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Facts
The assessee's appeal is against the order dated 03.01.2024 passed by the Ld. Commissioner of Income-tax (Appeals). The assessee faced significant delays in filing the appeal, citing advanced age, ill health, and lack of technological access. The additions made were substantial, involving unexplained cash credit and disallowed interest.
Held
The Tribunal condoned the delay of 536 days in filing the appeal, considering the assessee's genuine reasons and the principles of natural justice. The Tribunal set aside the order of the Ld. CIT(A) and restored the matter to the Assessing Officer for fresh adjudication, granting the assessee an adequate opportunity to present evidence.
Key Issues
The primary issue was the condonation of the 536-day delay in filing the appeal and, on merits, the addition of ₹11,10,93,681/- as unexplained cash credit and disallowance of interest of ₹46,00,926/-.
Sections Cited
68, 144, 142(1), 250
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
This appeal by the assessee is directed against order dated 03.01.2024 passed by the Ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre- Delhi [in short ‘the Ld.CIT’] for assessment year 2018-19, raising following grounds:-
“1. That the Learned Commissioner of Income Tax (Appeals) erred in law and on facts in passing the order under section 250 of the Income Tax Act, 1961 without considering the genuine and reasonable cause for non-compliance during appellate proceedings.
That the Learned Assessing Officer erred in law and on facts in 2. That the Learned Assessing Officer erred in law and on facts in 2. That the Learned Assessing Officer erred in law and on facts in treating the unsecured loans amounting to 11,10,93,681/ unsecured loans amounting to 11,10,93,681/ unsecured loans amounting to 11,10,93,681/- as unexplained cash credit under section 68 without giving adequate unexplained cash credit under section 68 without giving adequate unexplained cash credit under section 68 without giving adequate opportunity to the appellant to substantiate the same with opportunity to the appellant to substantiate the same with opportunity to the appellant to substantiate the same with documentary evidence. documentary evidence.
That the Learned Assessing Officer further erred in disallowing 3. That the Learned Assessing Officer further erred in disallo 3. That the Learned Assessing Officer further erred in disallo interest of ₹46,00,926/ 46,00,926/-on such unsecured loans without properly on such unsecured loans without properly appreciating the factual matrix and supporting details, some of appreciating the factual matrix and supporting details, some of appreciating the factual matrix and supporting details, some of which were already available and others co which were already available and others could have been furnished uld have been furnished if opportunity was granted. if opportunity was granted.
That the assessment orde 4. That the assessment order passed under section 144 r.w.s. 147 r passed under section 144 r.w.s. 147 was ex parte and in violation of the principles of natural justice, as was ex parte and in violation of the principles of natural justice, as was ex parte and in violation of the principles of natural justice, as the appellant did not receive or was unable to access the statutory the appellant did not receive or was unable to access the statutory the appellant did not receive or was unable to access the statutory notices due to old age, ill health, and technological constraints. notices due to old age, ill health, and technological constraints. notices due to old age, ill health, and technological constraints.
That the appellant prays for condonation of delay in filing the appellant prays for condonation of delay in filing the appellant prays for condonation of delay in filing the present appeal before the Hon'ble ITAT, as the appellant came to present appeal before the Hon'ble ITAT, as the appellant came to present appeal before the Hon'ble ITAT, as the appellant came to know of the CIT(A)'s order only upon receipt of a recovery notice from know of the CIT(A)'s order only upon receipt of a recovery notice from know of the CIT(A)'s order only upon receipt of a recovery notice from the Jurisdictional Assessing Officer. The delay is neither deliberate the Jurisdictional Assessing Officer. The delay is neither delib the Jurisdictional Assessing Officer. The delay is neither delib nor due to negligence but is attributable to his advanced age (80 nor due to negligence but is attributable to his advanced age (80 nor due to negligence but is attributable to his advanced age (80 years), poor health, and lack of access to electronic communication. years), poor health, and lack of access to electronic communication. years), poor health, and lack of access to electronic communication. The delay may kindly be condoned in the interest of substantial The delay may kindly be condoned in the interest of substantial The delay may kindly be condoned in the interest of substantial justice. 6. That the authorities below have failed 6. That the authorities below have failed to consider the appellant's to consider the appellant's submissions in proper perspective and have passed orders based submissions in proper perspective and have passed orders based submissions in proper perspective and have passed orders based merely on non-compliance without examining the merits. compliance without examining the merits. compliance without examining the merits. 7. That the orders passed are bad in law, arbitrary, and in violation 7. That the orders passed are bad in law, arbitrary, and in violation 7. That the orders passed are bad in law, arbitrary, and in violation of the principles of natural justice. of the principles of natural justice. 8. The appellant craves leave to add, alter, amend or withdraw any 8. The appellant craves leave to add, alter, amend or withdraw any 8. The appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal
at the time of hearing.” of the above grounds of appeal at the time of hearing.” of the above grounds of appeal at the time of hearing.”
