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Facts
The assessee filed appeals against the orders of the CIT(A) for AYs 2008-09 to 2012-13, related to additions made under section 68 of the Income Tax Act, 1961, for unsecured loans treated as unexplained cash credits. The appeals were filed with a significant delay.
Held
The Tribunal noted that the appeals were filed with an inordinate delay of 583 days. The reasons provided by the assessee, such as the death of their father and misunderstandings between professionals, were not considered sufficient cause for condoning the delay. The Tribunal also observed that the assessee had not appeared before the CIT(A) and failed to provide proper evidence.
Key Issues
Whether the inordinate delay in filing the appeal can be condoned, and whether the additions made under Section 68 were justified.
Sections Cited
250, 147, 148, 68, 253(3), 253(5)
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Before: SHRI SANDEEP GOSAIN & SHRI BIJAYANANDA PRUSETH
O R D E R PER BIJYANANDA PRUSETH, AM:
These appeals filed by the assessee emanate from the orders passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the ACIT, Circle-5(3)(1), Mumbai [in short, “CIT(A)”], all dated 15.02.2024, for the assessment years (AY)
2008-09 to 2012-13. The facts of the cases and the grounds raised by the appellant are similar except variance in the amounts involved in different AYs. Hence, all the appeals were clubbed and heard together and a common order is passed for the sake of convenience and brevity. for AY 2008-09 is taken as the “lead case.”
The grounds of appeal raised by the assessee in (AY 2008-09) are as under:
“1 1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the action of re-opening of the assessment proceeding U/s. 147 of the income Tax Act 1961.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO which is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, since the order of the learned AO is passed without giving proper opportunity to the assessee of hearing and explaining the case.
3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO. The same is bad in law as proper service of the notices was not made to the assessee, the same is in violation of the principles of natural justice on various issues as stated herein.
4. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the additions of Rs. 3,30,00,000/- comprising of the following amount, without affording proper opportunity of being heard to the assessee. a. Unexplained Cash Credits u/s. 68 Rs. 3,30,00,000/- towards Unsecured Loan taken from certain parties. The learned CIT(A) failed to acknowledge the Confirmations, Bank Statements and other documents submitted by assessee as and when called for. Thus, onus of proving the genuineness of the transaction has been established before the Id. Assessing Officer, however, the same was conveniently ignored by the appellate authorities.
5. On the facts and in the circumstances of the case and in law, the Order passed by the learned CIT (A) is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, and the same is passed without application of mind and in violation of the principles of natural justice on various issues as stated hereinabove. The order so confirmed by the learned CIT (A) is without any basis and based on assumption, surmises, whims and suspicion. The learned CIT(A) passed the order in mechanical manner without giving proper opportunity to the assessee of hearing and explaining the case.
6. The Appellant craves leave to add, to alter or to amend any of the ground of appeal
mentioned hereinabove.
7. Each one of the above grounds of appeal is independent and without prejudice to each other.”
The grounds of appeal raised by the assessee in (AY 2009-10) are as under:
“1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the action of re-opening of the assessment proceeding U/s. 147 of the income Tax Act 1961.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO which is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, since the order of the learned AO is passed without giving proper opportunity to the assessee of hearing and explaining the case.
3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO. The same is bad in law as proper service of the notices was not made to the assessee, the same is in violation of the principles of natural justice on various issues as stated herein.
4. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the additions of Rs.7,39,37,397/- comprising of the following amount, without affording proper opportunity of being heard to the assessee. a. Unexplained Cash Credits u/s. 68 Rs.7,39,37,397/- towards Unsecured Loan taken from certain parties. The learned CIT(A) failed to acknowledge the Confirmations, Bank Statements and other documents submitted by assessee as and when called for. Thus, onus of proving the genuineness of the transaction has been established before the Id. Assessing Officer, however, the same was conveniently ignored by the appellate authorities.
5. On the facts and in the circumstances of the case and in law, the Order passed by the learned CIT (A) is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, and the same is passed without application of mind and in violation of the principles of natural justice on various issues as stated hereinabove. The order so confirmed by the learned CIT (A) is without any basis and based on assumption, surmises, whims and suspicion. The learned CIT(A) passed the order in mechanical manner without giving proper opportunity to the assessee of hearing and explaining the case.
6. The Appellant craves leave to add, to alter or to amend any of the ground of appeal mentioned hereinabove.
7. Each one of the above grounds of appeal is independent and without prejudice to each other.”
The grounds of appeal raised by the assessee in (AY 2010-11) are as under:
“1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the action of re-opening of the assessment proceeding U/s. 147 of the income Tax Act 1961.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO which is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, since the order of the learned AO is passed without giving proper opportunity to the assessee of hearing and explaining the case.
