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Facts
The assessee is an agriculturist whose assessment was commenced due to a cash deposit of Rs. 16,50,000/- in his bank account. The assessee claimed the deposit was from lease income of his agricultural land, but the AO rejected this for lack of a written lease agreement. The appeal was filed beyond the limitation period.
Held
The Tribunal condoned the delay in filing the appeal, citing the wife's serious illness and death as sufficient cause. The Tribunal accepted the assessee's explanation for the source of funds, considering the local practice of oral lease agreements for agricultural land. Consequently, the additions made by the AO were deleted.
Key Issues
Whether the delay in filing the appeal can be condoned due to sufficient cause. Whether the assessee's explanation for the source of income from agricultural land lease is acceptable without a written agreement.
Sections Cited
142(1), 253, 249, 5
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Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
आदेश/ORDER PER RAJPAL YADAV, VP
1. The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 16.10.2023 passed for assessment year 2017-18.
ITA 295/CHD/2025 A.Y. 2017-18 2
2. The assessee has taken six grounds of appeal but his sole grievance is that ld. CIT (Appeals) has erred in confirming the assessment order vide which income of the assessee has been determined at Rs.16,50,000/-. In other words, ld. CIT (Appeals) has erred in confirming the addition of Rs.3,00,000/- and Rs.13,50,000/- added by the AO.
The Registry has pointed out that appeal is time barred by 424 days. The assessee has filed an application for condonation of delay which is placed in the Paper Book from page Nos. 1 to 4. The assessee has filed an affidavit alongwith the application. It has been pleaded that his wife was diagnosed with a brain tumor in 2021. Her condition progressively deteriorated and ultimately, she died on 02.07.2024. The assessee was disturbed due to this prolonged period of illness and he was physically and mentally pre- occupied with her. Due to this reason, he could not file the appeal well in time. The ld. counsel for the assessee relied upon the explanation of the assessee. Medical history of his wife has also been placed in Paper Book from page Nos. 8 to 41.
ITA 295/CHD/2025 A.Y. 2017-18 3
4. The ld. DR, on the other hand, submitted that assessee should be more vigilant in filing the appeal, more particularly after the death of his wife.
Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub- section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision
ITA 295/CHD/2025 A.Y. 2017-18 4 in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:
Ordinarily a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
3. "Every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to ITA 295/CHD/2025 A.Y. 2017-18 5 benefit by resorting to delay. In fact, he runs a serious risk.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (1998) 7 SCC 123 dated 03.09.1998. It reads as under:
“Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah
ITA 295/CHD/2025 A.Y. 2017-18 6 Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.
In the light of above, if we examine facts of the present case, then it would reveal that assessee is basically an agriculturist who earns income from sale of milk. Even he has not filed his return of income because he was not having taxable income. His assessment was commenced by inviting a return u/s 142(1) on account of some cash deposit of Rs.16,50,000/- in the bank account. In our opinion, considering the background of the assessee, it cannot be gainfully said that assessee has made this appeal time barred intentionally or it was a strategy to litigate with the Department. It is purely a bonafide mistake, therefore, we condone the delay and proceed to decide the appeal on merit.
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With the assistance of ld. Representative, we have gone through the record carefully. It emerges out from the record that assessee has made deposits in his Saving Bank Account with Oriental Bank of Commerce. These deposits have been made in cash. The case of the assessee before the AO was that he has agricultural land which was given on lease to three farmers @ Rs.45,000/- per acre. The assessee has received the lease amount for two years and the same was deposited in the bank account. The assessee has given details of the lesser, land holding and other circumstances. However, ld. AO has simply rejected the contention of the assessee on the ground that no agreement, executed between the assessee and alleged lesser, has been filed by the assessee. Statement of the assessee was recorded by him and he could not bring any material which can demonstrate that his statement is not worthy of credence.
The appeal to the CIT (Appeals) did not bring any relief to the assessee.
We have duly considered the rival contentions and gone through the record carefully. A perusal of the record would
ITA 295/CHD/2025 A.Y. 2017-18 8 indicate that assessee was having 13 acres of land. He has alleged ownership of two cows whose milk was sold by him. The expectation of the AO was that assessee should have entered into a Lease Agreement and since he failed to produce Lease Agreement, therefore, his story is unreliable. In this regard, we are of the view that in this area i.e. Punjab and Haryana, land owners do not execute Lease Agreement because that would unnecessarily create relationship of lesser and lessee and the lesser will be ejected with the help of the Court of law which would take number of years and there could be one other problem, namely, a land is being given to person ‘A’ who remained the tenant of the assessee for two years and his name was entered into the Land Revenue Record (Girdawari) and next year the land was cultivated by the assessee himself or by somebody else and natural calamities happened, then compensation announced by the Government will go to erstwhile tenant because his name would be reflecting in the land revenue record. The landlord does not give land continuously to a single tenant for number of years to avoid this type of situation and they just enter into an oral agreement instead of a written agreement. Therefore, assessee
ITA 295/CHD/2025 A.Y. 2017-18 9 has sufficient source of the above cash which was deposited in his bank account. We find merit in the explanation of the assessee and delete the additions made by the AO.
In the result, appeal of the assessee is allowed. Order pronounced on 16th July,2025.