2. At the outset, the Ld. Counsel for the assessee invited our At the outset, the Ld. Counsel for the assessee invited our At the outset, the Ld. Counsel for the assessee invited our attention to the delay of attention to the delay of 536 days in filing the present appeal. It in filing the present appeal. It was submitted that the delay was occasioned due to the assessee’s was submitted that the delay was occasioned due to the assessee’s was submitted that the delay was occasioned due to the assessee’s advanced age, ill health, and lack of computer literacy. Reliance was advanced age, ill health, and lack of computer literacy. Reliance was advanced age, ill health, and lack of computer literacy. Reliance was Umashankar Shiwaprasad Modi placed on the affidavit sworn by the assessee, wherein it has been placed on the affidavit sworn by the assessee, wherein it has been placed on the affidavit sworn by the assessee, wherein it has been averred, inter alia, that the assessee does not personally operate , that the assessee does not personally operate , that the assessee does not personally operate electronic modes of communication, that emails were handled by electronic modes of communication, that emails were handled by electronic modes of communication, that emails were handled by assistants assistants assistants whose whose whose frequent frequent frequent changes changes changes resulted resulted resulted in in in important important important communications remaining unattended, and that the order of the communications remaining unattended, and that the order of the communications remaining unattended, and that the order of the Ld. CIT(A) came to the ass Ld. CIT(A) came to the assessee’s knowledge only upon receipt of a essee’s knowledge only upon receipt of a recovery notice from the Assessing Officer in July 2025. It was recovery notice from the Assessing Officer in July 2025. It was recovery notice from the Assessing Officer in July 2025. It was further stated that the delay was neither deliberate nor intentional, further stated that the delay was neither deliberate nor intentional, further stated that the delay was neither deliberate nor intentional, but arose due to circumstances beyond the assessee’s control. The but arose due to circumstances beyond the assessee’s control. but arose due to circumstances beyond the assessee’s control. relevant part of his affidavit is reproduced as under: his affidavit is reproduced as under: “4. That due to my advanced age and ill health, I do not operate 4. That due to my advanced age and ill health, I do not operate 4. That due to my advanced age and ill health, I do not operate email or digital communication channels personally. My email email or digital communication channels personally. My email email or digital communication channels personally. My email account is generally checked by my assistants, who thereafter print account is generally checked by my assistants, who thereafter print account is generally checked by my assistants, who thereafter print out important emails f out important emails for my perusal.
5. That over the relevant period, there had been frequent changes in 5. That over the relevant period, there had been frequent changes in 5. That over the relevant period, there had been frequent changes in my assistants, owing to which my emails remained unchecked and my assistants, owing to which my emails remained unchecked and my assistants, owing to which my emails remained unchecked and unattended. Consequently, the intimation of the CIT(A)'s order was unattended. Consequently, the intimation of the CIT(A)'s order was unattended. Consequently, the intimation of the CIT(A)'s order was never brought to my notice. never brought to my notice.
