cash deposits made in the assessee’s bank Mandadi Vijaya Lakshmi Vs. ITO account during the subject year represented the cash repayment of the aforementioned loans. The Ld. AR submitted that as the email ID registered with the Department belonged to the assessee’s son, who did not monitor the notices issued during the assessment proceedings, thus, the assessment proceedings had gone unattended. The Ld. AR submitted that family disputes later arose between the assessee’s son and her deceased husband’s brother, due to which the assessee could not obtain the necessary details regarding loan repayments from her brother-in-law, nor attend to the appellate proceedings before the CIT(A). The Ld. AR submitted that the assessee, being a housewife unfamiliar with legal intricacies, was unable to follow up the proceedings. Also, the order of the CIT(A) was not conveyed to her immediately. The Ld. AR to support his factual averments had drawn our attention to the application filed by the assessee seeking condonation of the delay involved in filing the present appeal, which is accompanied with a supporting “affidavit”

The Ld. AR submitted that the assessee, after sustained efforts, has now obtained confirmations from six persons who had confirmed to have repaid during the subject year the cash loans earlier advanced by her deceased husband. The Ld. AR submitted that the aforesaid confirmations have been filed before the Tribunal as “additional Mandadi Vijaya Lakshmi Vs. ITO evidence” and requested that as the same goes to the root of the matter, therefore, considering the facts as to why the same could not be submitted before the authorities below, the same, in all fairness and interest of justice, be admitted.

We further observe that although the CIT(A) had declined to condone the delay in the appeal filed before him, he nevertheless proceeded to refer to the facts involved in the case before him and at Para 7.3 specifically observed that the appellant’s case does not hold good on merit too. In our view, as it is a settled principle of law that when an Mandadi Vijaya Lakshmi Vs. ITO appellate authority examines the merits of the case, the delay in filing the appeal stands impliedly condoned. Reference may be made to the judgment of the Hon’ble High Court of Madras in the case of Vijayeswari Textiles Ltd. Vs. CIT (2002) 256 ITR 560 (Mad) wherein it was, inter alia, observed that as the Tribunal while declining to condone the delay involved in the appeal, had proceeded with and considered and rejected the appeal on merits, therefore, it was to be inferred that the Tribunal was itself not convinced that the appeal should be dismissed as barred by limitation. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under:

We thus, in terms of our aforesaid observations, are of the firm conviction that as the CIT(A) in the present case before us did not stop with the order declining to condone the delay, but had specifically observed that the appellant’s case does not hold good on merit too, Mandadi Vijaya Lakshmi Vs. ITO therefore, the only inference that can be drawn by relying on the judgment of the Hon’ble High Court of Madras in Vijayeswari Textiles Ltd. Vs. CIT (supra) is that he had impliedly condoned the delay involved in the appeal filed before him. The aforesaid view of the Hon’ble High Court had been respectfully followed by the Tribunal in Nafees Sultana Vs. The ITO, Ward 14(1, Hyderabad, ITA No.642/Hyd/2025. In terms of our aforesaid observations, the CIT(A) order, to the extent he had declined to condone the delay, cannot stand when he has simultaneously referred to and approved the observations of the AO regarding the merits of the case. Accordingly, in view of the aforesaid settled position of law, the observation of the CIT(A) to the extent he had refused to condone the delay is set aside.

Coming back to the additional evidence filed by the assessee before us, viz. (i). copy of the death certificate of the assessee’s husband, viz. Late Shri. M. Rama Chandra Reddy; and (ii). six confirmation letters regarding repayment of cash loans, we are of the view that as these documents are relevant to determine the true nature and source of the cash deposits made in the assessee’s bank account during the subject year, therefore, the same merits admission. We, thus, considering the significance of the additional evidence and the fact that the material has not been examined earlier, restore the matter to the file Mandadi Vijaya Lakshmi Vs. ITO of the AO for de novo adjudication. The AO shall examine the additional evidence and readjudicate the issue after carrying out necessary verification. Needless to say, the AO shall, in the course of the set aside proceedings, afford a reasonable opportunity of being heard to the assessee.

Before parting, we may herein clarify that though we have restored the matter to the file of the AO for re-adjudication, but have not expressed any opinion on the merits of the addition made under section 69A of the Act, which the AO shall remain at liberty to decide in accordance with law.

Resultantly, the appeal filed by the assessee is allowed for statistical purpose.