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Facts
The assessee, a commission agent, did not file a return for AY 2011-12. The AO, based on information about cash deposits, assessed income from undisclosed sources. The CIT(A) dismissed the assessee's appeal ex-parte due to non-compliance.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause due to the negligence of the previous counsel. The Tribunal restored the matter to the AO for de novo assessment, stating that the appeal is allowed for statistical purposes.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the matter should be restored to the AO for de novo assessment after an ex-parte order by the lower authorities.
Sections Cited
144, 142(1), 143(2), 271(1)(c), 148
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC’’ JAIPUR
fu/kZkj.ko"kZ@AssessmentYears : 2011-12 Shri Sanjiv Jha cuke The ITO, C/o Kalani& Co. Chartered Accountants Vs. Ward-4 5th Floor, Milestone Building, Gandhinagar Bharatpur Turn, Tonk Road Jaipur 302 015 LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: AEXPJ 7924 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri P.C. Parwal, CA (Thru: V.C.) jktLo dh vksjls@Revenue by : Shri Gautam Singh Choudhary, JCIT -DR a lquokbZ dh rkjh[k@Date of Hearing : 26/06/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 30 /06 /2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The assessee has filed an appeal against the order of the ld.Addl./JCIT CIT(A)-1, Vadodara for the assessment year 2011-12in the matter of Section 144 of the Income Tax Act, 1961 and thus raising therein following ground of appeal:-
‘’1. The Ld. Addl. CIT(A) has erred on facts and in law in deciding the appeal ex parte due to non compliance of notices by the consultant without deciding the merit of the addition.
2. The Ld. Addl. CIT(A) has erred on facts and in law in confirming the addition of Rs.15,34,300/- by treating the cash deposit in the bank account as income from undisclosed sources ignoring that amount of cash deposit is only Rs.10,10,000/- (correct amount Rs.10 lacs) and source of such deposit is out of earlier withdrawals from the bank account and out of the commission income of assessee.
2.1 During the course of hearing, the Bench noticed that there is a delay of 80 days in filing the appeal for which the assessee has filed an application dated 11-04-2025 for condonation of delay giving therein following reasoning. ‘’’Sub: Application for condonation of delay in filing the appeal With reference to above it is to submit that the Ld. CIT(A) vide order dt.22.11.2024 has upheld the order passed by AO assessing the total income at Rs.15.35.110/-. The appeal was to be filed on or before 31.01.2025. However, for the reasons stated hereunder, the appeal could not be filed in time:-
1. 1. I am a commission agent. I have not filed my return of income for AY 2011-12 as my income was below the maximum amount chargeable to tax 2. AO issued notice u/s 148 dt. 28.03.2018 on the basis of information that there is cash deposit of Rs 5,15,000/- in my bank account. I engaged CA Sunil Mittal, Bharatpur to file my return of income which was filed on 28.11.2018 at Rs.13,150/- .
3. During the course of assessment proceedings CA Sunil Mittal once appeared before AD but thereafter since he did not appear, the assessment order was passed u/s 144 at income of Rs.15.35,110/- by holding that cash deposit of Rs.15,34,300/- is my income from undisclosed sources.
4. Against the assessment order CA Sunil Mittal filed appeal before the appellate authority. He filed adjournment application in response to notice dt. 08.02.2024 but did not respond to notice dt. 29.02.2024, 08.03.2024 & 05.11.2024 and therefore the appellate authority dismissed my appeal vide order dt. 22.11.2024.
CA Sunil Mittal communicated me about the passing of appellate order in the third week of February, 2025 and suggested me to file the appeal before Hon'ble ITAT through CA P.C. Parwal of Mis Kalani& Co., Jaipur. However, since the date of filing of appeal has expired, he advised to file the appeal with a request to condone the delay in filing the appeal and accordingly the appeal is now filed by me. Thus the delay in filing the appeal before Hon'ble ITAT is due to a reasonable cause and therefore, the same be condoned and appeal be admitted for hearing for imparting substantial justice.
To support the application for condonation of delay, the ld. AR of the assessee has relied upon following case laws.
