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Facts
The assessee, an individual, did not file his Return of Income. The AO found cash deposits of Rs.1,20,60,500/- and interest income, initiating proceedings under Section 148. The assessee failed to comply, leading to the AO treating the deposits as income under Section 69 and completing assessment under Section 147. The CIT(A) dismissed the appeal due to non-prosecution.
Held
The Tribunal condoned the delay in filing the appeal, recognizing the reasonable cause due to the assessee's illness (Covid-19) and the tax consultant's failure. The Tribunal set aside the impugned order and remanded the matter to the AO for fresh adjudication after considering the documentary evidence.
Key Issues
Whether the delay in filing the appeal can be condoned due to the assessee's medical condition and consultant's lapse, and whether the matter should be remanded for fresh adjudication.
Sections Cited
253(3), 148, 69, 147, 144, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
(निर्धारण वर्ा/Assessment Year:2017-18) Kasanagottu Santosh Kumar, Income Tax Officer, Hyderabad. Vs. Ward-1, Siddipet. PAN:AQPPPK0048K (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Sri Sai Keerthana, C.A. रधजस् व द्वधरध/Revenue by:: Dr. Sachin Kumar, SR-DR सुिवधई की तधरीख/Date of hearing: 11/02/2025 घोर्णध की तधरीख/Pronouncement: 24/02/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Kasanagottu Santhosh Kumar (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 26.06.2024 for the A.Y. 2017-18.
At the outset, it is seen that there was a delay of 103 days in filing the appeal before the ITAT. The assessee has filed condonation petition along with Affidavit explaining the reasons for the delay which is to the following effect :
As a small businessman, I am not fully aware of the assessment proceedings and I had engaged a Tax Consultant at Siddipet to handle my income tax proceedings, responding to the notices issued by the Authorities, including filing and pursuing the appeal. However, due to an unfortunate lapse, the consultant failed to adequately monitor or act upon the notices and orders issued by the authorities. During my follow up with the consultant on my tax matters, I realized the fact that the Tax Consultant was not monitoring my case before the Income Tax Authorities and became aware that the Ld. Commissioner of Income Tax (Appeals) had already passed an order, dismissing my appeal and I require to file further appeal before the Hon'ble Tribunal. Realizing the gravity of the situation, I sought the assistance of another Chartered Accountant situated at Hyderabad to handle the matter promptly and professionally. With the prompt suggestion of the consultant, action has been taken to file an appeal and the same is ultimately filed on 12.12.2024, resulting in a delay of 109 days, beyond the statutory period. The delay in filing the appeal is purely unintentional and occurred due to circumstances beyond my control, constituting a reasonable cause as per the provisions of Section 253(3) of the Income Tax Act, 1961. Being a small business man I am totally dependent on the Tax Consultant, whose oversight led to the delay. When the issue came to my attention, I acted with due diligence and engaged a new professional at Hyderabad to ensure compliance with all the necessary procedures.
On the basis of reason given in Affidavit, the Learned Authorised Representative (“Ld. AR”) prayed before the bench for condonation of delay. After considering the reason for the delay and after hearing the Learned Department Representative (“Ld. DR”), we are of the opinion that there was a reasonable cause for delay in filing the appeal before us. Accordingly, we condone the delay in filing the appeal and admit for adjudication.
The assessee has raised the following grounds : “
1. On the facts and circumstances of the case the order, passed by the Ld. CIT(Appeals) is erroneous both on facts and in law.
2. The Ld. CIT(Appeals) is not justified in sustaining the assessment order without appreciating the fact that the appellant promptly filed the appeal on becoming aware of assessment order passed. However, unfortunately due to failure of the consultant in monitoring of the notices issued by the appellate authorities, the information called for could not be submitted.
3. Without prejudice to the above, the Ld. CIT(A) erred in confirming the cash deposits made by the assessee of Rs.1,21,02,252/- as unexplained money in the bank account of the assessee without appreciating the fact of the case.
4. The Ld. CIT(A) ought to have appreciated the fact that during the year under consideration, the assessee carried out agency business of Amul Dairy Products (Gujarat Co-operative Milk Marketing Federation Ltd.) in the name & style" Satyanarayana Agencies" on which name the bank account(s) have been maintained.
5. The Ld. CIT(A) ought to have appreciated the fact that the assessee maintained bank account(s) in the name & style 11 Satyanarayana Agencies" and the entire transactions, reflected in the bank account are relating to his business, carried out as an agent of Amul Dairy Products (Gujarat Co-operative Milk Marketing Federation Ltd.). All the transactions, cash deposits & other deposits are explainable transactions.
