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Facts
The assessee filed a belated return and was selected for scrutiny for investment in immovable property. The AO treated the investment of Rs. 11,00,000 as unexplained as the assessee's declared income did not match the investment. The assessee's appeal before the CIT(A) was dismissed due to a delay of 206 days, without going into the merits.
Held
The Tribunal held that the assessee had shown sufficient cause for the delay in filing the appeal before the CIT(A) due to medical incapacity and the accountant's resignation. The Tribunal condoned the delay and restored the matter to the CIT(A) for adjudication on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was condonable and whether the matter should be adjudicated on merits considering the additional evidence.
Sections Cited
250, 143(3), 144B, 139(4), 143(2), 142(1), 56(2)(x), 249(2), 249(3), 69, 46A
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MS.SUCHITRA R. KAMBLE & SHRI MAKARAND V.MAHADEOKAR
This appeal by the assessee is directed against the appellate order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] u/s 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] dated 18.03.2025. The impugned order arises from the assessment framed by the Assessment Unit, Income-tax Department u/s 143(3) r.w.s. 144B of the Act by order dated 16.09.2022.
Facts of the Case 2.1 The brief factual matrix, as emanating from the assessment order, is that the assessee, an individual and resident, filed a belated return u/s 139(4) on 30.03.2021 declaring total income of Rs.4,70,890/-. The return was selected for Limited Scrutiny under CASS for the examination of investment in immovable property. During the faceless assessment, a notice u/s 143(2) dated 29.06.2021 was followed by several notices u/s 142(1). The assessee replied only to the first, on 20.11.2021, furnishing computation of income, bank statements, and the property deed. No response was received to later requisitions or to the SCN dated 31.08.2022 seeking details of the seller, assessee’s share, source of investment, applicability of section 56(2)(x), and proof of creditworthiness. The AO found that the property was jointly purchased by six parties, including the assessee, and that a payment of Rs.11,00,000 was made on 22.06.2020 to Shri Govind Kumar Veljibhai by cheque, as reflected in the deed. Observing several prior cash and other credits in the assessee’s bank account and noting that his declared income of Rs.4,70,890 did not match the investment, the AO treated the source as unexplained.
2.2 The assessee preferred a first appeal before the CIT(A). As recorded in the appellate order, the appeal was instituted on 10.05.2023 against the assessment order dated 16.09.2022, which, as per the CIT(A), was served on 17.09.2022. The CIT(A) computed a delay of 206 days vis-à-vis the limitation prescribed under section 249(2). As mentioned in Form-35, the assessee sought condonation of delay stating that he was suffering from health conditions, was under medical treatment and medication, and was therefore not in a mental state to file the appeal in time. It was also explained that the accountant left the job on short notice, resulting in further difficulty. The CIT(A) held that the assessee had not produced medical records to substantiate incapacity, that treatment alone did not prove inability to act for the entire period, and that no alternate compliance arrangements were made; the accountant’s resignation was an internal matter. Emphasising adherence to limitation and citing judicial dicta that delay defeats equity, the CIT(A) refused to condone the 206-day delay u/s 249(3), rejected the appeal without going into merits, and did not consider the additional evidences filed.
Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal:
1. The order passed u/s.250 on 18.03.2025 received 20.03.2025 for A.Y. 2020-2021 by NFAC CIT(A), dismissing the appeal on the grounds and merits, for late filing by 206 days and not taking into consideration the circumstances of medical grounds for delayed filing of appeal and upholding the addition of Rs.11,00,000/-towards unexplained investment u/s 69 of the IT Act is wholly illegal, unlawful and against the principles of natural justice.
2. The Ld. NFAC CIT(A) has grievously erred in law and or on facts without further going into the facts substantiated documents, details also without fully and properly appreciating the facts and the additional evidence placed before the CIT(A) NFAC.