1. Bhagwati Colonizers Pvt. Ltd. Vs. ITO order dt. 22.10.2019 (Asr.) (Trib.) (TM) : -Condonation of delay of 571 days: Mistake of counsel may be taken into account in condoning delay. Claim that the delay was caused by counsel not communicating the order has to be accepted unless it is shown that blame put on counsel is with malafide intentions in order to cover up mistake/lapse on the part of assessee. As per human conduct and probabilities, a professional counsel cannot be expected to admit his lapses as it may affect his reputation. Also if the appeal is adjudicated on merits, refusing to condone the delay is an error.
Srimaan Industries (P) Ltd. Vs. ITO (2022) 213 DTR 105 (Hyd.) (Trib.): -In view of the fact that the assessee's counsel neither appeared before the CIT(A) nor informed the assessee about the disposal of the appeal and the assessee came to know that its appeal has already been disposal of much later when it received the penalty notice and thereafter it filed the appeal before the Tribunal after engaging another counsel, there was sufficient cause for the delay in filing the appeal and therefore, the delay is condoned.
M/s Midas Polymer Compounds Pvt. Ltd. Vs. ACIT order dt. 25.06.2018 (Cochin) (Trib.): -Delay of 2819 days in filing the appeal caused by the fault of CA/ Counsel has to be condoned. The expression “sufficient cause” should be interpreted to advance substantial justice.
If there is "sufficient cause", the period of delay cannot be regarded as excessive or inordinate.
4. Desert Infraspace (P.) Ltd. Vs. ITO (2024) 300 Taxman 406 (Guj.) (HC):-Where Tribunal dismissed appeal filed by assessee against addition made on account of unexplained share capital u/s 68 in its hand as ex parte as Chartered Accountant engaged by assessee to contest its case remained negligent towards his professional duty and case of assessee could not be represented effectively, since negligence was not attributed to assessee, assessee was to be given another opportunity of hearing before Tribunal. 2.2 On the other hand, the ld.DR objected to condonation application of the assessee. 2.3 We have heard both the parties and perused the materials available on record and also the case laws cited by the ld. AR (supra). In this case, the Bench in nut shell noted that there is sufficient cause in not timely filing the appeal of the assessee and there is merit in the application of the assessee. Thus the delay is condoned. 3.1 As regards the appeal of the assessee, it is noticed that the ld. CIT(A) has passed an ex-parte order by dismissing the appeal of the assessee. The narration as made by the ld CIT(A) in his order is reproduced as under:- ‘’6. DECISION: 6.1. Ground No. 1 pertains to addition of Rs. 15,35,110/- on account of unexplained cash deposit and interest 6.1.2 Despite numerous notices dated 17.02.2021, 08.02.2024, 29.02.2024, 08.03.2024 and 05.11.2024, requesting the appellant to provide relevant details concerning the grounds outlined in the appeal and written submissions, no response has been received till date. The appellant has been given ample opportunities to justify his claim of deleting the addition made for Rs.15,35,110/- on account of unexplained cash deposit and interest 6.1.3 In the appellate proceedings, initial burden of proof lies on the appellant to prove that facts and findings of the AO are incorrect. If the appellant fails to disprove or rebut with cogent evidence such facts and findings, no interference is required. In this case, the appellant chose to remain silent on specific inquiries, indicating a lack of willingness to pursue the appeal. Without necessary details and documentary evidence from the appellant, it is impossible to verify the contentions made in the appeal regarding deleting the addition made for Rs. 15,35,110/- on account of unexplained cash deposit and interest 6.1.4 In the case of CIT v. Gold Leaf Capital Corporation Ltd. (ITA No.798 of 2009), the Hon'ble High Court of Delhi, on 2nd September 2011, emphasized that an assessee displaying negligence should not receive multiple opportunities solely based on the magnitude of the amount in question. The appropriate action according to the court, is to draw adverse inferences, otherwise, it would unjustly reward the assessee for their negligence. When an assessee exhibits non- cooperation, it reasonably leads to the conclusion that the assessee deliberately avoids presenting evidence that could potentially expose falsehood or lack of genuineness. In this regard, the decision of the Hon'ble High Court of Mumbai in the case of M/s. Chemipol vis. Union of India [Central Excise Appeal No.62/2009 dated Dec.12th 2009] clearly states that every court judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss the case in default. For case of reference, relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai in the said case, quoting decision of Hon'ble Supreme Court in case of Nandramdas Dwarkadas AIR 1958 MP 260, is reproduced below. "Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses."