6. That I came to know about the passing of the CIT(A)'s order only me to know about the passing of the CIT(A)'s order only me to know about the passing of the CIT(A)'s order only when I received a demand recovery notice from the Jurisdictional when I received a demand recovery notice from the Jurisdictional when I received a demand recovery notice from the Jurisdictional Assessing Officer in July 2025. Immediately thereafter, I took steps Assessing Officer in July 2025. Immediately thereafter, I took steps Assessing Officer in July 2025. Immediately thereafter, I took steps to obtain copies of the order and initiate the appeal process before to obtain copies of the order and initiate the appeal process befo to obtain copies of the order and initiate the appeal process befo this Hon'ble Tribunal. this Hon'ble Tribunal.
That the delay in filing the appeal is neither deliberate nor 7. That the delay in filing the appeal is neither deliberate nor 7. That the delay in filing the appeal is neither deliberate nor intentional, but solely due to the above genuine reasons beyond my intentional, but solely due to the above genuine reasons beyond my intentional, but solely due to the above genuine reasons beyond my control.
That I respectfully submit that I am a senior citizen suffering from 8. That I respectfully submit that I am a senior citizen suffering from 8. That I respectfully submit that I am a senior citizen suffering from chronic ailments including diabetes, high blood pressure, and ailments including diabetes, high blood pressure, and ailments including diabetes, high blood pressure, and restricted mobility, and pray for sympathetic consideration of my restricted mobility, and pray for sympathetic consideration of my restricted mobility, and pray for sympathetic consideration of my request.
That in view of the above circumstances, I humbly pray that this 9. That in view of the above circumstances, I humbly pray that this 9. That in view of the above circumstances, I humbly pray that this Hon'ble Tribunal may kindly be pleased to condone the delay in Hon'ble Tribunal may kindly be pleased to condone the dela Hon'ble Tribunal may kindly be pleased to condone the dela filing the appeal in the interest of justice. filing the appeal in the interest of justice.”
We have carefully considered the submissions of both the We have carefully considered the submissions of both the We have carefully considered the submissions of both the parties and perused the affidavit placed on record. Keeping in view parties and perused the affidavit placed on record. Keeping in view parties and perused the affidavit placed on record. Keeping in view the age, health condition, and technological limitations of the the age, health condition, and technological limitations of the the age, health condition, and technological limitations of the assessee, and applying a liberal interpretation to the expression and applying a liberal interpretation to the expression and applying a liberal interpretation to the expression “sufficient cause”, we are of the considered view that the assessee , we are of the considered view that the assessee , we are of the considered view that the assessee has satisfactorily explained the delay. has satisfactorily explained the delay.
3.1 It is well settled that when substantial justice and technical It is well settled that when substantial justice and technical It is well settled that when substantial justice and technical considerations are pitted considerations are pitted against each other, the cause of against each other, the cause of substantial justice deserves to be preferred. Guided by this salutary substantial justice deserves to be preferred. Guided by this salutary substantial justice deserves to be preferred. Guided by this salutary principle, and in the absence of any mala fide or deliberate principle, and in the absence of any mala fide or deliberate principle, and in the absence of any mala fide or deliberate negligence, we condone the delay of 536 days in filing the appeal negligence, we condone the delay of 536 days in filing the appeal negligence, we condone the delay of 536 days in filing the appeal and admit the same for ad and admit the same for adjudication.
The principal grievance of the assessee in the present appeal is The principal grievance of the assessee in the present appeal is The principal grievance of the assessee in the present appeal is against the addition of against the addition of ₹11,10,93,681/- made under section 68 of made under section 68 of the Income-tax Act, 1961, along with disallowance of interest of tax Act, 1961, along with disallowance of interest of tax Act, 1961, along with disallowance of interest of ₹46,00,926/-, allegedly without granting , allegedly without granting adequate opportunity to adequate opportunity to substantiate the supporting documentary evidence. substantiate the supporting documentary evidence.