3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO. The same is bad in law as proper service of the notices was not made to the assessee, the same is in violation of the principles of natural justice on various issues as stated herein.
4. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the additions of Rs.9,25,40,284/- comprising of the following amount, without affording proper opportunity of being heard to the assessee. a. Unexplained Cash Credits u/s. 68 Rs.9,25,40,284/- towards Unsecured Loan taken from certain parties. The learned CIT(A) failed to acknowledge the Confirmations, Bank Statements and other documents submitted by assessee as and when called for Thus, onus of proving the genuineness of the transaction has been established before the Id. Assessing Officer, however, the same was conveniently ignored by the appellate authorities.
5. On the facts and in the circumstances of the case and in law, the Order passed by the learned CIT (A) is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, and the same is passed without application of mind and in violation of the principles of natural justice on various issues as stated hereinabove. The order so confirmed by the learned CIT (A) is without any basis and based on assumption, surmises, whims and suspicion. The learned CIT(A) passed the order in mechanical manner without giving proper opportunity to the assessee of hearing and explaining the case.
6. The Appellant craves leave to add, to alter or to amend any of the ground of appeal
mentioned hereinabove.
7. Each one of the above grounds of appeal is independent and without prejudice to each other.”
The grounds of appeal raised by the assessee in (AY 2011-12) are as under:
“1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the action of re-opening of the assessment proceeding U/s. 147 of the income Tax Act 1961.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO which is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, since the order of the leamed AO is passed without giving proper opportunity to the assessee of hearing and explaining the case.
3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO. The same is bad in law as proper service of the notices was not made to the assessee, the same is in violation of the principles of natural justice on various issues as stated herein.
4. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the additions of Rs. 7,22,40,274/- comprising of the following amount, without affording proper opportunity of being heard to the assessee a. Unexplained Cash Credits u/s. 68 Rs. 7,22,40,274/- towards Unsecured Lean taken from certain parties.
The Icarned CIT(A) failed to acknowledge the Confirmations, Bank Statements and other documents submitted by assessee as and when called for. Thus, onus of proving the genuineness of the transaction has been established before the Id. Assessing Officer, however, the same was conveniently ignored by the appellate authorities.
5. On the facts and in the circumstances of the case and in law, the Order passed by the learned CIT (A) is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, and the same is passed without application of mind and in violation of the principles of natural justice on various issues as stated hereinabove. The order so confirmed by the learned CIT (A) is without any basis and based on assumption, surmises, whims and suspicion. The learned CIT(A) passed the order in mechanical manner without giving proper opportunity to the assessee of hearing and explaining the case. 5
6. The Appellant craves leave to add, to alter or to amend any of the ground of appeal
mentioned hereinabove.
7. Each one of the above grounds of appeal is independent and without prejudice to each other.”
The grounds of appeal raised by the assessee in (AY 2012-13) are as under:
“1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the action of re-opening of the assessment proceeding U/s. 147 of the income Tax Act 1961.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO which is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, since the order of the leamed AO is passed without giving proper opportunity to the assessee of hearing and explaining the case.
3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the Order passed by the learned AO. The same is bad in law as proper service of the notices was not made to the assessee, the same is in violation of the principles of natural justice on various issues as stated herein.
4. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the additions of Rs.5,24,00,000/- comprising of the following amount, without affording proper opportunity of being heard to the assessee. a) Unexplained Cash Credits u/s. 68 Rs.5,24,00,000/- towards Unsecured Loan taken from certain parties. The learned CIT(A) failed to acknowledge the Confirmations, Bank Statements and other documents submitted by assessee as and when called for. Thus, onus of proving the genuineness of the transaction has been established before the id. Assessing Officer, however, the same was conveniently ignored by the appellate authorities.
5. On the facts and in the circumstances of the case and in law, the Order passed by the learned CIT (A) is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, and the same is passed without application of mind and in violation of the principles of natural justice on various issues as stated hereinabove. The order so confirmed by the learned CIT (A) is without any basis and based on assumption, surmises, whims and suspicion. The learned CIT(A) passed the order in mechanical manner without giving proper opportunity to the assessee of hearing and explaining the case.
6. The Appellant craves leave to add, to alter or to amend any of the ground of appeal
mentioned hereinabove.
