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Facts
The assessee's appeal was filed with a delay of 587 days due to an oversight by their Chartered Accountant. The appeal pertains to additions made by the Assessing Officer (AO) of Rs. 29,50,000/- on account of unexplained cash credits and Rs. 75,001/- for dividend income.
Held
The Tribunal condoned the 587-day delay in filing the appeal, citing reasonable cause and a liberal approach to substantial justice. The issue of addition of Rs. 29,50,000/- was remanded back to the CIT(A) for fresh adjudication after proper verification. The ground regarding the addition of Rs. 75,001/- was dismissed.
Key Issues
Whether the delay in filing the appeal can be condoned; and whether the addition on account of unexplained cash credits and denial of exemption on dividend income are justified.
Sections Cited
271(1)(c), 5, 143(1), 143(2), 142(1), 68, 10(34)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE “SMC” BENCH : PUNE
Before: DR. MANISH BORAD
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “SMC” BENCH : PUNE BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A.No.1270/PUN/2025 (Assessment Year 2014-15) Vijay Ashok Jeswani, vs. ITO, Ward-4, Panvel. Shop No.4, Plot Hari Kripa Apartment, Plot No.27, Panvel-Matheran Road, Sector-19, New Panvel, Dist. Raigad. PAN : ADZPJ 7706 L (Appellant) (Respondent) For Assessee : Shri Hari Krishan, Tax Practitioner For Revenue : Shri Deepak Kumar Kedia, JCIT-DR Date of Hearing : 07.07.2025 Date of Pronouncement : 09.07.2025 ORDER
This appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”], dated 08/08/2023 for the Assessment Year (“AY”) 2014-15.
2. Registry has pointed out that there is a delay of 587 days in filing of this appeal. The assessee has filed an application for condonation of delay stating as under :
“1. In this case the order of the Commissioner of Income Tax (Appeals) was passed on 08-08-2023. Accordingly the appeal before the Hon'ble Tribunal was required to be filed on or before 07-10- 2023. The appeal however has been filed on 16-05-2025. Thus there is a delay of 587 days in filing the appeal.
It is respectfully submitted that our Chartered Accountant Mr. R.R. Jakhotia who was looking after our income tax compliances has omitted to prepare and file the appeal, by oversight.
3. On 24-03-2025 an order came to be passed u/s 271(1) (c) of the Income Tax Act levying penalty of Rs.9,34,725/- on the assessee.
2 ITA.No.1270/PUN./2025 (Vijay Ashok Jeswant)
Then Mr. R.R. Jakhotia Chartered Accountant checked the e-portal account of the assessee and noticed that the appeal of the assessee filed against the assessment order dated 30-12-2016 has been already dismissed by the Commissioner of Income Tax (Appeals) vide order dated 08-08-2023. Shri. R.R. Jakhotia Chartered Accountant then realized that appeal is required to be filed against the said order of the Commissioner of Income Tax (Appeals) as also against the penalty order dated 24-03-2025 passed u/s 271(1)(c) of the Income Tax Act. The appeal against the penalty order was filed on 04-04-2025.
Accordingly the process of gathering the relevant documents and the information required for preparing and filing the appeal against the order of the Commissioner of Income Tax (Appeals) dated 08-08- 2023 was started.
5. The appeal was finally filed on 16-05-2025.
6. It is respectfully submitted that delay has been caused due to genuine reasons. There was no malafides or gross negligence on the part of the assessee in the delay in filing of the appeal. The assessee has not obtained any undue advantage from the delay in filing the appeal.”
I have heard rival submissions and gone through the averments made in the condonation application. Hon‟ble courts by virtue of various judgments observed that when consideration of an appeal on merits is pitted against the rejection of a meritorious claim on the technical ground of the bar of limitation, the Courts lean towards consideration on merits by adopting a liberal approach towards „sufficient cause‟ to condone the delay. The Court considering an application under section 5 of the Limitation Act may also look into the prima facie merits of an appeal. A liberal approach may be adopted when some plausible cause for delay is shown. The Hon‟ble Supreme Court in the case of Inder Singh Vs. State of Madhya Pradesh, dated 21.03.2025 (2025 INSC 382) condoned delay of 1537 days sub-serving the cause of justice. It was held so while observing that the appeal filed by the appellant with a delay was unintentional, much less due to any deliberate
3 ITA.No.1270/PUN./2025 (Vijay Ashok Jeswant) laches, and was well-explained by the State before the High Court. Hon‟ble Court further held that in cases where the merits are significant, a more liberal approach may be adopted to allow for the examination of the case on its merits. Having gone through the averments made in the condonation application and considering the ratio laid down by the Hon‟ble Court in the case of Inder Singh (supra), I am of the view that there was a „reasonable cause‟ which prevented the assessee in filing the appeal within the stipulated time. I, therefore, condone the delay of 587 days and admit the appeal for adjudication.
The assessee has raised the following grounds of appeal:- 4.
1. The Ld.CIT(A) has erred in dismissing the grounds of appeal of the assessee before him, regarding the addition of Rs. 29,50,000/- made to the income of the assessee as unexplained cash credits.