4.1 The assessment was completed under section 144 of the Act The assessment was completed under section 144 of the Act The assessment was completed under section 144 of the Act on account of non-compliance with statutory notices. Before the compliance with statutory notices. Before the compliance with statutory notices. Before the first appellate authority also, the assessee failed to respond to first appellate authority also, the assessee failed to r first appellate authority also, the assessee failed to r
Umashankar Shiwaprasad Modi multiple opportunities granted for filing submissions and evidence. multiple opportunities granted for filing submissions and evidence. multiple opportunities granted for filing submissions and evidence. Consequently, the Ld. CIT(A), after recording detailed reasons, Consequently, the Ld. CIT(A), after recording detailed reasons, Consequently, the Ld. CIT(A), after recording detailed reasons, upheld the additions and dismissed the appeal, observing that the upheld the additions and dismissed the appeal, observing that the upheld the additions and dismissed the appeal, observing that the assessee had not discharged the onus cast upon him and had assessee had not discharged the onus cast upon h assessee had not discharged the onus cast upon h remained non-cooperative throughout the proceedings. The relevant cooperative throughout the proceedings. The relevant cooperative throughout the proceedings. The relevant finding of Ld. CIT(A) is reproduced as under: finding of Ld. CIT(A) is reproduced as under:
“4.1. The order of the Ld. AO passed u/s 144 dated 11/05/2021 as 4.1. The order of the Ld. AO passed u/s 144 dated 11/05/2021 as 4.1. The order of the Ld. AO passed u/s 144 dated 11/05/2021 as well as the grounds of appeal and statement of facts filed by the well as the grounds of appeal and statement of facts filed by the well as the grounds of appeal and statement of facts filed by the appellant have been carefully considered. In essence, all the pellant have been carefully considered. In essence, all the pellant have been carefully considered. In essence, all the substantial grounds taken by the appellant relate to the action of the substantial grounds taken by the appellant relate to the action of the substantial grounds taken by the appellant relate to the action of the Ld. AO regarding addition of Rs. 11,10,93,681/ Ld. AO regarding addition of Rs. 11,10,93,681/- - on account of unexplained cash deposit under section 68 of the Income Tax Act unexplained cash deposit under section 68 of the Income Tax Act unexplained cash deposit under section 68 of the Income Tax Act, 1961 and addition Rs. 46,00,926/ 1961 and addition Rs. 46,00,926/- on account of interest paid on on account of interest paid on unsecured loans. unsecured loans. 4.2. During the course of appellate proceedings, the appellant 4.2. During the course of appellate proceedings, the appellant 4.2. During the course of appellate proceedings, the appellant assessee was given several opportunities by fixing hearing on assessee was given several opportunities by fixing hearing on assessee was given several opportunities by fixing hearing on 21/11/2023 and 27/11/2023, to represent the ca 21/11/2023 and 27/11/2023, to represent the case by uploading se by uploading written submission along with supporting document(s) if any. written submission along with supporting document(s) if any. written submission along with supporting document(s) if any. In the notice u/s 250 dated 23/11/2023, fixing the case of hearing dt. notice u/s 250 dated 23/11/2023, fixing the case of hearing dt. notice u/s 250 dated 23/11/2023, fixing the case of hearing dt. 27/11/2023, it is mentioned; "What if we do not hear from you? If no 27/11/2023, it is mentioned; "What if we do not hear from you? If no 27/11/2023, it is mentioned; "What if we do not hear from you? If no submissions/information/documents is/ar submissions/information/documents is/are received e received within within the the stipulated time period, it will be presumed that you have nothing to stipulated time period, it will be presumed that you have nothing to stipulated time period, it will be presumed that you have nothing to say in this matter. The Department may proceed ahead based on say in this matter. The Department may proceed ahead based on say in this matter. The Department may proceed ahead based on material available on record." Further a show cause letter was issued material available on record." Further a show cause letter was issued material available on record." Further a show cause letter was issued to the appellant on 13.12.2023 re to the appellant on 13.12.2023 requesting for an explanation questing for an explanation by 22.12.2023 as to why appeal of the appellant should not be 22.12.2023 as to why appeal of the appellant should not be 22.12.2023 as to why appeal of the appellant should not be dismissed due to repeated non dismissed due to repeated non-compliance. However, the appellant compliance. However, the appellant did not avail the opportunities to counter the findings of the Ld. AO did not avail the opportunities to counter the findings of the Ld. AO did not avail the opportunities to counter the findings of the Ld. AO and hence appellant's reluctanc and hence appellant's reluctancy to comply to the notices leads to the y to comply to the notices leads to the presumption that he has either nothing to explain in this regard or is presumption that he has either nothing to explain in this regard or is presumption that he has either nothing to explain in this regard or is not interested to continue the appellate proceeding and thus has no not interested to continue the appellate proceeding and thus has no not interested to continue the appellate proceeding and thus has no objection at present regarding addition made by the Ld. AO in the objection at present regarding addition made by the Ld. AO in the objection at present regarding addition made by the Ld. AO in the impugned assessment order. The reason for the addition was sessment order. The reason for the addition was sessment order. The reason for the addition was specifically mentioned in detail in the assessment order but the specifically mentioned in detail in the assessment order but the specifically mentioned in detail in the assessment order but the appellant failed to upload any evidence or submission in support of appellant failed to upload any evidence or submission in support of appellant failed to upload any evidence or submission in support of the grounds of appeal. the grounds of appeal.