7. Each one of the above grounds of appeal is independent and without prejudice to each other.”
The case was initially posted for hearing on 19.01.2026. Shri Ramesh C. Jain, FCA, the learned authorized representative (AR), appeared on 19.01.2026 and requested for adjournment. The request was acceded to and last opportunity of hearing was granted to the assessee on 28.01.2026. However, none appeared on behalf of the assessee nor any request for adjournment or written submission were filed. Hence, no useful purpose would be served by prolonging the proceedings before us. The case is, accordingly, decided on the basis of materials available on record.
Facts of the case in brief are that the assessee filed his return of income for the AY 2008-09 on 25.09.2008 declaring total income at Rs.Nil. The case was re- opened u/s 147 and notice u/s 148 was issued on 13.02.2015. The reasons recorded for reopening is at page 2 of the assessment order wherein it is mentioned that the assessee has taken accommodation entries of unsecured loans of Rs.3,30,00,000/- from different concerns of Bhavarlal Jain group, who were found to be engaged in the business of providing accommodation entries to many parties. After confronting the assessee on the subject issue, the AO has added Rs.3,30,00,000/- u/s 68 of the Act.
Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). In the appellate proceedings, the appellant did not file any written submission. Four notices were issued by CIT(A) fixing the hearings on 28.08.2020, 31.12.2020, 08.09.2023 and 14.02.2024. But the appellant was non-compliant to the notices.
The CIT(A) dismissed the appeal for non-prosecution as well as on merit. He has dismissed the ground challenging validity of reopening u/s 147 of the Act and also dismissed the ground against addition of Rs.3,30,00,000/- u/s 68 of the Act by observing that no corroborative evidence and reply were filed in respect of grounds of appeal. Hence, appeal was dismissed.
10. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. It is seen that the appeal was filed after delay of 570 days from the time allowed u/s 253(3) of the Act. The Ld. AR of the assessee has filed a letter and submitted that the delay was not intentional. He has filed a notarized affidavit of the appellant for the condonation of delay in filing appeal before the ITAT. The appellant has stated therein that the tax matters were handled by his father and after his demise, the appellant was not aware of the status or pendency of the matters. Two separate professionals were appointed for appeal matters and each operated under the assumption that the other was responsible for filing appeals.
Consequently, appeals remain unfiled. The appellant became aware after receipt of the demand notices. There was further delay due to change in the professional for 2008-09 & Ors. Jaimin Gautam Mehta handling the case. He stated that the delay was neither deliberate nor malicious but due to genuine difficulties. He requested to condone the delay.
On the other hand, the learned Senior Departmental Representative (Sr. DR) for the revenue submitted that there was gross negligence on part of the assessee and the explanation given would not constitute “sufficient cause” within the meaning of Section 253(5) of the Act.
We have heard both parties on this preliminary issue of condonation of delay. There was a delay of 583 days in filing appeal before the CIT(A). The Ld. AR submitted that the delay was not intentional. In the affidavit, it is submitted that the father of the assessee passed away and assessee was not aware of the pendency of the appeal. Further, there were two separate professionals for the appeal matter and due to misunderstanding between them, the appeal could not be filed. It is submitted that they did not take interest because of non-payment of certain outstanding fees. Assessee came to know about the lapse on receipt of demand notice.
On going through the facts of the case and the material, on record, we find that there is inordinate delay of 583 days in filing appeal by the assessee before the ITAT. The appellant has not given any affidavit of the CAs or any supporting evidence in respect of his affidavit that the CAs did not advise him in filing the appeal. It is clear from the facts that the assessee has not been able to give any cogent reason 2008-09 & Ors. Jaimin Gautam Mehta for such inordinate delay in filing appeal before ITAT. The reasons given by the appellant such as negligence by the CAs, lack of knowledge about status of appeal etc. could not be treated as a “sufficient cause” in terms of provisions of section 253(5) of the Act for the inordinate delay of 583 days. We find that the Hon’ble Supreme Court in a number of decisions, namely, (i) P. K. Ramachandran vs State of Kerala & Anr. (1997) 7 SCC 556, (ii) Pundik Jalam Patil vs. Executive Engineers, Jalgaon Medium Project, (2008) 17 SCC 448 and (iii) Basawaraj and Anr vs. Special Land Acquisition Officer, (2013) 14 SCC 81, (iv) Pathapati Subba Reddy (dies) By L.
Rs. & Ors. Vs The Special Deputy Collector (LA), SLP(C) No.31248 of 2018 (SC), dated 08.04.2024 held that condonation of delay should not be granted only on the ground that ordinarily a litigant does not stand to benefit by lodging an appeal late.
