ALPESHBHAI BALDEVBHAI RABARI,MEHSANA vs. THE ITO, WARD-1, MEHSANA

2.2 Aggrieved by the said assessment order, the assessee filed an appeal before the CIT(A). The appeal, however, was filed on 13.09.2021, whereas the assessment order had been passed on 02.12.2019. Thus, there was a delay of approximately 620 days in filing the appeal. The assessee submitted an application for condonation of delay under section 249(3) of the Act, supported by an affidavit. The assessee explained that he was a graduate in commerce with Gujarati as the medium of instruction and was working as a Business Correspondent in a rural area. He asserted that he did not possess in-depth knowledge or understanding of income-tax laws or procedural requirements. It was explained that he relied upon the advice of a friend who had assured him that no adverse consequences would follow, and that on release of his bank account from attachment under section 226(3) of the Act, he genuinely believed that the matter stood resolved. The assessee further stated that it was only on receipt of a penalty notice dated 12.08.2021 that he realized the seriousness of the matter, after which he consulted a professional tax advisor and promptly filed the appeal.

3 2.3 The learned CIT(A), however, did not find merit in the explanation offered by the assessee. After discussing the provisions of section 249(2) and 249(3) of the Act and referring to various judicial precedents the CIT(A) concluded that the reasons advanced by the assessee did not constitute “sufficient cause” within the meaning of section 249(3). It was observed that the assessee was in receipt of the assessment order on 02.12.2019 itself and had ample time to consider the implications and take appropriate legal remedies. The plea of ignorance of law, according to the CIT(A), could not be a valid ground for condonation. The learned CIT(A) accordingly rejected the application for condonation of delay and held that the appeal was not maintainable. Since the appeal was dismissed at the threshold, the CIT(A) did not adjudicate the grounds on merits and consequently confirmed the addition made by the AO.

2.4 Aggrieved by the order of the CIT(A), the assessee is now in appeal before us. The grounds raised by the assessee read as under:

1. In law and in the facts and circumstances of the case of the appellant, the order passed by the CIT(A) us 250 of the Act is bad in law and deserves to be quashed.

2. In law and in the facts and circumstances of the case of the appellant, the CIT(A) has grossly erred in not condoning the delay in filing of appeal and thereby dismissing the appeal filed by the appellant. 2.1 In law and in the facts and circumstances of the case of the appellant, the CIT(A) has grossly erred in not appreciating the sufficient cause for the delay in filing of appeal and not condoning the delay in filing of appeal.

either before or during the course of hearing of the appeal.

3. At the outset, the learned Authorised Representative (AR) of the assessee reiterated the factual background of the case. It was submitted that the assessee is a small-town individual residing in village Palaj, Mehsana, and is engaged as a Business Correspondent (BC) for the Central 4 Bank of India since 24.09.2014. In this capacity, the assessee is responsible for facilitating banking services in rural areas by accepting deposits from customers, enabling withdrawals, and performing transfer transactions on behalf of villagers. The AR clarified that the entries in the assessee’s bank account, which were treated as unexplained money by the Assessing Officer, were in fact mere pass-through transactions undertaken in the capacity of a Business Correspondent and did not represent the assessee’s own income.

3.1 The AR next addressed the issue of delay in filing the appeal before the CIT(A). The AR reiterated the reasons submitted before CIT(A) and stated that the assessee, though a commerce graduate, had Gujarati as his medium of instruction and had no in-depth knowledge or understanding of income-tax laws, compliance requirements, or procedural formalities. The AR further explained that after the assessment order dated 02.12.2019, the assessee’s bank account was attached under section 226(3) of the Act. Upon making a representation, and with the intervention of the bank manager of the Central Bank of India, the attachment was withdrawn. The assessee, under a bona fide though mistaken belief, presumed that the matter had been resolved and no further action was required from his side. It was only upon receipt of a penalty notice dated 12.08.2021 that the assessee realized the seriousness of the matter and immediately sought professional assistance from a tax consultant based at Mehsana. The AR emphasised that the assessee resides in a rural area where access to professional tax advice is extremely limited, and this geographical and resource constraint was a contributing factor to the delay. The AR drew attention to the affidavit dated 27.08.2021, filed both in English and Gujarati, wherein the assessee has set out the sequence of events leading to the delay.

