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Facts
The assessee, engaged in the business of money transfer, faced an addition of Rs. 8,96,126,260/- for unexplained cash deposits. The assessee could not furnish details due to pandemic restrictions and claimed family financial distress caused non-attendance. The CIT(A) dismissed the appeal due to delay, which was not condoned.
Held
The Tribunal noted that the lower authorities did not examine the source of cash deposits in detail. Citing the case of the assessee's son where delay was condoned for similar reasons, the Tribunal condoned the delay for the assessee. The Tribunal set aside the orders and restored the matter to the CIT(A) for adjudication on merits.
Key Issues
Whether the CIT(A) erred in dismissing the appeal solely on the grounds of delay without considering the merits, especially when similar reasons led to delay condonation in a related case?
Sections Cited
250, 143(3), 143(3A, 143(3B), 271AAA(1), 69A, 133(6), 142(1), 143(2), 138, 249(3), 251, 271AA
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeals at the instance of assessee are directed against the orders dated 06.03.2025 and 05.03.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) which inturn arising out of Assessment Order dated 12.04.2021 passed u/s.143(3) r.w.s.143(3A and 143(3B) of the Act and Penalty Order dated 22.02.2022 passed u/s.271AAA(1) of the Act respectively.
At the outset, Ld. Counsel for the assessee referring to the paper books filed in and 1365/PUN/2025 running into 156 and 155 pages respectively submitted that the assessee is engaged in the business of money transfer, mobile recharge carried out on commission basis and the cash received from various persons is sent to the families and relatives as per the direction at the given destination. Assessee is duly registered under the Government regulations for carrying out this business activity. However, ld. AO has made addition for total cash received from various persons and made high pitch assessment during covid-19 pandemic period making addition of Rs.8,96,126,260/- to the returned income of Rs.5,78,040/-. He also submitted that due the covid-19 pandemic restrictions assessee could not furnish all necessary details to explain the source of cash deposits. He further submitted that even before ld.CIT(A) assessee could not succeed due to delay of 608 days in filing of the appeal and ld.CIT(A) dismissed the appeal in limine being barred by limitation. He therefore submitted that assessee deserves one more round of proceedings either before ld. AO or before ld.CIT(A) for making necessary submissions and filing of details.
3. On the other hand, ld. DR vehemently argued supporting the order of ld.CIT(A).
4. We have heard the rival contentions and perused the record placed before us. Assessee is an individual and engaged in the business of money transfer having subjected to addition u/s.69A of the Act at Rs.8,96,126,260/- for unexplained money. There are huge cash deposits in the assessee’s bank account held with Bank of Maharashtra. Information was called from the bank u/s.133(6) of the Act to which the details of cash deposits other credit entries were provided. Assessee is claiming that the cash deposits are the funds received from various individual persons for transfer to their friends and relatives located at various parts of the country. However, since the assessee failed to provide the details of persons who have given cash to the assessee, impugned addition has been made. Appeal filed before ld.CIT(A) is delayed and the same has not been condoned by ld.CIT(A).
Before us, Ld. Counsel for the assessee has filed a written note in support of contention that one more opportunity may be granted so that various details which could not filed before the lower authorities can be submitted and issues on merits can be adjudicated. The contentions made in the said written note are reproduced below :
“Brief facts of the case 2. The appellant is an individual Ms. Shaila Omprakash Jethale having PAN ACIPJ5773B. She has filed return of income on 08.10.2018 vide acknowledgement No. 328105780081018 declaring total income at Rs.5,78,040. The return was processed under section 143(1). The return was selected for scrutiny as per CASS for LIMITED PURPOSE. The notices were issued u/s 142(1)/143(2).
The appellant could not attend the scrutiny assessments. The reason for non-attendance has been explained by the appellant in the affidavit file before the Hon'ble Tribunal along with evidences filed. The main reason is that the appellant is a member of Joint Family. The appellant's family i.e. her husband and son were carrying on business. Her family incurred heavy losses in the business. For the purpose of business loans from banks and other parties were borrowed. Because of losses in the business, they could not repay the loan. The loan accounts with banks were identified as non-performing assets. Banks and various creditors filed suit for recovery. Various notices U/s 138 Negotiable Instrument Act were imitated for recovery and cheque bounced cases. All the evidences including suit filed and disposed before the Magistrate, Public notices issued by the banks in the newspapers are attached along with affidavit.