The Hon'ble Supreme Court in the case of Basawaraj (supra) summarized the law on the subject issue by stating that where a case has been presented in the Court beyond limitation of time, the applicant has to explain as to what was the “sufficient cause” which means an adequate and enough reason, which prevented him to approach the Court within the limitation. In case a party is found to be negligent, or for want of bonafide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, there cannot be a justified ground to condone the delay.
We also find that in a subsequent decision, in the case of Pathapati Subba Reddy (dies) & Ors. vs. The Special Deputy Collector (LA), in SLP (Civil) No. 31248 of 2018 (SC) dated 28.04.2024, the Hon'ble Supreme Court referred to and discussed various decisions of Hon'ble Supreme Court and held as under:
“7. The law of limitation is founded on public policy. It is enshrined in the legal maxim “interest reipublicae ut sit finis litium” i.e. it is for the general welfare that a period of limitation be put to litigation. The object is to put an end to every legal remedy and to have a fixed period of life for every litigation as it is futile to keep any litigation or dispute pending indefinitely. Even public policy requires that there should be an end to the litigation otherwise it would be a dichotomy if the litigation is made immortal vis-a-vis the litigating parties i.e. human beings, who are mortals.”
We also find that the Hon’ble Supreme Court in case of H. Guruswamy & Ors. vs. A. Krishnaiah Since Deceased by LRS., in Civil Appeal No. 317 of 2025, dated 08.01.2025, has set aside the order of Hon’ble High Court of Karnataka in WP No.7220 of 2014 wherein the Hon’ble High Court allowed the Writ Petition by condoning the delay. The Hon’ble Supreme Court at para 13 observed as under:
‘13. We are at our wits end to understand why the High Court overlooked all the aforesaid aspects. What was the good reason for the High Court to ignore all this? Time and again, the Supreme Court has reminded the District judiciary as well the High courts that the concepts such as “liberal approach”, “Justice oriented approach”, “substantial justice” should not be employed to frustrate or jettison the substantial law of limitation.’
We further find that the Hon’ble Supreme Court in case of C.I Builders Pvt. Ltd. vs. PCIT, (2025) 178 taxmann.com 257 (SC), dismissed the SLP against the order of Hon’ble Madhya Pradesh High Court that where the assessee contented that the delay was due to negligence of the counsel to file appeal. The Hon’ble High Court 2008-09 & Ors. Jaimin Gautam Mehta had dismissed the appeal of the assessee. It is observed that it was otherwise the duty of the assessee to watch its affairs and there was gross negligence in the attitude to the assessee in filing appeal and the assessee has not exercised any care to enquire about the status of second appeal and tried to shift the responsibility towards his counsel. Hence, the delay was not condoned and the Hon’ble Supreme Court dismissed that SLP. In view of the above facts and respectfully following the authoritative precedents cited supra, we find no reason to condone the inordinate delay of 583 days in filing appeal before the Tribunal in absence of any sufficient cause. Accordingly, the appeal of the assessee is not liable to be admitted.
The appellant is also not liable to succeed on merit for the following reasons.
As stated earlier, the appellant did not appear before the CIT(A) though adequate and sufficient opportunity of hearing was given by him. Therefore, the CIT confirmed the addition of unsecured loans of Rs.3,30,00,000/- u/s 68 of the Act.
The fact that the assessee received the unsecured loans from entry providers has not been disproved by the assessee before the AO, CIT(A) and the Tribunal with proper explanation and cogent evidence. In any case, despite being given the opportunity of hearing, he choose not to appear before the CIT(A) or the Tribunal.
It has also been held in a number of cases that dismissal of appeal is an inherent power which every Tribunal possesses. The Hon’ble Bombay High Court in case of M/s Chemipol vs. UOI, Central Excise Appeal No.62 of 2009, referred to the decision 2008-09 & Ors. Jaimin Gautam Mehta in case of Sundarlal vs. Nandramdas, AIR 1958 MP 206 where it was observed that though the Act does not give any power of dismissal, 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. This was approved in Dr. P.
Nalla Thampy vs. Shankar, 1984 (Supp) SCC 631. In New India Assurance vs. Srinivasan, (2000) 3 SCC 242, it was held that every Court or judicial body or authority which has a duty to decide a lis between two parties, inherently possesses the power to dismiss a case in default. Where a case is called of 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. The Hon’ble Supreme Court in case of CIT vs. B. N. Bhattacharjee & Ors., (1979) 10 CTR 354 (SC) observed that preferring an appeal means effectively pursuing it. Following the above authoritative precedents, the appeal is also liable to be dismissed.
In the result, the appeal of the assessee is dismissed.
(AY: 2009-10), 2010-11), 2011-12) & 2012-13)