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Facts
The assessee faced financial hardship and mental trauma, leading to a significant delay in filing the appeal. The assessment year is 2016-17, and the Assessing Officer made an addition of Rs. 20,96,225/- under Section 68 for unexplained cash deposits. The CIT(A) upheld the addition, refusing to admit additional evidence due to non-compliance with Rule 46A(1).
Held
The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's financial and mental distress. The appeal was admitted for adjudication, and the issue was restored to the CIT(A) to allow the assessee to file additional evidence and decide the matter on merit.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the CIT(A) erred in not admitting additional evidence without a formal application, thus violating natural justice.
Sections Cited
143(2), 142(1), 144, 68, 46A(1), 250(6), 271(C)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: JUSTICE (RETD.) C V BHADANG & SHRI R. K. PANDA
This appeal filed by the assessee is directed against the order dated 24.05.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2016-17.
There is a delay of 358 days in filing of the appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. It has been explained in the affidavit that during the financial year 2023-24 the assessee faced acute financial hardship and his bank account was declared as NPA by SBI and IDBI Banks due to default in repayment of cash credit facilities availed by him for which he suffered from severe mental stress and psychological trauma. Further due to financial crunch the assessee was unable to engage the services of any legal consultant or professional. It has further been stated that the delay in filing of the appeal is neither willful nor deliberate but solely attributable to the financial hardship and mental condition prevailing during the relevant period. Relying on various decisions the Ld. Counsel for the assessee submitted that the delay in filing of the appeal should be condoned.
The Ld. DR opposed the condonation application filed by the assessee.
We have heard the rival arguments made by both the sides on the issue of delay in filing of the appeal. We have also considered the contents of the condonation application filed along with the affidavit of the assessee. We find recently the Hon’ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339 has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”
Considering the totality of the facts of the case and in the light of the decision of Hon’ble Supreme Court cited (supra), the delay in filing of the appeal is condoned and the appeal is admitted for adjudication.
Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 08.03.2017 declaring total income of Rs.3,15,020/-. The case was selected for limited scrutiny under CASS. Accordingly statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were issued and served on the assessee. During the course of assessment proceedings the assessee was asked to give the source of cash deposits made in SB account during the year under consideration and during the demonetization period. However, the assessee did not submit any documents in response to the notice issued along with questionnaire. The Assessing Officer therefore, proceeded to complete the assessment u/s 144 of the Act. On verification of ITS information available on the system and bank account statement the Assessing Officer noticed that the assessee has deposited total cash of Rs.49,25,060/- in his SB / cash credit / current accounts maintained with IDBI Bank, Poynad. However, the assessee has offered a sum of Rs.28,28,835/- as business receipts. Since the assessee failed to explain the source of cash deposits of Rs.20,96,225/- (Rs.49,25,060/- (-) Rs.28,28,835/-), the Assessing Officer made addition of Rs.20,96,225/- u/s 68 of the Act.
Before the Ld. CIT(A) / NFAC the assessee furnished certain additional evidences. However, in absence of any formal request for admission of the additional evidences under Rule 46A(1) of the I T Rules, 1962, the Ld. CIT(A) / NFAC did not accept the same and upheld the addition made by the Assessing Officer.
Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:
1. The learned CIT(A)/NFAC has passed an order without considering the facts and documents already on record, which is a violation of Section 250(6) of the Income-tax Act, 1961. The failure to do so renders the order bad in law and liable to be set aside. Relief may please be granted.
2. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)]/NFAC has erred in upholding the addition of ₹20,96,225/- made under Section 68 of the Income-tax Act, 1961 solely on the basis of non-filing of Rule 46A to admit additional evidences hence denial of admission of evidence amounts to violation of principles of natural justice. Relief may please be granted.
3. The learned CIT(A)/NFAC has further erred in disallowing genuine business purchases, without verifying their legitimacy & also not applying "peak credit" principle which is arbitrary, unjustified, and bad in law. Relief may please be granted.
4. The learned Assessing Officer (AO) and CIT(A)/NFAC have erred in initiating and sustaining penalty proceedings under Sections 271(C) without proper appreciation of facts and legal position Relief may please be granted.
5. The appellant craves leave to add and or alter any of the grounds of appeal before or at the time of hearing.
The Ld. Counsel for the assessee submitted that various documents were filed before the Ld. CIT(A) / NFAC in the shape of additional evidence to substantiate the nature and source of cash deposit of Rs.20,96,225/-. However, he has not accepted the additional evidence on the ground that no formal application for admission of the same has been filed as per Rule 46A(1) of the IT Rules. He submitted that in the interest of justice, the matter may be restored to the file of the Ld. CIT(A) / NFAC with a direction to admit the additional evidence and decide the appeal on merit.
The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. It is an admitted fact that out of total cash deposit of Rs.49,25,060/-, the Assessing Officer after considering the business receipts of Rs.28,28,835/-, made addition of Rs.20,96,225/- u/s 68 of the Act being the unexplained cash deposit in the SB account. We find although the assessee filed various details in shape of additional evidence before the Ld. CIT(A) / NFAC, however, he did not admit the same on the ground that no formal request for admission of the same was filed before him as per the provisions of Rule 46A(1) of the IT Rules, 1962. He, therefore, upheld the addition made by the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to follow the due procedure by filing an application for admission of the additional evidence and also explain the nature and source of the said cash deposit of Rs.20,96,225/-. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to permit the assessee to file a petition for admission of the additional evidence as per Rule 46A(1) of the IT Rules and decide the issue as per fact and law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court at the conclusion of hearing itself i.e. on 25th August, 2025.