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Facts
The assessee filed an original return of income, and her case was later reopened due to a large cash deposit during the demonetization period. The Assessing Officer (AO) added this deposit as unexplained income. The assessee's appeal before the CIT(A) was dismissed due to a 230-day delay, without considering the merits of the case.
Held
The Tribunal held that substantial justice should be preferred over technicalities, especially when the delay was not intentional and there was a reasonable cause. The Tribunal found that the CIT(A) should have condoned the delay and decided the appeal on merits.
Key Issues
Whether the CIT(A) erred in dismissing the appeal on the ground of delay without considering the merits, and whether the AO was justified in adding the cash deposit as unexplained income without proper verification.
Sections Cited
68, 144, 147, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 05.07.2024, I.T.A. No.: 571/PAT/2024 Assessment Year: 2017-18 Savitri Devi. which has been passed against the assessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 21.03.2022. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “A. Whether the A.O. was justified in reopening the case u/s 147? B. Whether the A.O. was justified in assessing at the so high pitch? C. Whether the A.O. was justifies in counting cash deposit as undisclosed Income? D. Whether the A.O. was justified in faceless assessment in case of re- opening of the case u/s 147? E. Whether the A.O. was justified in not sending the notice in physical form at the residence of the assessee as the alternative mode of serving the notice? F. Whether the A.O. truly compared the cash deposit before declaring it as not in line with the past account behaviour? G. Whether 1st appellate authority was justified in dismissal of the case only on the ground of delay, ignoring the merit of the case? H. Whether the 1st appellate authority was competent to go against the principle of natural justice?”
1 The assessee has also modified the grounds of appeal, which are as under and are accordingly taken up for adjudication:
“1. That the appellant raised altogether 8 grounds for filing the appeal for the redressal of her grievance.
That out of 8 grounds, some grounds were felt superfluous by the Hon'ble chairman and hence a direction was given to synchronise the ground of appeal and make it goal oriented.
That in the light of the intent of the direction the ground of appeal is reduced as follows: I. Whether A.O. was justified in counting cash deposit as undisclosed income without counting the parallel withdrawl? II. Whether A.O was justified in not ensuring the proper service of notice upon the appellant? III. Whether A.O. truly compared the cash deposit before declaring it as not in line with the past account behaviour? IV. Whether 1st appellate authority was justified in dismissal of the case only on the ground of delay, ignoring the merit of the case?” I.T.A. No.: 571/PAT/2024 Assessment Year: 2017-18 Savitri Devi.
Brief facts of the case are that the assessee is an individual and had e-filed her original return of income showing total income of ₹10,62,750/-. Subsequently, the case was reopened by issue of notice u/s 148 of the Act as the assessee was found to have deposited cash of ₹1,18,20,000/- in the bank accounts during the demonetization period. The Assessing Officer (hereinafter referred to as Ld. 'AO') issued three notices u/s 142(1) of the Act, which were not complied with and even the verification did not result into any response from the assessee nor any reply was filed in response to the show cause notice issued u/s 144 of the Act. Accordingly, the Ld. AO added a sum of ₹ 1,18,20,000/- as unexplained cash credits u/s 68 of the Act and the total income was assessed at ₹1,28,82,750/- u/s 144 r.w.s. 147 of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who did not condone the delay of 230 days in filing of the appeal and dismissed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal.
Rival submissions were heard and the record and the submissions made have been examined. As regards the non-appearance before the Ld. CIT(A), an affidavit in this regard has been filed stating as under:
“1. That I am the appellant in ITAT Case No 571/ PAT/2024 which is preferred against the order passed by the Ld. CIT(A).
That appeal before this Hon'ble forum is filed within due time whereas a delay of 230 days crept into, while filing appeal before the first appellate authority.
That the reason of delay was lack of information in connection with the assessment order passed by Ld. A.O.
That when the notice u/s 271AAC, 272A(1) (D) and 271(f) were served upon the appellant through post on 08/11/2022, the appellant immediately started searching good lawyer and finally filed appeal before1st appellate authority on 06/12/2022. 5. That the delay was neither intentional nor deliberate. I.T.A. No.: 571/PAT/2024 Assessment Year: 2017-18 Savitri Devi.
That a petition for condonation of delay was filed with reasonable ground even then 1st appellate authority did not condone the delay and without looking into the merit of the case, whimsically dismissed the appeal.
That the reason of delay was not within the control of the appellant.
That non condonation of delay abstained the appellant from placing her grievance before the appellate authority.
That the non condonation of delay has already caused big harm to the appellant and hence it is requested before the Hon'ble to overlook the delay in filing 1st appeal and hear the matter on merit.”
After having heard the Ld. AR and the Ld. DR and considering the affidavit filed by the assessee and taking into consideration the circumstances mentioned therein and keeping in view the principles laid down by Hon’ble Supreme Court of India in the case of Land Acquisition Collector v. Mst. Katiji & Ors., [1987] AIR 1353 (SC), wherein it has been held that where 'substantial justice' is pitted against technicalities of non-deliberate delay, then in that eventuality substantial justice is to be preferred. In our view the principles of advancing 'substantial justice' is of prime importance. Hence considering the explanation put forth by the assessee by justifiably and properly explaining the delay, which occurred in filing the appeal and construing the expression "sufficient cause" liberally, the Ld. CIT(A) ought to have condoned the delay in filing the appeal. In view of the affidavit filed, we were of the view that the assessee had a reasonable and sufficient cause and the delay in filing the appeal before the Ld. CIT(A) ought to have been condoned and the appeal should have been decided on merits.
We find that at both the stages of assessment order before the Ld. AO as well as before the Ld. CIT(A) in the appeal, proper representation was not made on behalf of the assessee as even the assessment order was made ex parte. During the course of the appeal, the Ld. AR I.T.A. No.: 571/PAT/2024 Assessment Year: 2017-18 Savitri Devi. submitted that the addition u/s 68 of the Act was made without comparing the deposits in previous and subsequent months and the order u/s 144 r.w.s. 147 of the Act was passed due to lack of information and the Ld. AR requested that the matter may be remanded to the Ld. AO as the assessee has sufficient evidence for explaining the source of cash deposits. The Ld. DR did not oppose the request of the assessee to set aside the order of the Ld. CIT(A) and remand the matter before the Ld. AO for the assessment to be done de novo. Therefore, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent her case properly before the Ld. AO as the assessee claims to have sufficient evidence in support of the relief claimed. We, therefore, set aside the order of the Ld. CIT(A) as well as of the Ld. AO and remit the matter to the Ld. AO to frame the assessment afresh, after affording an opportunity of being heard to the assessee and thereafter pass an order in accordance with law. The assessee shall not seek unnecessary adjournment and shall be at liberty to file all evidence in her possession for the relief claimed. Accordingly, the grounds taken by the assessee in her appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 28th July, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 28.07.2025 Bidhan (Sr. P.S.) I.T.A. No.: 571/PAT/2024 Assessment Year: 2017-18 Savitri Devi. Copy of the order forwarded to:
Savitri Devi, Om Trading, Madhu Bagh, Ara- Nawada, Ara, Dist- Bhojpur, Bihar, 802301. 2. ACIT, NFAC, Delhi.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Patna Bench, Patna.
Guard File. //// By order