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Facts
The assessee's appeal pertains to assessment year 2017-18, challenging the NFAC's order which upheld the AO's best judgment assessment, including additions for presumptive income from trucks and unexplained cash deposits. The assessee also faced a significant delay in filing the current appeal.
Held
The Tribunal condoned the delay of 222 days, finding a reasonable cause for the delay, and admitted the appeal for adjudication. The Tribunal decided to restore the case to the CIT(A) for admitting additional evidence and re-adjudicating the issues.
Key Issues
Whether the delay in filing the appeal was reasonable and whether the CIT(A) erred in not considering additional evidence related to truck business income and cash deposits.
Sections Cited
250, 144, 44AE, 69A, 143(3)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
This appeal filed by the assessee pertaining to the assessment year 2017-18 is directed against the order dated 22.07.2024 of National Faceless Appeal Centre (NFAC), Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Assessment Order dated 16.10.2019 passed u/s.144 of the Act.
Registry has informed that there is delay of 222 days in filing the appeal before this Tribunal. Affidavit for condonation of delay has been filed by the assessee explaining the reasons which led to delay in filing the appeal, the contents of which read as follows :
“9. That the delay has been occurred due to the following reasons:
- That the CIT(A) order dated 22/07/2024 was neither received physically nor by email. As such, I was completely unaware of the said order. - The said order came to my knowledge only in the month of April 2025 when I received SMS in connection penalty proceedings and when my tax consultant checked my IT Portal and got to know that order u/s 250 had already been passed on 22/07/2024.
That the delay in filing the appeal is neither due to negligence nor with any mala fide intention, but purely due to the circumstances explained above.
That I intend to contest the said assessment order on merits.
That I respectfully pray that the delay of 222 days in filing the appeal be condoned and the appeal be admitted for adjudication on merits in the interest of justice.”
We have heard the rival submissions and gone through the averments made in the affidavit. Hon’ble courts in plethora of 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. Hon’ble Supreme Court in the case of Inder Singh Vs. State of Madhya Pradesh judgment 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 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 affidavit and considering the ratio laid down by the Hon’ble Court in the case of Inder Singh (supra), we are of the view that there was ‘reasonable cause’ which prevented the assessee in filing the appeal within the stipulated time. We therefore condone the delay of 222 days and admit the appeal for adjudication.
4. In the instant appeal, assessee has raised following grounds of appeal :
“1. The learned CIT(A)-NFAC erred in law and on facts in upholding the best judgment assessment order passed u/s 144 by the learned AO by making following additions - a) Rs. 7,20,000 u/s 44AE (presumptive) b) Rs. 11,04,000 u/s 69A
2. Learned CIT(A)-NFAC erred in law and facts in dismissing the appellant's appeal without considering and appreciating the factual submissions, supporting documents, and evidences filed during the course of CIT(A) proceedings on 04/08/2021. The appellant contends that, the said order is in violation of the principles of natural justice being non-speaking order.
3. The learned CIT(A) NFAC erred in law and on facts in passing an appellate order without giving an adequate opportunity for being heard, and thereby violating the principle of natural justice.
The appellant contends that no addition ought to be made even on a presumptive basis u/s 44AE for alleged plying / running of trucks, since none of the trucks were operational, and no business activities were conducted in the AY 2017-18, due to the tragic murder incident in the parking on 06/04/2016.
The learned CIT(A) erred in law and on facts in confirming the addition of Rs.11,04,000 u/s 69A of the ITA, 1961, without appreciating that the said amount represented consideration received on account of sale of truck and as such ought not to be treated as unexplained money. Further, the appellant contends that, the learned CIT(A) failed to evaluate the additional evidences as submitted to substantiate the source of the said amount.
6. Alternately and on without prejudice basis, the appellant contends that, the learned CIT(A) ought to granted the benefit of the telescoping of the presumptive addition of Rs.7,20,000/-made u/s 44AE of the ITA, 1961
The appellant craves leave to add/modify/amend /delete all / any of the grounds of appeal.
5. At the outset, Ld. Counsel for the assessee referring to Ground No.3 stated that adequate opportunity of being heard was not provided by ld.CIT(A) and there were various details which the assessee possessed but could not produce in order to explain the source of alleged cash deposit. He further stated that assessee is engaged in the business of Truck plying and owns 8 Trucks. During the month of April, 2016 a bad incident occurred at the garage of the assessee due to which business came to a halt and thereafter assessee decided to sell the trucks through agent but since all the trucks were taken on loan it took sometime for selling the trucks. In the meantime, business activity was at halt and the agent deposited cash in the bank account in order to get No Objection Certificate from the Finance Company which had hypothecation over the Trucks. He also referred to various documents placed in the paper book running into 28 pages and also stated that necessary calculation shall be filed before ld.CIT(A) about the months for which the assessee owns trucks and that the presumptive income u/s.44AE of the Act shall be calculated and duly offered to tax after the necessary verification of the details. On the other hand, ld. Departmental Representative did not oppose this request.
We have heard the rival contentions and perused the record placed before us. We observe that the assessee who is engaged in the business of Truck plying owns 8 Trucks but did not file the return of income for A.Y. 2017-18. Ld. Assessing Officer based on the information about cash deposit of Rs.33,77,060/- in the loan account with ICICI bank, Kharadi branch, Pune including cash deposit of Rs.11,04,000/- on 12.11.2016, i.e. during the demonetization period, carried out the assessment proceedings and since the assessee had not provided necessary details he concluded the assessment u/s.144 of the Act making two additions firstly by computing the income u/s.44AE of the Act at Rs.7,20,000/- (@ Rs.7,500/- as income per month for 8 trucks) and further made addition u/s.69A of the Act for unexplained cash deposit at Rs.11,04,000/-. Further, when the assessee appealed before ld.CIT(A), even though some details were filed showing that the cash has been deposited in the loan account but still for want of sufficient details and evidence ld.CIT(A) dismissed the appeal of the assessee.
7. Before us, Ld. Counsel for the assessee has filed the paper book providing details of bank loan account statement, RTO registration details, truck sale agreement with Ujjwal Motors, declaration signed by Mr. Shriniwas Ladda that he has deposited Rs.11,04,000/- in the loan account standing in the name of the assessee for clearing the loan account. Further, assessee has also furnished the proof of the request letter given for admission of additional evidence before ld.CIT(A) placed at pages 26 to 28 of the paper book filed on 04.08.2021. Considering all these details, we find the present appeal to be a fit case to be restored back to the file of ld.CIT(A) and direct him to admit the additional evidence to be filed by the assessee along with the details placed before us so as to carry out the adjudication on two issues, firstly assessing the income u/s.44AE of the Act for the period during which assessee owned vehicles and secondly examine the source of alleged cash deposit in the bank account including the income u/s.44AE of the Act for the period when trucks are owned by the assessee and source of alleged cash deposit. Ld.CIT(A) may call for a remand report from the Jurisdictional Assessing Officer and thereafter decide the issues in accordance with law by passing a speaking order as contemplated u/s.250(6) of the Act. Grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 16th day of June, 2025.