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Facts
The assessee's appeal was filed beyond the limitation period by 203 days due to a delay in understanding the dismissal of the appeal. The assessee and his Chartered Accountant provided affidavits explaining the reasons for the delay, citing a bona fide belief that the proceedings were handled by another professional and a lack of communication.
Held
The Tribunal held that there was no mala fide intention on the part of the assessee and sufficient cause for condoning the delay, citing various legal precedents. The Tribunal decided to restore the issue for de-novo assessment.
Key Issues
Condonation of delay in filing the appeal and verification of the addition made by the AO on account of demonetized cash deposits.
Sections Cited
69A
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per Smt. Beena Pillai, JM: Present appeal filed by assessee arises out of order dated 26/02/2025 passed by NFAC, Delhi [hereinafter “the Ld.CIT(A)”], for Assessment Year 2017-18.
At the outset, it is noted that the present appeal is time barred by 203 days. In support of the application for condonation of delay, the assessee has filed two affidavits, one sworn by the assessee and another by the Chartered Accountant, explaining the reasons for the delay. The same are extracted for ready reference:-
Affidavit by assessee:-
Affidavit by C.A. of assessee:-
2.1. The assessee, in his affidavit, has explained the reasons for the delay, wherein it is stated that the assessee was under a bona fide belief that the appellate proceedings were being properly handled by his Chartered Accountant. It was submitted that there was lack of communication between the assessee and his regular Chartered Accountant regarding the status of the appeal. It is explained that the assessee, being preoccupied with his business, did not access his registered e-mail account. The assessee was under the impression that the matter was duly attended to. It was only later, that the assessee came to know about the dismissal of the appeal and the consequential proceedings, whereafter immediate steps were taken to approach a senior professional and file the present appeal.
2.2. The Chartered Accountant, in his separate affidavit, has confirmed that he was handling the routine tax matters of the assessee but there was a misunderstanding regarding the responsibility of pursuing the appellate proceedings. He has stated that he did not receive effective communication regarding the notice of hearing and, therefore, was under the impression that the matter was being handled by another professional. The non-appearance and consequent delay, therefore, occurred due to a bona fide misunderstanding and miscommunication between the assessee and his Chartered Accountant and not on account of any deliberate negligence.
2.3. On the contrary, the Ld.DR though opposed the condonation of delay by Ld.AR, could not controvert the submissions made.
I have perused the submissions advanced by both sides in light of records placed before me.
It is noted that there is no malafide intention on behalf of assessee in not filing the present appeal before this Tribunal, within the period of limitation. Nothing to establish any such intention has been filed by the revenue before this Tribunal. In our opinion there was sufficient cause for condoning the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 in support of his contentions.
3.1. We refer to the Third Member decision of Hon’ble Chennai, ITAT in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein it was held that "when substantial justice and technical consultation 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 non-deliberate delay".
3.2. It is also necessary to ascertain whether there was excessive or inordinate delay in the present facts of the case. Hon’ble Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered a situation of condonation of delay and held that where there exists a reasonable cause, period of delay may not be a relevant factor. Hon’ble Madras High Court relying on this principle had condoned the delay of nearly 21 years.
3.3. Reference is made to the decision of Co-ordinate Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) wherein this Tribunal has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Hon’ble Supreme Court. It was noted that, the revenue had not file any counter-affidavit opposing the application of the assessee for condonation of delay. The Hon’ble Supreme Court under similar circumstances had noted in case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause to condone the delay.
3.4. In the present facts of the case, we note that no such affidavit has been furnished by the revenue countering the condonation application of the assessee. At this juncture, we also take assistance and support from the observation of Justice Krishna Iyer wherein he has quoted at various occasion while dealing with technicalities that "any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities". Similar is the observation by Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471.
Based on the above discussions, in the interest of justice, we condone the delay in filing the present appeal before this Tribunal.
Coming to the merits of the case, the Ld.AR submitted that, the sole dispute is against the addition made by the Ld. AO based on cash deposits made during the demonetization period amounting to Rs. 33,57,000/-.
4.1. The Ld. AR submitted that, assessee had deposited the said amount during the period 09/11/2016 to 31/12/2016. The Ld. AO treated the same as unexplained and, therefore, the addition was made in hands of the assessee amounting to Rs. 33,57,000/- u/s 69A of the Act.
Aggrieved by the order of the Ld. AO, the assessee preferred appeal before the Ld. CIT(A). The Ld.CIT(A) passed an ex-parte order dismissing the appeal of the assessee in limine.
Perused the submissions advanced by both the sides in light of the material placed on record.
It is noted that the authorities below has not considered the following CBDT Circulars/Instructions :-
a) Instruction 3/2017, issued on February 21, 2017. b) Instruction No. 4/2017 dated 3rd March, 2017. c) Circular F. No. 225/363/2017 – ITA. II, dated 15/11/2017. d) Circular F.no.225/145/2019-ITA.II dated 09/08/2019.
5.1. Though the Ld.CIT(A) has passed an ex-parte order, we deem it fit to restore the issue for de-novo assessment. We direct the Ld. AO to verify the addition based on demonetized cash based on the applicable Circular specific to the assessee. The assessee is directed to furnish PAN and other details of the depositors if circumstances so warrant, in order to assist the Ld. AO to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to the assessee in accordance with law.
Accordingly, Grounds raised by the assessee stand partly allowed for statistical purposes.
In the result, appeal filed by the assesse stands partly allowed for statistical purposes.
Order pronounced in the open court on 06/02/2026 Sd/- (BEENA PILLAI) Judicial Member Mumbai Dated: 06/02/2026 SC Sr. P.S. Copy of the order forwarded to:
(1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.