ISRAMA DUDH UTPADAK SAHAKARI MANDLI LTD.,PETLAD, ANAND vs. THE ITO, WARD 1(3)(1), PETLAD,GUJARAT

The brief facts of the case are that no return of income was filed by the assessee for the A.Y. 2016-17. The Assessing Officer had reopened the case under Section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on the basis of an information that cash deposit of Rs.79,08,610/- was made in the HDFC Bank account of the assessee. In Assessment Year: 2016-17 Israma Dudh Utpadak Sahakari Mandli Ltd vs. ITO Page 2 of 6 response to notice under Section 148 of the Act dated 07.03.2023, the assessee had filed return of income declaring total income of Rs.4,67,770/-. However, there was no further compliance by the assessee in the course of assessment proceeding to the various notices issued under Section 142(1) of the Act. The Assessing Officer, had therefore, treated the entire cash deposit of Rs.79,08,610/- as unexperienced investment of the assessee under Section 69 of the Act. The assessment was completed under Section 147 read with Section 144 of the Act on 12.01.2024 at total income of Rs.83,76,380/-

Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal: -

Shri Dushyant Maharshi, Ld. AR of the assessee submitted that the assessee is a Co-operative Society engaged in the activity of supply of milk to the federal co-operative society, selling of cattle feeds and other Assessment Year: 2016-17 Israma Dudh Utpadak Sahakari Mandli Ltd vs. ITO Page 3 of 6 related materials. He explained that the notices were received in the registered e-mail id. of the office bearers of the society which remained unanswered. Further, the tax consultant appointed by the assessee for handling the assessment proceeding also did not make compliance, which resulted in ex-parte order of the Assessing officer. The order of the Assessing Officer was also not communicated to the society in time as a result there was delay of 129 days in filing the appeal before the ld. CIT(A). This delay was not condoned by the Ld. CIT(A) and the appeal of the assessee was dismissed in limine without adjudicating the merits of the case. The Ld. AR submitted that there was bona fide reason for the delay in filing the appeal before the Ld. CIT(A), which was duly explained in the form No.35. He relied upon various decisions in support of the contention that the delay in filing the appeal should be condoned when the assessee acted in a bona fide manner and the delay was caused by the professional who were handling the matter. The Ld. AR further submitted that the assessee had submitted supporting documentary evidence explaining the source of cash deposit in the course of appeal proceedings, which was also not considered by the Ld. CIT(A). He further explained that the cash deposit in the bank account was out of cash sales, amount received from debtors and earlier withdrawals made from the bank account and that the Assessing Officer was not correct in treating the entire cash deposit of the assessee as income. The Ld. AR submitted that since the additional evidences filed in the appeal proceedings were required to be examined by the Assessing Officer, the assessee may be allowed another opportunity to explain the source of cash deposits by setting aside the matter to the file of the Assessing Officer.

We have carefully considered the rival submissions. It is found that in Form no.35, the assessee had admitted the delay in filing of the appeal and also explained the reasons for the delay of 129 days. The Ld. CIT(A) has held that the assessee had failed to give sufficient explanation for the delay in filing the appeal and, therefore, he refused to condone the delay. However, no reason has been given by the Ld. CIT(A) as to why the explanation of the assesses for delay in filing the appeal was not acceptable. The assessee had explained that the delay was caused due to the lapse of the previous consultant. Hon’ble Gujarat High Court in the case of Nimesh Dilipbhai Brahmbhatt vs. Hitesh Jayantilal Patel (Special Civil Application No.6547 of 2020) dated 02.05.2022 has held that “it is a trite law that a party should not suffer due to the inaction on the part of the advocate and that the matter should be decided on merits rather than on technical ground”. The Hon’ble High Court further held that the petitioner’s right should not be defeated by declining to condone the delay which had occurred for the inaction on the part of their Advocate. Further the Hon’ble High Court has held in the case of Vareli Textile Industries vs. CIT, 284 ITR 238 (Guj.) that the meritorious case should not be thrown out on the ground of limitation.

In the present case, the Assessing Officer had treated the entire cash deposit of Rs.79,08,610/- in the bank account as income of the Assessment Year: 2016-17 Israma Dudh Utpadak Sahakari Mandli Ltd vs. ITO Page 5 of 6 assessee without taking into account the debit entries in the bank account. Further, the Ld. CIT(A) did not consider the explanation of the assessee that the cash deposits in the bank account represented the regular sales proceeds of the assessee. In view of these facts, we are of the considered opinion that the Ld. CIT(A) was neither correct in not condoning the delay in filing the appeal nor in rejecting the appeal of the assessee without examining the merits of the case. We, therefore, deem it proper to set aside the matter to the file of the Assessing Officer with direction to allow another opportunity to the assessee to explain the source of cash deposits in the bank account. The assessee is also directed to make compliance before the Assessing Officer in the course of set aside proceeding and respond to the notices and directions of the Assessing Officer. In the case of non-compliance on the part of the assessee, the Assessing Officer will be free to decide the matter on the basis of the materials on record.

In the result, appeal of the assessee is allowed for statistical purpose.