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Facts
The assessee, Shobha Ramakrishnan Nair, made substantial cash deposits of Rs. 1,84,54,000/- in her bank account during FY 2015-16 (AY 2016-17) but did not file an Income Tax Return. Her case was reopened under Section 147, and an ex-parte assessment was completed under Section 147 read with Sections 144 and 144B, adding the entire deposit as unexplained money under Section 69A, as she allegedly did not respond to notices sent to an incorrect email ID. The CIT(A)/NFAC dismissed her appeal in limine due to a 5-month delay in filing, without condoning the delay or considering the merits of the case.
Held
The ITAT condoned the 202-day delay in filing the appeal, accepting the assessee's reasons (medical grounds and non-receipt of notices due to an incorrect email ID) as bonafide, thereby prioritizing substantial justice. The Tribunal found that the assessee was denied a reasonable opportunity to present her case before the AO and that the CIT(A) had failed to consider the appeal on merits. Consequently, the ITAT remitted the entire matter back to the Assessing Officer for fresh consideration, directing that the assessee be granted a fair hearing and submit all necessary documents.
Key Issues
1. Whether the delay in filing the appeal should be condoned given the assessee's medical condition and claim of non-receipt of notices due to an incorrect email ID. 2. Whether the ex-parte assessment under Section 147 read with Sections 144 and 144B and the addition under Section 69A were valid when the assessee claims she was not properly served with notices.
Sections Cited
147, 148, 143(3), 144, 144B, 250, 139(1), 139(4), 142(1), 69A, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH:COCHIN
Before: SHRI INTURI RAMA RAO & SHRI KESHAV DUBEY
Assessment Year: 2016-17 Shobha Ramakrishnan Nair Karthika Sebipuram ITO Ernakulam Ward-2 Vs. Manjapra SO Aluva Kerala 683581 PAN NO :AWRPR5406L APPELLANT RESPONDENT Appellant by : None Respondent by : Smt. Leena Lal, Sr. D.R. Date of Hearing : 30.01.2025 Date of Pronouncement : 02.04.2025 O R D E R
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 22.12.2023 vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1059003947(1) for the AY 2016- 17 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).
The assessee has raised the following grounds of appeal:
There is a delay of 202 days in filing the appeal before this Tribunal. The assessee has filed a petition for condonation of delay in filing appeal along with a detailed affidavit dated 07.09.2024 explaining the reason for delay which is reproduced below for ease of reference and convenience:
3.1 On going through the affidavit as above, we are of the opinion that the explanation towards the delay on medical grounds is bonafide and it is a good and sufficient reason to condone the delay of 202 days in filing the appeal before us. It is noted that there is no malafide intention on the part of the assessee in not filing the Shobha Ramakrishnan Nair, Manjapra, Kerala Page 6 of 12 present appeal within time. In these circumstances, it cannot be said that assessee is very callous in its approach in filing the appeal before us.
3.2 At this stage, it is appropriate to refer to the judgment of Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (2) Refusing to condone delay can result in a meritorious matter being thrown 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, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the 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 nondeliberate 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 benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
3.3 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. Therefore, we have to prefer substantial justice rather than technicality in Shobha Ramakrishnan Nair, Manjapra, Kerala Page 7 of 12 deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, it would amount to legalize an illegal and unconstitutional order passed by the lower authority. In our opinion, this is a fit case to condone the delay of 202 days in filing the appeal before this Tribunal. Accordingly, the delay is condoned and the appeal is taken up for adjudication on merits.
Now the brief fact of the case are that as per the information, the assessee has made substantial cash deposit of Rs. 1,84,54,000/- in his saving account number 30360061935 in State Bank of India, Angamali Branch during the FY 2015-16 relevant to AY 2016-17 but has not filed his return of income for the AY 2016- 17 u/s. 139(1) or u/s. 139(4) of the Act. In view of this, the case of the assessee was re-opened u/s. 147 of the Act and accordingly, notice u/s. 148 of the Act dated 30.03.2021 was issued. The assessee had also not filed any return of income in response to notice u/s. 148 of the Act. Thereafter, notices u/s. 142(1) of the Act requesting to furnish the details such as bank accounts, source of cash deposit and proof of the same were issued on three instances along with ex-parte show cause notice u/s. 144 of the Act dated 02.02.2022, however, the assessee has neither responded nor filed any reply to any of the notices. The AO therefore, had no other Shobha Ramakrishnan Nair, Manjapra, Kerala Page 8 of 12 option than to add the total cash deposits of Rs. 1,84,54,000/- to the total income of the assessee u/s. 69A of the Act as unexplained money.
Aggrieved by the assessment completed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act dated 29.03.2022, the assessee preferred an appeal before the CIT(A)/NFAC
The ld. CIT(A)/NFAC dismissed the appeal of the assessee in limine by not condoning the delay of 5 months in filing the appeal as requested by the assessee in column 14 & 15 of form no. 35 filed on 28.09.2022 on the reasons that assessee has not shown any sufficient cause.
Aggrieved by the order of ld. CIT(A)/NFAC dated 22.12.2023, the assessee has filed the present appeal before this Tribunal.