2. The Ld.CIT(A) has erred in dismissing the grounds of appeal of the assessee before him, regarding the addition of Rs. 75,001/- made by the AO to the income of the assessee on account of dividend received from M/s. Abhudaya Co-op Bank.
3. The appellant craves leave to add to or amend/modify or delete any or all of the above grounds of appeal.”
Brief facts of the case are that the assessee is an individual and carries-out oil & paints business and also engaged in the business of building construction under the sole proprietorship of M/s. Vijay Properties. Income of Rs. 15,49,890/- declared in the return of income, e-filed on 26/11/2014 which was processed u/s. 143(1) and thereafter selected for scrutiny under CASS followed by validly serving notices u/s. 143(2) & 142(1) of the Act. During the course of assessment proceedings, Ld.AO observed that the assessee took unsecured loans from 62 different parties amounting
4 ITA.No.1270/PUN./2025 (Vijay Ashok Jeswant) to Rs. 6,60,10,050/-. The assessee furnished various details with regard to nature and source of unsecured loans. Ld.AO was satisfied with major details except for the unsecured loans from 06 parties, totaling to Rs. 29,50,000/-. The Ld.AO on observing that notice issued u/s. 133(6) of the Act has returned un-served, deputed Inspector of the Department for physical verification of 06 parties. However, report of the Inspector was negative and the Ld.AO came to a conclusion that assessee could neither produce the alleged loan creditors nor he could establish their identity. Therefore, Ld.AO finally concluded the assessment by making addition u/s. 68 of the Act at Rs. 29,50,000/-. Further, Ld.AO also denied the benefit of exemption u/s. 10(34) of the Act for the dividend income of Rs. 75,001/- received from Abhudaya Bank and the income assessed at Rs. 45,74,891/-. Aggrieved, the assessee preferred appeal before the Ld.CIT(A), but failed to succeed. Now, the assessee is in further appeal before this Tribunal.
Learned counsel for the assessee submitted that the Inspector‟s report, based on which, Ld.AO made the impugned addition u/s. 68 of the Act, has never been confronted to the assessee which violates the principles of natural justice. He further submitted that, if opportunity is granted, the assessee can produce all the alleged 06 loan creditors before the Ld.AO and also furnish all necessary details including confirmation of accounts, ledger account, PAN details, bank details and returns of income of the cash creditors.
5 ITA.No.1270/PUN./2025 (Vijay Ashok Jeswant)
On the other hand, ld. DR supported the orders of the lower authorities.
I have heard rival submissions and perused the material placed before me. The first issue for my consideration is regarding addition of Rs. 29,50,000/- made u/s. 68 of the Act, for which assessee was unable to explain the nature and source of the following 06 cash creditors:-
S.No. Name of the lender Amount of loan accepted in Rs. 1 Laxmiben Govind Patel 5,00,000 2 Kanku D Rathod 4,00,000 3 Chetankumar Kalyanji Velani 6,00,000 4 Surekha Panchal 3,50,000 5 Shantilal Panchan Singhani 4,00,000 6 Samant K Charan (HUF) 7,00,000 Total(A) 29,50,000
The Ld.AO has made the addition on two counts; firstly, notices issued u/s. 133(6) returned un-served and secondly, the Inspector deputed to verify the existence of 06 cash creditors also filed negative report. Now, the only plea of the learned counsel for the assessee is that Inspector‟s report which has been mentioned by the Ld.AO in the assessment order at page Nos. 3-5 has never been confronted to the assessee before taking cognizance of the same. It is submitted that all relevant documents to explain the nature and source of the alleged sum stands duly filed before the lower authorities and before this Tribunal. If required, the assessee can produce all the alleged 06 cash creditors before the Ld.AO for necessary verification. Ld.DR did not object to the request made by the learned counsel for the assessee. I, therefore, considering the 6 ITA.No.1270/PUN./2025 (Vijay Ashok Jeswant) facts and circumstances of the case, remand back the issue of addition of Rs. 29,50,000/- to the file of Ld.CIT(A), who shall direct the Ld.AO to carry-out the remand proceedings during which the assessee shall produce the alleged 06 cash creditors and the Ld.AO shall record their statements and after necessary verification shall make a remand report and sent it to Ld.CIT(A). Thereafter, Ld.CIT(A) shall decide the issue of addition made u/s. 68 of the Act in the light of the remand report as well as the documents filed by the assessee and decide in accordance with law. Thus, ground of appeal No.1 raised by the assessee is allowed for statistical purposes.
10. As regards ground No.2 for the addition of Rs. 75,001/-, which the Ld.AO has made, by denying the benefit of sec. 10(34) of the Act, learned counsel for the assessee has not made any submissions on this ground before me. Therefore, I fail to find any infirmity in the findings of the Ld.CIT(A) confirming the said addition. Thus, this ground No.2 raised by the assessee is dismissed.
In the result, appeal of the Assessee is partly allowed for statistical purposes.