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Facts
The assessee, a co-operative society, faced an addition of Rs. 26,81,940 under Section 68 for unexplained cash deposits during the demonetization period. Its appeal to the CIT(A) was filed with a delay of 425 days, which the CIT(A) rejected without considering the merits, leading to the dismissal of the appeal. The assessee attributed the delay to its previous counsel's failure to inform or attend proceedings.
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A), stating that the assessee should not be penalized for its counsel's mistake. The matter was remanded back to the CIT(A) for adjudication on merits, with a direction for the assessee to produce all necessary documents.
Key Issues
Whether the CIT(A) erred in rejecting the condonation of delay application in filing the appeal without adjudicating on merits, particularly when the delay was attributed to the previous counsel's negligence.
Sections Cited
250, 249(3), 144, 143(3), 80P(2)(a)(i), 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH: “B”, CHANDIGARH.
Before: SH. RAJPAL YADAV, HON’BLE VICE- & SH. KRINWANT SAHAY, HON’BLE
ORDER Per: KRINWANT SAHAY, AM: The appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, dated 05.08.2024 passed u/s 250 of the Income Tax Act 1961, for A.Y. 2017-18. For the sake of convenience we take ITA 852/Chandi/2024 as lead case.
ITA 852/Chandi/2024
The grounds of appeal taken by the assessee are as under:
& 1024 /Chandi/2024 2 Assessment Year: 2017-18
“1) That under the facts, circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) of the National Faceless Appeal Centre, Delhi erred in rejecting the prayer of the appellant for condonation of delay in filing the appeal although there was sufficient cause within the meaning of Sec. 249(3) of the Income-tax Act, 1961 for delay in filing the appeal by 1170 days. The Counsel did not guide our society that the appeal is required to be filed against the order dated 21/12/2019 passed by the Assessing Officer u/s 144 of the Income Tax Act with the Commissioner of Income Tax (Appeals) and there was no deliberate inaction or mala fide intention on the part of the assessee in late filing the appeal. The appellant/litigant does not stands to benefit by resorting to delay in filing the appeal and in fact he runs a serious risk. 2) That under the facts, circumstances of the case and in law the Ld. CIT(Appeals) has not exercised his power to condone the delay in filing the appeal in a pragmatic manner to advance the cause of substantial justice notwithstanding that there was inordinate delay of 1170 days in filing the appeal and rejected the prayer for condonation of delay in filing the appeal in haste without affording reasonable opportunity to the appellant- assessee to explain the delay in filing the appeal. The Ld. CIT(A) ought to have adopted a liberal approach in dealing with the prayer for condonation of delay in filing appeal as observed by & 1024 /Chandi/2024 3 Assessment Year: 2017-18 the Hon'ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Ors. (167 ITR 471) (SC). 3) That the appellant is a rural small co-operative society engaged in the business of providing credit facilities to its members for agricultural activities and whole of its income is eligible for deduction u/s 80P(2)(a)(i) of the Act and it was the first time that the case of the assessee for the A.Y. 2017-18 was selected for scrutiny u/s 143(3) of the Act and was not aware that appeal is to be preferred against the order of the assessing officer. The additions for Rs. 26,81,940/- were made for the reason that there were cash deposits in the bank account during demonetisation period which were made out of cash received from the farmer-members of the appellant society towards repayment of their loan advanced by the appellant. 4) That under the facts, circumstances of the case and in law the Ld. CIT(Appeals) erred in not adjudicating Ground No. 1 taken in Form-35 which reads as under: That under the facts and circumstances of the case and in law, the Assessing Officer erred in making the addition for Rs. 26,81,940/-u/s 68 of the Act."
5) That under the facts, circumstances of the case and in law the Ld. CIT(Appeals) erred in not adjudicating Ground No. 2 taken in Form-35 which reads as under:
& 1024 /Chandi/2024 4 Assessment Year: 2017-18
"That under the facts, circumstances and in law the assessment order dated 21/12/2019 passed by the Assessing Officer u/s 144 of the Act for the A.Y. 2017-18 is bad in law." 6) That the appellant may be allowed to add, amend or raise additional grounds of appeal before the appeal is finally heard or disposed of.”
3. Brief facts are that the assessee is a Co-operative Society and it has been registered under the Punjab State Co-operative Societies Act. The assessee society is primarily agricultural credit society and its main activity is to provide credit facilities to its member for agricultural activities it has made cash deposits of Rs. 26,81,940/- in its bank during the demonetization period. It was made out of cash received from the members of the society for repayment made of their loan advanced by the appellant. It could not be properly explained in absence of any books of accounts (cash book, ledger, stock register). In absence of any documentary evidences, being produced before the assessing officer, it resulted in addition u/s 68 r.w. provisions of section 115BBE of the Act 61.
4. At the very outset, the ld. counsel of the assessee submitted before the bench that there was a delay of 425 days in filing of the appeal before the ld. CIT(A). The assessee was not aware about the penalty proceedings and various notices issued by the Income Tax Department. When it came to the knowledge of the assessee society that the penalty was levied by the Income Tax Department, the assessee & 1024 /Chandi/2024 5 Assessment Year: 2017-18 filed an appeal before the ld. CIT(A), the main reason of delay as submitted by the counsel of the assessee is that the assessee was dependent on its counsel for its day to day income tax works. But the then (previous counsel of the assessee ) neither attended any proceedings before the ld. CIT(A) nor he brought it to the notice to the assessee.
The ld. DR relied on the order of the ld. CIT(A).
We have heard the findings given by the ld. CIT(A) for not considering the delay in filing of the appeal before him. Accordingly, he has dismissed the appeal but we find if the counsel of the assessee society did not attend the proceedings before the ld. CIT(A) and did not inform the assessee then the assessee should not be penalized for a mistake committed by its counsel. Accordingly, we are of the considered opinion that the delay is to be condoned and the matter is to be restored back to the file of the ld. CIT(A) to decided the appeal on merits. Thus, the delay is condoned in filing of the appeal before the ld. CIT(A), for passing an order on merits.
6.1 As such we are of the opinion that it will serve the ends of justice if the matter is restored back to the file of the Ld. CIT (A), for decision on merits and we direct the assessee to produce all required documents including books of accounts and other supporting papers to establish its claim and prove his case.
& 1024 /Chandi/2024 6 Assessment Year: 2017-18 6.2 The assessee should be provided reasonable opportunity of being heard and the assessee shall fully cooperate in appellate proceedings, for proper disposal of case on merits.
6.3 Since we have decided the appeal in on the ground of condonation of delay before the ld. CIT(A) without going into the merits of the case. Therefore, our observations are mutatis mutandis applicable to ITA 1024/Chandi/2024 also and follows accordingly.
In the result, both the appeals of the assessee are allowed for statistical purposes.