None appeared on behalf of the assessee, however the assessee in his written submission stated that the assessee is a stamp vendor, holding temporary State license from 25-11-2015 on behalf of Smt. Radha, the original Licensee, since Smt. Radha was unwell. She gets a commission of 2% to 4% from sale of stamp paper. From this Commission she has to pay some amount to the original Licensee. She did not file her return of income for the asst. year 2016-17, as she did not have any taxable income during the relevant financial year 2015-16. The assessee did not receive any notice or communications from the Department regarding issue of notice under section 148 or 142 (1) of the Act, or any other communications, including copy of the assessment order. She realized that an assessment has been completed in her case only when she received a show cause notice dated 04-08-2022, from the Shobha Ramakrishnan Nair, Manjapra, Kerala Page 9 of 12 Income tax Officer, ward 2, Aluva, proposing levy of penalty under section 271(1)(c)of the Act. It appears that all notices/communications addressed to her were sent to the earlier email id, which belonged to her staff, who had left the job in 2018. The e mail id was changed and updated on the income tax e filing portal on 28-08-2018. The entire amount of Rs 1,84,54,000/-, deposited in her bank account with SBI, has been assessed as her income, under section 69A of the Act as unexplained money, without taking into account the fact that almost the entire amount has been deposited to the Treasury account of Government of Kerala. The assessment for the subsequent asst. year 2017-18, was completed under section 143 (3) of the Act on 15-11-2019, by the Income-tax officer, Ward 3 , Aluva, on a total income of Rs. 3,15,580/-, accepting the income returned, which included commission from sale of stamps.
8.1 Further, the assessee stated that the ld. CIT(A)/NFAC grossly erred in not condoning the delay of 5 months in filing the appeal and dismissed the appeal in limine. Further, the ld. CIT(A)/NFAC had also ignored bank statement and ledger copies, and evidence in the form of letter from the Sub treasury showing details of Commission received.
The ld. DR on the other hand supported the order of the authority below and submitted that the ld. CIT(A)/NFAC rightly dismissed the assessee’s appeal in limine without condoning the delay in filing the appeal as the delay was substantial without being the sufficient cause for Delay. The delay was only due to the negligence of the assessee as echoed during the course of assessment proceeding as well as appellate proceedings including before this Tribunal.
We have heard the rival submissions and perused the material on record. On going through the order of the ld. CIT(A)/ NFAC, we find that ld. CIT(A)/NFAC dismissed the appeal in limine by not condoning the delay of 5 months in filing the appeal before him on the reason that the assessee has not shown any sufficient cause. We have also gone through the reasons explained by the assessee in filing the appeal belatedly before the ld. CIT(A)/NFAC as stated in Column no. 15 of Form 35. The main reason as stated by the assessee in filing the appeal belatedly before the ld. CIT(A)/ NFAC is that none of the notices were served on the assessee as they were all sent to the wrong email-id and accordingly, the assessee was unable to participate in the assessment proceedings. The assessee became aware of the assessment only when the jurisdictional assessing officer issued a show cause notice dated 04.08.2022 proposing to levy penalty u/s. 271(1)(c) of the Act. Thereafter, on becoming aware of the assessment, the assessment order was obtained on 04.09.2022. It is not the case that the assessee has not cited any reasonable cause for filing appeal belatedly. The ld. CIT(A)/NFAC on the ground that the assessee has not shown any sufficient cause has not condoned the delay in filing appeal. On going through the facts of the case, we find force in the assessee’s contention. In our opinion, it cannot be said that assessee is very callous in its approach in filing the appeal belatedly before the ld. CIT(A)/NFAC. Moreover, no counter affidavit was filed by the revenue denying the allegation made by the assessee. It is not a case of the revenue that the assessee has deliberately filed the appeal belatedly. Further, the revenue has also not brought on record any adverse material / inferences to refute the claim of the assessee.
Shobha Ramakrishnan Nair, Manjapra, Kerala Page 11 of 12 10.1 Being so, as discussed above, when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. Accordingly, the delay in filing the appeal before the ld. CIT(A)/NFAC by five months has to be condoned and is accordingly condoned.
Now coming to the totality of the fact of the case, we find that the assessee could not represent its case before the AO as none of the assessment notices were served upon the assessee as they were all sent to the wrong email-id. Further, ld. CIT(A)/NFAC has also not considered the case on merit and had not considered the details like bank statement and ledger copies, and evidence in the form of letter from the Sub treasury showing details of Commission received. Further we also take a note of the fact that the assessment in the case of the assessee for the subsequent Asst. year 2017-18 is concluded u/s 143(3) of the Act on 15/11/2019 by the AO on a total income of Rs.3,15,580/- accepting the returned Income. Further, we also take a note of the fact that the AO in his assessment order after perusal of the returns filed for the Asst. years 2017-18, 2018-19, 2019-20 & 2020-21 has also observed that the assessee is a stamp vendor and has shown income from business activities. In view of the above, we are of the considered opinion that in the interest of justice and fair play, it is proper to remit back the issue in dispute in its entirety to the file of AO to consider the case afresh in accordance with the law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to update the email id, contact number and addresses in the Income Tax portal and cooperate with the proceeding before the concerned authorities. The assessee is also directed to file all the necessary documents / Shobha Ramakrishnan Nair, Manjapra, Kerala Page 12 of 12 records / information as required by the AO and satisfy him regarding the genuineness of the transaction made by the assessee. We make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.