Loading judgment…
Facts
The assessee's appeal against the order of the CIT(A)/NFAC for AY 2017-18 was filed with a delay of 103 days. The assessee claimed the delay was due to illness (dengue) and technical issues in receiving notices. The AO made additions under Section 68 for alleged unexplained cash deposits and disallowances for contract work expenses without proper opportunity to the assessee.
Held
The Tribunal condoned the delay in filing the appeal, citing the assessee's illness and technical issues preventing proper communication. The Tribunal set aside the assessment order due to lack of adequate opportunity to the assessee and restored the matter to the AO for fresh verification.
Key Issues
Whether the appeal is barred by limitation and whether the assessment order was passed ex-parte without providing adequate opportunity to the assessee.
Sections Cited
142(1), 282, 144, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
O R D E R PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 17.08.2024 pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: -
1. Because the assessee was prevented by sufficient and reasonable cause in non-complying the notice issued under section 142(1) of the Act, as the notices issued were never served on the appellant, the Assessing Officer was not justified in framing the assessment ex-parte, the assessment being bad in law, the same be set aside.
Because there being no service of notice issued under section 142(1) by the Assessing Officer on the assessee as per the provisions of section 282 as alleged in the assessment order, the I assessment framed under section 144 of the Act is bad in law, be quashed.
3. Because the Assessing Officer has erred on facts and in law in adding a sum of Rs.33,70,000/- under section 68 of the Act, being cash deposited in bank, being cash balance as on 08.11.2016 arising on account of sales, contract receipts and realization of debtors, all forming part of income or receipts reflected in the profit and loss account duly audited, the addition made is contrary to facts, bad in law be deleted.
4. Because on a proper consideration of facts and circumstances of the case and on interpretation of provisions of section 68, the amount of Rs.33,70,000/- deposited in bank, not being a cash credit, the provisions of section 68 are not applicable, the addition made is bad in law and be deleted 5. Because the accounts being tax audited and the entire amount of Rs.33,70,000/- being part of the sales/gross receipts incorporated in the books of account as maintained, the books of account having not been rejected, the addition made is purely on conjecture, surmises and suspicion, the same is contrary to the provisions of law, be deleted. 6. Because the Assessing Officer has erred on facts and in law in disallowing a sum of Rs.10,16,051/- being 10 percent out of purchases made and Rs.24,27,430/- being 10 percent the expenses claimed in respect of contract work, in all aggregating to Rs.34,43,481/- the disallowance made is without any basis, the entire purchases made and expenses incurred being for the purposes of business, the disallowance made be deleted. 7. Because the purchase being verifiable, the accounts being audited, audit report being filed, no defects in the same was pointed out, the addition made on adhoc basis of 10 percent of the purchases and expenses claimed is contrary to facts, bad in law and be deleted.” 2. The present appeal is barred by limitation for 103 days. The assessee has filed petition seeking condonation of delay in filing the present appeal. The Ld. Counsel for the assessee reiterated the submissions as made in the petition seeking condonation of delay and also the contents of the supporting affidavit. The Ld. Counsel for the assessee submitted that the assessee was suffering from dengue and was advised complete bed rest. Therefore, due to his illness, the appeal could not be filed within the prescribed time. He further contended that the delay is neither deliberate nor intended to cause any prejudice to the Revenue. He placed reliance on the judgment of the Hon'ble Supreme Court rendered in the case of Collector of Land Acquisition Vs. MST. Katiji & Ors 167 ITR 471 (SC).
On the other hand, the Ld. Departmental Representative for the Revenue opposed the submissions and contended that the assessee ought to have filed the appeal within the prescribed time. It was further submitted that the facts of the case do not warrant for taking a liberal view in the matter.
We have heard rival submissions and perused the materials available on record. It is stated by the assessee that he was indisposed for the period of three months from 30.09.2024 to 31.12.2024 and an affidavit to this effect has been filed on record. Further, a medical certificate issued by Dr. Ajay Kumar Sinha dated 02.11.29024 and another medical certificate dated 31.12.2024 have also been placed on record, certifying that the assessee was advised complete bed rest w.e.f 01.11.2024 to 30.12.2024. Looking to these facts and medical certificate issued by the medical practitioner, we are of the vew that there was a reasonable cause for assessee that prevented him from filing the present appeal within the prescribed time line. We, therefore, respectfully following the judgment of the Hon'ble Supreme Court in the case of Collector of Land Acquisition Vs. MST. Katiji & Ors 167 ITR 471 (SC) hereby condone the delay and admit the appeal for hearing on merits.
Apropos to the grounds of appeal, the Ld. Counsel for the assessee contended that the assessment order was passed ex parte to the assessee. He contended that the assessee was not afforded adequate opportunity of being heard. He reiterated the contents of the written submissions. It is contended that no compliance was due to technical issues whereby the notices of hearing were not received by the appellant. Therefore, no effective representation could be made. Further, he contended that the authorities below failed to appreciate the facts that the amount deposited in the bank account represented the cash balance as on 08.11.2016 which had been generated out of sales, contract receipts and realization of debt. Had the AO given an opportunity to the assessee, he would have explained the source of cash deposits. He prayed that in the interest of natural justice an opportunity be granted to the assessee for representing his case effectively.
6. On the other hand, the Departmental Representative for Revenue opposed the submissions and submitted that the lower authorities have given sufficient opportunity to the assessee and the assessee ought to have submitted relevant explanation before the Assessing Officer.
7. Heard the Ld. Representatives of the parties and perused the materials available on records. It is transpired from the records that there was no meaningful representation by the appellant before the lower authorities. The assessment order was passed ex parte to the assessee. Thereafter, even before the Ld. CIT(A) there was no effective representation on behalf of the assessee.
8. From the impugned assessment order, it is evident that the AO made two additions on account of alleged unexplained cash deposits in the bank account of the appellant and unexplained expenditure amounting to Rs.33,70,000/- and Rs.34,43,481/- respectively. It is pertinent to note that the AO made disallowance of expenditure on ad hoc basis treating the same as unverifiable. On appeal to the Ld. CIT(A), both additions were sustained for want of relevant evidences. Before us, the Ld. Counsel for the assessee contended that owning to the circumstances beyond the control of the assessee relevant explanation/evidences could not be furnished before the lower authorities. It is stated that the assessee has plausible explanation with regard to the impugned additions.
9. It is well settled that the tax payers should be given adequate opportunity to present his case. In the present case, it is stated that due to technical issues whereby the notices of hearing were not received by the appellant. Therefore, the explanation could not be filed before the lower authorities. Considering the totality of the facts, we deem it fit and proper and to sub-serve the interest of principles of natural justice, we hereby set aside the impugned assessment order and restore the assessment to the file of the Assessing Authority who would verify the correctness of the claim of the assessee regarding availability of cash in hand and incurrence of expenditure. The assessee would cooperate and furnish all relevant evidence and explanations as called for by the Assessing Authority. The grounds raised in this appeal are allowed for statistical purposes in the terms indicated hereinabove.
10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 30/12/2025.