3.2 The learned AR further placed before us a specific request for admission of additional evidence, invoking the provisions of Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. The AR explained that the assessee has now filed before this Tribunal a comprehensive paper book

Letters dated 11.03.2020 and 16.08.2021 issued by the Branch i. Manager of Central Bank of India to the Jurisdictional AO, enclosing BC mapping details and confirming the scope of assessee’s role as Business Correspondent. The engagement letter issued to the assessee by the Central Bank of ii. India, outlining the terms of his appointment as Business Correspondent. Affidavits dated 27.08.2021 in English and Gujarati narrating the iii. sequence of events explaining the delay in filing appeal. Extracts of the assessee’s bank account along with supporting letters iv. evidencing that the credits and debits correspond with customers’ deposits and withdrawals. Sample acknowledgments issued to customers for cash withdrawals v. on their behalf. Submissions made before the CIT(A), copy of the application for vi. admission of additional evidence, and the condonation application for delay. 3.3 It was argued that these documents go to the very root of the matter and are essential for establishing the true character of the bank account transactions. The AR emphasised that the nature of transactions as pass- through entries can be conclusively demonstrated only through such corroborative evidence from the Bank, which the AO did not obtain or examine during assessment proceedings.

3.4 The learned Departmental Representative (DR), on the other hand, strongly supported the orders passed by the lower authorities. The DR further submitted that the Assessing Officer had passed the order under section 144 of the Act only after providing opportunity. At the same time, the learned DR fairly submitted that in the event this Tribunal is inclined to admit the additional evidences and consider the matter afresh in the interest of justice, the issue may be restored to the file of the Assessing Officer for a de novo examination.

6 4. We have carefully considered the rival submissions, the orders of the lower authorities, and the material available on record. The assessee’s appeal before the learned CIT(A) was dismissed in limine on account of delay of 620 days. The explanation advanced by the assessee is that he was working as a Business Correspondent for the Central Bank of India in a rural area, was not conversant with income-tax procedures, and entertained a bona fide though mistaken belief that the release of his bank account attachment concluded the matter. Only upon receipt of penalty notice did he realize the seriousness of the issue, after which he promptly approached a professional and filed the appeal. The affidavit placed on record reiterates these circumstances.

4.1 In our considered view, while the delay is indeed long, the explanation offered cannot be brushed aside as mala fide. The assessee resides in a rural area, has limited exposure to tax procedures, and the sequence of events does indicate that the delay was attributable more to ignorance and mistaken belief than to deliberate inaction. We are mindful of the principle that substantial justice must prevail over technical considerations and that ordinarily, when the assessee demonstrates bona fides, liberal construction should be applied in matters of condonation. We are equally conscious of the fact that the concept of “sufficient cause” cannot be stretched to condone every lapse and must be applied with circumspection.

4.2 Balancing these two facets, we are of the view that the assessee deserves one opportunity to have his case decided on merits. The nature of the addition made by the AO, being the entire bank deposits of Rs.54,69,131/- treated as unexplained under section 69A, is a serious matter, and there is material now sought to be produced by way of additional evidence, such as letters from the Bank confirming the assessee’s role as Business Correspondent. These go to the root of the matter and require factual verification. In the absence of such verification, neither the AO nor the CIT(A) has had the occasion to examine the true character of the impugned deposits. Therefore, in the larger interest of justice, we deem it appropriate to admit the additional evidence under Rule 29 of the ITAT 4.3 At the same time, we cannot lose sight of the fact that the assessee remained completely non-compliant before the AO, failed to avail repeated statutory opportunities, and even allowed the delay of 620 days to occur before approaching the appellate authority. Such conduct shows disregard for statutory timelines and the orderly process of law. While we are inclined to condone the delay in the peculiar circumstances of the case, it is necessary to send a clear message that such laxity and negligence cannot be countenanced and that condonation should not be taken as a matter of right. In order to balance equity with deterrence, we direct the assessee to pay a sum of Rs. 5,000/- (Rupees Five Thousand only) as cost, by way of donation to the Prime Minister’s Relief Fund, within a period of four weeks from the receipt of this order. This cost is imposed not as a penalty but as a measure of deterrence, to ensure that taxpayers do not treat compliance with statutory notices and timelines casually. The object is to instill a sense of responsibility and discipline in approaching judicial forums, while still safeguarding the assessee’s right to be heard on merits.

4.4 We accordingly set aside the orders of the lower authorities and restore the matter to the file of the AO with the direction to examine the assessee’s claim afresh in accordance with law, after verifying the additional evidences filed and granting due opportunity of hearing.