6. The Ld. CIT(A) ought to have appreciated the fact that all the transactions, cash deposits & other deposits are explainable transactions and the sources of the same are out of sale proceeds of the dairy products of Amul Dairy, for which the assessee is an Agent.
The assessee may add, alter, or modify or substitute any other points to the grounds of appeal
at any time before or at the time of hearing of appeal.”
4. The brief facts of the case are that the assessee is an individual, did not file his Return of Income (“ROI”). From the available record, the Learned Assessing Officer (“Ld. AO”) found that during the year under consideration the assessee had deposited cash of Rs.1,20,60,500/- in his bank account and the assessee also had interest income of Rs.41,752/-. Accordingly, the Ld. AO issued notice u/s.148 of the Income Tax Act, 1961 (“the Act”) to the assessee. In response to the notice u/s.148 of the Act also, the assessee neither filed any ROI nor made any compliance to the subsequent notice issued by the Ld. AO. Consequently, the Ld. AO treated the total deposit of Rs.1,21,02,252/- in the bank account as the income of the assessee u/s.69 of the Act and completed the assessment u/s.147 r.w.s. 144 r.w.s. 144B on 16.03.2022.
5. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). Before the Ld. CIT(A) also, the assessee could not make any compliance. Consequently, the Ld. CIT(A) dismissed the appeal of the assessee due to non-prosecution.
6. Aggrieved with the order of Ld. CIT(A), the assessee is now in appeal before us. The Ld. AR submitted that, when the proceedings were pending before the Ld. AO, the assessee got effected from Covid 19 and was hospitalised and Doctor advised him to take bed rest for atleast six months. Only due to the suffering from Covid 19 the assessee could not make any compliance before the Ld. AO. Further, as explained in the condonation petition for delay in filing the appeal before the ITAT, the assessee had entrusted the appellate work to one tax consultant. However, the tax consultant failed to monitor the proceedings before the Ld. CIT(A). Accordingly, the Ld. CIT(A) passed exparte order. Therefore, the assessee could not prosecute his case on merits before the Ld. CIT(A). The Ld. AR further submitted that, the assessee does not stand to gain by allowing the appeal to be disposed of without any documentary evidence being produced and it is only due to the reasons beyond the control of the assessee, the assessee could not produce the necessary documents/evidences before the revenue authorities to prosecute his case. By consolidating all the grounds, he further submitted that, given an opportunity, the assessee is now ready to produce all such details and conduct the proceedings diligently and get the matter disposed of on merits.
7. Per contra, Ld. DR placed heavy reliance on the orders of the authorities below, and submitted that sufficient opportunity has already been given by the authorities, but the assessee failed to avail the same. He opposed the grant of further opportunity to the assessee.
We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. It is manifest from the assessment order that the Ld.AO has made addition of the entire deposit in the bank account for want of any supporting evidence of source of the deposit, the Ld.CIT(A) has confirmed the addition on the same reasoning that the assessee has failed to produce any supporting evidence to explain the source of the said deposit. The assessee has explained the reason for non-compliance of the notice issued by the Ld. AO as well as Ld. CIT(A) that he was suffering from Covid 19 and confined to bed for almost six months and therefore completely dependant on the tax consultant who has failed to monitor the proceedings before the authorities below. The assessee has filed the relevant medical record that he was suffering from Covid 19 and therefore the assessee was having sufficient cause for not participating in the proceedings before the authorities below as well as not filing the relevant details and documentary evidence. The assessee has submitted that, he is having an agency business of Amul Diary products in the name and style of Satyanarayana Agency and all the deposits made in the bank account are nothing but the business proceeds of the assessee. Therefore, without examining the relevant records treating the entire addition as unexplained income of the assessee would result gross injustice to the assessee. The assessee has now pleaded that he may be given one more opportunity to produce all the relevant documentary evidence in support of the claim that the deposits made in the bank account are business proceeds of the assessee. Accordingly, in the facts and circumstances of the case as discussed above, we are of the considered opinion that the assessee deserve one more opportunity to present his case along with the documentary evidence and therefore the impugned order of the Ld. CIT(A) is set aside and matter is remanded to the record of the Ld. AO for fresh adjudication after considering the relevant details and documentary evidence to be filed by the assessee. Needless to say, the assessee is given appropriate opportunity of hearing before passing the order.
In the result, the appeal of the assessee is allowed for statistical purpose.