The whole family got disrupted. The appellant and her family had to move from self-occupied property to rented property. After negotiation and disposing the secured assets some cases with banks are settled. In this period her family members were required to attend various bank cases and cases launched by the creditors.
5. There was a lot of psychological, financial pressure and tension prevailed in the family.
Nature of business
6. The appellant was carrying on the business of "Money Transfer", "Mobile Recharge" etc. on commission basis. This was the period before development of publicly known apps today like UPI and BHIM app. After development of these apps the business of the appellant has gone down. As explained earlier because of losses incurred in the family business they were already facing bad patch. The bad patch started somewhere in 2017, followed by Covid lockdown and still it is not completely recovered.
Ex-parte assessment order
Because of all these circumstances the appellant could not attend assessment proceedings. The Ld. AO has passed the ex-parte order. The Ld. AO called information from Bank of Maharashtra U/s 133(6). The Ld. AO came to the conclusion that the appellant has deposited cash in bank of Rs. 8,96,16,260. The Ld. AO has extracted details of cash deposit in his assessment order. However, it may kindly be noted that he has not uttered a single word about payment side or utilisation of cash. This fact is important while making an assessment. For the sake of repetition, it is submitted that the appellant was engaged in the business of "Money Transfer".
Assessed income
8. The Ld. AO has assessed the total income at Rs. 9,01,94,300 which is 156 times of returned income U/s 69A of the Act and levied the tax 115BBE and also levied the penalty U/s 271AAC.
It is submitted that the Ld. AO has not considered the entire material and only considered cash deposited in the bank. It is submitted that even though the assessment is ex-parte, it cannot be made arbitrarily. The high-pitched assessment is unjustified. In this regard it is important to note the instruction of CBDT.
It is to be noted that the Ld. AO has determined the assessed income which is 156 times of the returned income. It is to be noted that the approach of the Ld. AO in this case is contrary to the instruction of CBDT no. 767 dated 04.10.1974 i.e. sourced from 193rd report of Public Accounts Committee (83-84) (PP-26-27). As per the said instruction the high-pitch assessment made by the officers raising uncollectible demands and high-pitch assessment was criticized. It was instructed that Inspecting Assistant Commissioner should periodically review the ex-parte orders and the Board desire that it should be impressed upon the officers to avoid such assessments.
11.In view of this it is submitted that the assessment is arbitrary.
Matter before Ld. CIT(A), NFAC 12.It is submitted that the matter was carried before Ld. CIT(A). Because of the reasons stated above regarding disruption of the family and financial losses there was delay in filing the appeal before the Ld. CIT(A).
The Ld. CIT(A) failed to appreciate the sufficient cause for condonation of delay. The delay which was quantified for quantum appeal was 880 days, however, after considering the Covid circumstances, as per the directions of the Hon'ble Supreme Court and various notifications issued to ease out the limitation period for filing appeal etc., the delay is quantified as 496 days for quantum appeal and 601 for penalty appeal.
The Ld. CIT(A) without appreciating the facts and circumstances of the case and the judicial precedents dismissed both the appeals on preliminary ground of delay. The Ld. CIT(A) has not considered the merits and even disregarded the provision U/s 251 where Ld. CIT(A) is now authorised to set aside the matter to the Ld. AO for fresh assessment. Appeal before ITAT
The appellant filed appeals before Hon'ble Bench of Pune ITAT aggrieved by the order of Ld. CIT(A) for in quantum appeal and penalty appeal.
16.It is submitted that in view of the material on record, cases filed by the banks and creditors, losses incurred by the family there is a case beyond doubt that there is a sufficient cause for condonation of delay within the meaning of section 249(3) for CIT(A) to condone the delay.
The series of decisions from the Hon'ble Supreme Court, High Court and Hon'ble Pune Bench have condoned the delay by taking the pragmatic view. The Hon'ble Courts have always taken a view that the miscarriage of justice should be avoided.
In view of this it is submitted that the Hon'ble Bench may kindly direct the Ld. CIT(A) to condone the delay and decide the case on merits.
Disposal of quantum appeal and penalty appeal by recording same finding which indicates gross negligence on the part of Ld. CIT(A).
Without prejudice it is submitted that the Ld. CIT(A) disposed of the penalty appeal vide order dated 05.03.2025 and quantum appeal vide order 06.03.2025. With respect it is submitted that the Ld. CIT(A) erred in disposing penalty appeal first followed by disposal of quantum appeal. Ideally, quantum appeal should be disposed first.