The above proposition has been upheld by the Hon'ble Supreme Court in case of Dr. P. Nalla Thampy Vs. Shankar (1984 (Supp) SCC 63) Further Hon'ble Supreme Court in case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. has stated as under- "That every court or judicial body or authonty, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default Where a case is called up for hearing and the party is not present, the court or the judicial or quasi-judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi judicial body. In the absence of the complainant, therefore, the court will be well within its jurisdiction to dismiss the complaint for non prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the nonappearance of the complainant" As a result, the order passed under section 144 of the Act, rendered by the ITO, Ward-4, Bharatpur, remains in effect. The appeal on these grounds is dismissed owing to the appellant's failure to furnish any submissions 7. In the result, appeal is "Dismissed".
3.2 During the course of hearing the ld. AR of the assessee has filed following written submission concerning the appeal of the assessee. ‘’Facts &Submission:-
1. Assessee is a commission agent. He did not file the return as his income was below the maximum amount chargeable to tax. The AO on the basis of information available in NMS data observed that assessee has deposited cash of Rs.5,15,000/- in HDFC bank account and thus issued notice u/s 148. However, due to non compliance of notice issued u/s 142(1), AO assessed the total cash deposit of Rs.15,34,300/- plus interest of Rs.810/- in HDFC bank account. i.e. Rs.15,35,110/- under the head income from other sources.
2. The Ld. CIT(A) issued notice dt. 08.02.2024, 29.02.2024 & 08.03.2024 at e-mail id sunilmittalca@gmail.com. Against notice dt. 08.02.2024, adjournment application was filed by the counsel CA Sunil Mittal but he did not respond to notice dt. 29.02.2024 & 08.03.2024. Thereafter another notice was issued on 05.11.2024 which also remained uncomplied with and therefore the Ld. CIT(A) vide order dt. 22.11.2024 dismissed the appeal filed by the assessee.
3. It is submitted that the order dt. 22.11.2024 was communicated by CA Sunil Mittal to the assessee in third week of February, 2025 and thereafter the undersigned was engaged to file the appeal. The appeal was filed on 11.04.2025 and thus there is a delay of 80 days in filing the appeal. This delay is due to the negligence of counsel of assessee CA Sunil Mittal for which assessee should not be penalized. Reliance in this connection is placed on the following cases:- Bhagwati Colonizers Pvt. Ltd. Vs. ITO order dt. 22.10.2019 (Asr.) (Trib.) (TM) Condonation of delay of 571 days: Mistake of counsel may be taken into account in condoning delay. Claim that the delay was caused by counsel not communicating the order has to be accepted unless it is shown that blame put on counsel is with malafide intentions in order to cover up mistake/lapse on the part of assessee. As per human conduct and probabilities, a professional counsel cannot be expected to admit his lapses as it may affect his reputation. Also if the appeal is adjudicated on merits, refusing to condone the delay is an error. Srimaan Industries (P) Ltd. Vs. ITO (2022) 213 DTR 105 (Hyd.) (Trib.) In view of the fact that the assessee's counsel neither appeared before the CIT(A) nor informed the assessee about the disposal of the appeal and the assessee came to know that its appeal has already been disposal of much later when it received the penalty notice and thereafter it filed the appeal before the Tribunal after engaging another counsel, there was sufficient cause for the delay in filing the appeal and therefore, the delay is condoned. M/s Midas Polymer Compounds Pvt. Ltd. Vs. ACIT order dt. 25.06.2018 (Cochin) (Trib.) Delay of 2819 days in filing the appeal caused by the fault of CA/ Counsel has to be condoned. The expression “sufficient cause” should be interpreted to advance substantial justice. If there is "sufficient cause", the period of delay cannot be regarded as excessive or inordinate. Desert Infraspace (P.) Ltd. Vs. ITO (2024) 300 Taxman 406 (Guj.) (HC) Where Tribunal dismissed appeal filed by assessee against addition made on account of unexplained share capital u/s 68 in its hand as ex parte as Chartered Accountant engaged by assessee to contest its case remained negligent towards his professional duty and case of assessee could not be represented effectively, since negligence was not attributed to assessee, assessee was to be given another opportunity of hearing before Tribunal.