3. The Ld. NFAC CIT(A) has grievously erred in law and on facts in confirming the addition made by the AO towards Unexplained investment in property u/s 69 of the IT Act as this would render the additions made totally unjust and contrary when going into the prima facie evidences and scrutinizing the documents/details ie the confirmations of the amounts received in Bank, Agriculture Proof and Agriculture proceeds cash Receipts, Cash Book, Bank Passbook in the form of Additional evidences which was all made available to the NFAC CIT (A). 4. That in the facts and circumstances of the case as well as in law, the Ld.NFAC CIT(A) ought not to have upheld the addition towards unexplained investment u/s 69 of the IT Act without going into the merits and facts of the case and evidences produced before good honour. 5. The Ld. NFAC CIT(A) dismissed the appeal on the grounds of non- appearance of the appellant before NFAC and further also erred on not considering the circumstances on medical grounds surrounded which was beyond the control of the appellant and upheld the order of the NFAC. 6. Without prejudice to above and in alternative, the impugned addition of Rs.11,00,000/- is highly excessive and contrary when going into the prima facie evidences and scrutinizing the documents/details ie the confirmations of the amounts received in Bank, Agriculture Proof and Agriculture proceeds cash Receipts, Cash Book, Bank Passbook in the form of Additional evidences which was all made available to the NFAC CIT(A). 7. Without prejudice to above and in alternative, it would against the natural justice and principal of law as to recovery of taxes on the additions made not sustainable in law............ Treating Income of Rs 11,00,000 as unexplained investment upon various credits observed by the AO in the Bank statement of the assessee whereas the fact is the appellant derived cash receipts from sale of agriculture produce and further advances received from friends and relatives in personal capacity, the same is substantiated by confirmations from friends, relatives and agriculture cash receipts.
8. Without prejudice to above and in alternative, the appellant begs your honour to set aside the matter for fresh adjudication and/or for statistical purpose. The case appellant has a good case on merit and is likely to succeed in case the appellant is given an opportunity to contest the appeal on merits.
During the course of hearing before us, the learned Authorised Representative (AR) for the assessee submitted that the entire delay of 206 days in filing the appeal before the CIT(A) was genuine and attributable to bonafide circumstances, fully supported by contemporaneous medical records. The assessee placed on record a detailed affidavit affirming that the non-filing of appeal in time was due to complete knee failure and subsequent bilateral total knee replacement surgery conducted at Krishna Shalby Hospital, Ahmedabad. The affidavit further records that the accountant handling the ITR correspondence (Mr. Gopal Shah) resigned without notice, and all electronic communication, including e-proceedings, was being routed through the email ID of the accountant, which remained unattended, causing further lapse in knowledge of the proceedings. In support of this plea, the assessee furnished discharge summary and medical reports.
The AR also placed on record a comprehensive paper book (filed before CIT(A) and re-submitted before us), indexed and paginated, containing agricultural cash receipts (pages 4–27), agriculturist proof (page 28), cash book and bank passbook (pages 29–37), and confirmations from friends and relatives regarding loans/advances (pages 38–81). It was submitted that the CIT(A), despite having these documents on record, summarily rejected the condonation request without appreciating the evidentiary value of the medical records and affidavit. The AR argued that the assessee had made out a “sufficient cause” within the meaning of section 249(3) of the Act, and the delay deserved condonation.
The learned Departmental Representative, considering the facts and circumstances of the case, did not raise any objection to restoring the matter to the file of the CIT(A) for adjudication on merits based on the additional evidence produced by the assessee.
We have carefully considered the rival submissions, the material placed on record, including the affidavit and medical records evidencing the assessee’s bilateral total knee replacement surgery in March 2023, and the sequence of events leading to the delay of 206 days in filing the appeal before the CIT(A). The explanation tendered by the assessee demonstrates that the delay was occasioned by a combination of serious medical incapacity and circumstances beyond his control, including the abrupt resignation of the accountant handling the e-proceedings. These facts are substantiated by contemporaneous hospital records, discharge summaries, and sworn affidavit.
7.1 It is settled position of law that a liberal approach should be adopted while considering an application for condonation of delay, and that substantial justice should prevail over technicalities. In the present case, we are satisfied that the assessee has shown “sufficient cause” within the meaning of section 249(3) of the Act, and the delay in filing the appeal before the CIT(A) deserves to be condoned in the interest of justice.
7.2 We also note that the assessee had filed before the CIT(A) additional evidences in the form of confirmations from friends and relatives, agricultural cash receipts, cash book, and bank passbook to explain the source of Rs.11,00,000/-. These materials go to the root of the matter and require examination on merits. The learned Departmental Representative has also fairly submitted that, considering the facts, there is no objection if the matter is restored to the file of the CIT(A) for a fresh decision on merits.
7.3 In view of the foregoing, we condone the delay of 206 days in filing the appeal before the CIT(A). We set aside the impugned order and restore the matter to the file of the CIT(A) with a direction to admit the appeal, consider the additional evidences in accordance with Rule 46A of the Income-tax Rules, 1962, grant reasonable opportunity of being heard to the assessee, and decide the appeal afresh on merits by a speaking order.
In the result, the appeal is allowed for statistical purposes.
Order pronounced in the Court on 12th August, 2025 at Ahmedabad.