20.It is also interesting to note that the Ld. CIT(A) has extracted rather copied all findings in quantum appeal from order of penalty appeal. It is humbly submitted that the Ld. CIT(A) has done gross error by not carefully recording a finding separately in penalty and quantum appeal.
In view of the above it is submitted that the Ld. CIT(A) erred in not condoning the delay and also disposed of the appeals by not recording appropriate finding as per the law. Even though the appeals are ex-parte, assessments are ex-parte the Ld. CIT(A) has to dispose cases by passing speaking order. The comparison of both the orders of Ld. CIT(A) indicates that findings are recorded devoid of merits.
Lastly, it is submitted that even though Tribunal is expected to set aside the matter to the lower authorities for granting fresh opportunity on the principle of natural justice, the addition made U/s 69A is bad in law.
Section 69A is a deeming fiction which provides for computing deemed income which is unexplained money.
23.It is submitted that given the fresh opportunity the appellant can explain the source of money deposited. She is carrying business only on commission basis. The section 69A cannot be invoked in the facts of the case.
Reliance on the decision of Hon'ble Supreme Court in the case of DN Singh vs. CIT, Central (2023) 150 taxmann.com 301 (SC). In this case facts of the case, it was held that when addition was made on account of "Bitumen" is not a valuable article in the context of section 69A. The appellant was a carrier supplying goods (Bitumen) from consigner i.e. oil marketing companies to consignee i.e. Road construction department. It was held that when the assessee is a carrier hen could not be said to be owner of valuable article for the purpose of addition U/s 69A. The Hon'ble Supreme Court has considered various circumstances for eg. A case of carrier, a Bailee, Owner under the Sale of goods Act, can a thief be regarded as legal owner and held that the addition U/s 69A cannot be made as the appellant cannot be regarded as owner for the purpose of section 69A.
In the light of the facts and circumstances of the case in the case of the appellant and considering the Hon'ble Supreme Court and other precedents the appellant submit that the addition cannot be sustained.
In view of the above facts and circumstances of the case it is submitted that the matter may kindly be restored to the Ld. AO/Ld.
CIT(A) as the Hon'ble Bench thinks fit to decide the merits of the case. 27.It is humbly submitted that the Hon'ble Bench will consider the case on merits.”
On going through the above contentions and also considering the submissions made by ld. Counsel for the assessee, we find merit in the same and are of the considered view that various details which may explain the source of alleged cash have not been examined by the lower authorities due to non compliance before ld.AO and due to delay in filing appeal before ld.CIT(A).
7. Further, it is brought to the notice of Bench that ld.CIT(A) has condoned the delay in case of assessee’s son Mr.Ram Jethale for the very same assessment year 2018-19 and the reasons stated are similar. Copy of ld.CIT(A)/NFAC order dated 13.11.2024 is placed on record. On going through the finding, we find that ld.CIT(A) after considering the facts and reasons for delay has condoned the delay by observing as under :
4.2 The reasons stated for delay in condonation application and the facts of the case have been considered and the delay in filing of appeal is hereby condoned. Accordingly, the appeal filed is treated as valid within the meaning of Section 249(3) of the Act.
7.1 However, in the case of assessee, eventhough the reasons for delay in filing the appeal are similar, ld.CIT(A) has blatantly refused to condone the delay. We therefore considering the ‘reasonable cause’ on the part of assessee in not filing the appeal within the stipulated time, condone the delay before ld.CIT(A). Further, as ld.CIT(A) has not adjudicated the issues on merits relating to quantum addition as well as the issues raised against the penalty levied u/s.271AAA(1) of the Act, we deem it appropriate to set aside all the issues on quantum additions as well as penalty to the file of ld.CIT(A) for necessary adjudication. Ld.CIT(A) shall pass a speaking order as contemplated u/s.250(6) of the Act in light of judgment of Hon’ble Bombay High Court in the case of PCIT (C) vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bombay) wherein it was held that ld.CIT(A)/NFAC is obliged to dispose of the appeal on merits even in an exparte order. Ld.CIT(A) may call for a remand report from the ld. Jurisdictional Assessing Officer for all the additional evidences filed for the first time before ld.CIT(A) and after providing reasonable opportunity to the assessee for rebuttal shall decide the issues in accordance with law. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause. Impugned orders are hereby set aside and effective grounds of appeal raised by the assessee in both the appeals are allowed for statistical purposes.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced on this 27th day of October, 2025.