BHANUCHANDER GOUD PUTTA,HYDERABAD vs. INCOME TAX OFFICER, WARD- 6(1), HYDERABAD

During the course of the assessment proceedings, the A.O observed that the there were cash deposits of Rs. 43.58 lakhs (approx.) in the assessee’s Savings Bank Account No. 134010100000894 with Andhra Bank, Branch: Kalyan Nagar. On being queried, it was the claim of the assessee that he was engaged in a petty business of trading of fish and prawn feeding material and the subject cash deposits in his bank account were the sale proceeds that were directly deposited by the farmers to whom goods were sold. As the explanation of the assessee did not on the favour with the A.O, therefore, he held the entire amount of cash deposits of Rs.43.58 lakhs (supra) as the assessee’s unexplained money under Section 69A of the Act. Accordingly, the A.O vide his order passed under Section 147 r.w.s 144 r.w.s 144B of the Act, dated 22/03/2022, determined the income of the assessee at Rs. 43.58 lakhs (supra).

Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the assessee, despite having been afforded three opportunities had failed to participate in the proceedings before the CIT(A), therefore, the latter was constrained to proceed with and dispose the appeal vide an ex-parte order. The CIT(A) found no infirmity in the addition of Rs. 43.58 lacs (supra) made by the A.O. under Section 69A of the Act and, thus, upheld the same.

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

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

Shri S.K. Gupta, the Learned Authorized Representative (in short “Ld. AR”) for the assessee, at the threshold of hearing, submitted that the present appeal involves a delay of 144 days. Elaborating on the reasons leading to the delay, the Ld. AR had drawn our attention to the application that was filed by the assessee seeking condonation of the same a/w his “affidavit”, dated 07/03/2025. The Ld. AR submitted that the assessee had failed to participate in the proceedings before the CIT(A), for the reason, that the Income Tax Practitioner (ITP) through whom he had filed the appeal had failed to follow up the appellate proceedings. Elaborating further on his contention, the Ld. AR submitted that the assessee who was not having any taxable income and was a non-filer had learnt about the dismissal of his appeal by the CIT(A) only when his bank account was attached by the Department vide a notice dated 04/12/2024. The Ld. AR submitted that both the failure on the part of the assessee to participate in the proceedings before the CIT(A); as well as the delay in filing of the present appeal before the Tribunal, had occasioned due to bonafide reasons and not on account of any lackadaisical approach on his part. Carrying his contention further, the Ld. AR submitted that considering the totality of the facts which had led to the delay involved in filing of the present appeal, the same, in all fairness be condoned.

Per contra, the Ld. Senior Departmental Representative (“DR”, for short) objected to the seeking of condonation of delay by the assessee. It was submitted by him that as not only the delay involved in filing of the present appeal was inordinate, but also the assessee had failed to come forth with any justifiable reason explaining the same, therefore, his request for condonation of the same ought not to be acceded.

We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both the parties on the issue of delay involved in filing of the present appeal. Considering the deposition of the assessee in his “affidavit” that the delay in filing of the present appeal, had occasioned, due to the failure of his counsel i.e., the Income-Tax Practitioner to follow up the appellate proceedings before the CIT(A) and, thus, intimate the fate of disposal of the same to the assessee, therefore, we are of the view that the same merits to be condoned. Our aforesaid view is supported by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Specia Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025. The Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed, that a justice oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing of the appeal.

Apropos, the merits of the case, it transpires that the assessee on being queried about the cash deposits of Rs. 43.58 lakhs (supra) in his Saving bank account No. 134010100000894 held with Andhra Bank, Branch: Kalyan Nagar, had claimed that the same were sourced out of the sale proceeds of his petty business of trading of fish and prawn feeding material. As is discernible from the record, the assessee had during the assessment proceedings, vide his reply dated 20/02/2022, claimed that the cash deposits in his bank account aggregating to Rs. 43.58 akhs (supra) was the sale proceeds of his aforesaid business that were directly deposited by the farmers to whom he had made the sales during the subject year. It transpires on a perusal of the assessment order that the A.O had summarily rejected the aforesaid explanation of the assessee, for the reason, that the latter had failed to substantiate his claim that the cash deposits in his bank account was the turnover of his business of trading in fish and prawns feeding material. Although, we concur with the A.O that if an assessee fails to irrefutably substantiate his explanation as regards tge source of cash deposits in his bank account based on clinching material, then, he is not obligated to accept the same. At the same time, we find that there is no whisper in the assessment order which would reveal that the A.O had ever called upon the assessee to substantiate his aforesaid claim i.e., the subject cash deposits were sourced from the sale proceeds of his aforementioned business by placing on record any supporting documentary evidence/material. Rather, we find that the assessee had after furnishing his reply dated 20/02/2022 (supra), filed before the A.O filed another reply dated 13/03/2022, wherein he had once again reiterated his aforesaid claim and had sought for the determining of his income from the aforesaid retail business of trading in fish and prawns feeding material as per the presumptive provisions of section 44AD of the Act. Nothing is either discernible from the assessment order; nor brought to our notice by the Ld. D.R which would reveal that the A.O had in the course of the assessment proceedings directed the assessee to produce supporting documentary evidence to corroborate his aforesaid claim as regards the source of cash deposits in his bank account. We, thus, find substance in the Ld. AR's claim that the assessee had been visited with the impugned addition of the entire amount of the cash deposits of Rs. 43.58 lacs (supra) without having been afforded any sufficient opportunity to substantiate his claim.

Although, we are not oblivion of the fact that the assessee had failed to substantiate his claim in the course of the proceedings before the CIT(A), but then as observed by us hereinabove, as there were justifiable reasons for the assessee in not participating in the proceedings before the first appellate authority, therefore, he had remained divested of an opportunity to substantiate his claim even before the first appellate authority.

Be that as it may, we are of the firm conviction that as the impugned addition of Rs. 43.58 lacs (supra) had been made by the A.O, vide his order passed U/s. 147 r.w.s 144 r.w.s 144B of the Act, dated 22/03/2022 without affording of a sufficient opportunity to the assessee to substantiate his claim as regards the source of the cash deposits in his bank account, therefore, the addition so made cannot be summarily approved on our part. We, thus, in terms of our aforesaid observations, set aside the matter to the file of the A.O with a direction to re-adjudicate the case after affording a reasonable opportunity of being heard to the assessee who will remain at a liberty to substantiate his claim based on fresh documentary evidence, if any.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.