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Facts
The assessee, engaged in agricultural activity, did not file his return for AY 2011-12. Later, the AO reopened the case upon receiving information of cash deposits totalling Rs. 23,30,500/- in the assessee's bank account. The assessee claimed these were savings from agricultural income and household savings, but failed to provide documentary evidence.
Held
The Tribunal condoned the delay of 771 days in filing the appeal due to the assessee's bona fide reasons. The Tribunal set aside the CIT(A)'s ex-parte order and restored the matter to the CIT(A) for de novo adjudication, directing that the assessee be given adequate opportunity to be heard and present evidence.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the assessee should be granted an opportunity for a fresh adjudication of the appeal on merits.
Sections Cited
139, 148, 69A, 2(14), 250, 253(5)
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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
O R D E R
PER SIDDHARTHA NAUTIYAL, JM:
The present appeal has been preferred by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 29/09/2022 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2011-2012.
The assessee has raised the following grounds of appeal: “1. The Hon’ble CIT(A) erred in law and facts of the case by upholding the addition amounting to Rs.23.30,500/- made as unexplained investments in case of the appellant for AY 2011-12.
2. The appellant reserves the right to add/alter or amend any of the ground of appeal.” Jayeshbhai Gordhanbhai Patel vs. ITO Asst. Year : 2011-12 Condonation of delay
3. At the outset, we note that there is a delay of 771 days in filing of the present appeal. The assessee has filed an application for condonation of delay along with an Affidavit, wherein it has been submitted the order of the learned CIT(A), Delhi, was passed on 29.09.2022, but the assessee did not receive the physical copy of the said order through post or courier. Further, it has been explained that the assessee is not well-versed with the use of electronic communication such as e-mail and does not access it regularly. Owing to these reasons, he was not aware of the adjudication of his appeal by the CIT(A), and consequently, could not take the required steps for filing the appeal before this Tribunal within the prescribed limitation period. It is further seen from the Affidavit that the assessee came to know about the appellate order only upon receipt of the issue letter dated 14.11.2024 issued by the Income Tax Officer, Ward 1(3)(1), Petlad, for recovery of outstanding demand. Immediately thereafter, the assessee took necessary steps to file the appeal before this Tribunal, resulting in a delay of 771 days in filing the same. The assessee has submitted that the delay is neither deliberate nor intentional but occurred due to the genuine and bona fide circumstances beyond his control.
4. We have carefully considered the submissions made and the reasons explained by the assessee in his affidavit. We are of the considered view that the cause of delay explained by the assessee constitutes a sufficient cause within the meaning of section 253(5) of the Act. The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Others [1987] 167 ITR 471 (SC) has held that a liberal approach is to be adopted while considering an application for condonation of delay and that substantial justice should prevail over technical considerations. The Hon’ble Court Jayeshbhai Gordhanbhai Patel vs. ITO Asst. Year : 2011-12 further observed that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. Similarly, the Hon’ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123 / [1999] 1 SCR 963 held that the length of the delay is not material; what matters is the acceptability of the explanation offered. If the explanation does not smack of mala fides and is otherwise reasonable, the delay should be condoned in the interest of justice. In the present case, considering the facts and circumstances narrated in the affidavit and the supporting documents placed on record, we are satisfied that the assessee was prevented by reasonable and bona fide cause in not filing the appeal within the prescribed period. The delay in filing the appeal cannot be said to be deliberate or due to negligence. Accordingly, in the interest of justice and equity, and following the ratio laid down by the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji (supra) and N. Balakrishnan v. M. Krishnamurthy (supra), we hereby condone the delay of 771 days in filing of the present appeal.
The appeal is therefore admitted for adjudication on merits.
On Merits 6. The brief facts of the case are that the assessee, Shri Jayeshbhai Gordhanbhai Patel, an individual engaged in agricultural activity, did not file his return of income for Assessment Year 2011-12 within the due date prescribed under section 139 of the Act. Subsequently, the Assessing Officer (“AO”) received information that the assessee had deposited a total amount of Rs. 23,30,500/- in cash in his bank account during the relevant financial year. Based on this information, the case was reopened by issuing notice under section 148 of the Act. In response, the assessee filed his return Jayeshbhai Gordhanbhai Patel vs. ITO Asst. Year : 2011-12 declaring total income of Rs. 1,13,260/- and agricultural income of Rs. 85,000/-. During the reassessment proceedings, the AO issued multiple statutory notices and provided various opportunities to the assessee to furnish supporting documents explaining the source of the cash deposits. However, the assessee failed to produce any documentary evidence to substantiate his claim. The assessee submitted a written statement asserting that he was engaged solely in agriculture, derived income from ancestral and partnership agricultural lands, and that the deposited cash represented long- term household savings of himself and his family, kept at home for social and family needs. The AO, after examining the bank statement, found that large cash deposits, including Rs. 20,00,000/- on a single day, were made without any credible explanation. The AO rejected the explanation as an afterthought and treated the entire sum of Rs. 23,30,500/- as unexplained income under section 69A of the Act, completing the assessment at a total income of Rs. 24,43,760/-.
Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) Delhi (“CIT(A)”), raising various grounds, inter alia, that the assessment order was passed without granting proper opportunity of hearing, that the addition of Rs. 23,30,500/- as unexplained investment was unjustified, and that the amount represented proceeds from sale of agricultural land not chargeable to tax under section 2(14) of the Act. However, the CIT(A) noted that the assessee did not respond to any of the notices of hearing issued under section 250 of the Act, nor filed any written submission or evidence in support of his grounds of appeal. The CIT(A) observed that despite repeated opportunities, the assessee failed to establish the genuineness of the source of cash deposits or furnish evidence relating to agricultural income or sale of agricultural land. The CIT(A) held that merely Jayeshbhai Gordhanbhai Patel vs. ITO Asst. Year : 2011-12 stating that the assessee was engaged in agriculture did not prove the source of the deposits. Accordingly, the CIT(A) upheld the findings of the AO and dismissed the appeal, sustaining the addition of Rs. 23,30,500/- made under section 69A of the Act.
7.1. Thereafter, the assessee filed the present appeal before this Tribunal along with an application for condonation of delay of 771 days, supported by an affidavit explaining that he did not receive the CIT(A) order physically or through e-mail and came to know about the same only upon receipt of a recovery notice dated 14.11.2024 issued by the Income Tax Officer, Ward 1(3)(1), Petlad. Upon discovering this, the assessee immediately took steps to file the present appeal. We have already, in the preceding part of this order, allowed the assessee’s application for condonation of delay after being satisfied with the bona fide reasons furnished by the assessee.
Now coming to the merits of the case, we observe that the CIT(A) has dismissed the appeal ex parte without examining the matter in detail on facts and merits. Since the assessee has now explained the reasons for non- compliance and the delay in pursuing the appeal was found to be genuine, we are of the view that in the interest of justice and fair play, the assessee deserves an opportunity to present his case before the first appellate authority.
8.1. Accordingly, we set aside the impugned order of the CIT(A) and restore the matter to his file for de novo adjudication. The CIT(A) is directed to afford adequate opportunity of being heard to the assessee and decide the appeal afresh on merits, in accordance with law. We make it clear that the Jayeshbhai Gordhanbhai Patel vs. ITO Asst. Year : 2011-12 assessee shall cooperate in the appellate proceedings and produce necessary documentary evidence in support of his claim.
In the result, the appeal of the assessee is allowed for statistical purposes, in the interest of justice.