Otherwise also, from the bank statement it can be noted that the total cash deposit in the bank account is Rs.10 lacs whereas AO made addition of cash deposit of Rs.15,34,300/- which is prima facie incorrect. Further the source of cash deposit in the bank account is partly out of the withdrawal from the same bank account and partly out of the commission income of assessee and therefore the source of cash deposit is otherwise verifiable. In view of above and the interest of substantial justice, it is requested that appeal ofassessee be set aside to AO for making denovoassessment.’’ To support the submission, the ld. AR of the assessee has filed following paper book.
S.N. Particulars Page No.
Copy of Bank account statement of assesee from 01-04-2010 to 1-5 31-03-2011 3.3 On the other hand, the ld. DR supported the order of the lower authorities. 3.4 We have head both the parties and perused the materials available on record. In this case, it is noted that the AO while making the assessment of the assessee noticed that in spite of providing various opportunities and issuance of notices, there was no compliance on behalf of the assessee to file the reply as required by the AO for which the AO made addition amounting to Rs.15,34,300/- in the hands of the assessee by observing as under:- ‘’3. Despite issue of notice u/s 142(1) of the LT Act, 1961, neither the assessee nor his authorized representative attended nor any reply in compliance to above notice was filed by the assessee in required date, therefore, I have no option but to complete the assessment case ex-parte. It is pertinent to mention here that last notice u/s 142(1) was issued on 04.12.2018 requiting to show cause why the cash deposit of Rs. 15,34,300/- be not treated as escaped income under head "Income from other sources" for A.Y. 2011-12 The assessee was at liberty to file his reply either directly or through his A/R but the assessee has opted otherwise i.e. not to file any reply in the case. The reasons are best known to the assessee only. As such I am left with no other option but to complete the assessment under section 144 of the Income-tax Act, 1961 after considering the facts and as well as on the basis of material/information available on records. 4 Notice u/s 143(2) of the IT. Act, 1961 was issued on 29.11.2018.
5. In view of the facts mentioned above, Rs. 15,35,110 (cash deposit of Rs. 15,34,300 interest of Rs. 810/-) is treated as income from undisclosed sources under the head "Income from Other Sources for the A.Y 2011-12. Since, the assessee has concealed his income and tried to evade taxes by not showing/declaring his true income, penalty proceedings u/s 271(1Xc) of the 11 Act, 1961 for concealment of income are being initiated separately.’’ In first appeal, the ld. CIT(A) has also passed an ex-parte order confirming the action of the AO for the reasons that there was no response from the side of the assessee despite of numerous notices to provide relevant details/ written submission concerning the grounds of appeal raised before him. Hence, it is noticed that there was ex-parte orders from the sides of the lower authorities for the reason that there was no details made available by the assessee. It is also pertinent to mention that the ld.AR of the assessee during the course of hearing prayed to restore the matter to the file of the AO for making de novo assessment as the assessee was ex- parte before the lower authorities. According to the assessee, the total cash deposit in the bank account what is mentioned in the first para of his order with that of finally added is different which according to him prima facie is incorrect requires a fresh examination on the facts. Since it is an admitted fact that the assessee is ex-parte before the AO and also before the ld. CIT(A). Therefore, he could not put forth his defence. It was the bounded duty of the assessee to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue but the assessee remained lethargic and unserious in pursuing his case However, we are of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter is restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes.
3.5 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. 4.0 In the result, the appeal of the assessee is allowed for statistical purposes Order pronounced in the open court on 30 /06/2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 30/06 /2025 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Sanjiv Jha, Bharatpur 2. izR;FkhZ@The Respondent- ITO, Ward-4, Bharatpur. 3. vk;djvk;qDr@CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZQkbZy@Guard File { } vkns'kkuqlkj@By order
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