4.3. It is the well-settled dictum of law "VIGILENT "VIGILENTIBUS, NO 4.3. It is the well DORMENTIBUS, JURA SUBVENIUNT" DORMENTIBUS, JURA SUBVENIUNT" which means the law will which means the law will help only those who are vigilant. Law will not assist those who are help only those who are vigilant. Law will not assist those who are help only those who are vigilant. Law will not assist those who are careless of his/her right. In order to claim once right she/he must be careless of his/her right. In order to claim once right she/he must be careless of his/her right. In order to claim once right she/he must be watchful of his/her rights. Only those persons, who a watchful of his/her rights. Only those persons, who a watchful of his/her rights. Only those persons, who are watchful and careful of using his/her rights, are eligible for the benefits of the law. careful of using his/her rights, are eligible for the benefits of the law. careful of using his/her rights, are eligible for the benefits of the law. Law confers rights on persons who are vigilant of their rights. In this Law confers rights on persons who are vigilant of their rights. In this Law confers rights on persons who are vigilant of their rights. In this connection, the various connection, the various judicious decisions of the Hon'ble Courts may judicious decisions of the Hon'ble Courts may be cited. In the case o be cited. In the case of the Estate of Late TukojiraoHolkarvs f the Estate of Late TukojiraoHolkarvs Commissioner of Wealth Tax (1997) (223 ITA 480 MP) the Hon'ble M.P. Commissioner of Wealth Tax (1997) (223 ITA 480 MP) the Hon'ble M.P. Commissioner of Wealth Tax (1997) (223 ITA 480 MP) the Hon'ble M.P. High Court held that, "If the party, at whose instance the reference is High Court held that, "If the party, at whose instance the reference is High Court held that, "If the party, at whose instance the reference is made, fails to appear at the hearing, or falls in taking steps for made, fails to appear at the hearing, or falls in taking steps for made, fails to appear at the hearing, or falls in taking steps for preparation of the paper books so as to enable hearing of the n of the paper books so as to enable hearing of the n of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference." Similarly, reference, the court is not bound to answer the reference." Similarly, reference, the court is not bound to answer the reference." Similarly, Hon'ble Punjab & Haryana High Court in the case of New Dewan Oil Hon'ble Punjab & Haryana High Court in the case of New Dewan Oil Hon'ble Punjab & Haryana High Court in the case of New Dewan Oil Mills Vs. CIT reported in (2008) 296/TR495 (P&H) had returned the Mills Vs. CIT reported in (2008) 296/TR495 (P&H) had returned the Mills Vs. CIT reported in (2008) 296/TR495 (P&H) had returned the reference unanswered, since the assessee remained absent and there ference unanswered, since the assessee remained absent and there ference unanswered, since the assessee remained absent and there was no assistance from the assessee. In the case of CIT vs B. N. was no assistance from the assessee. In the case of CIT vs B. N. was no assistance from the assessee. In the case of CIT vs B. N. Bhattacharya. (118 ITR 461) (Pages 477, 478), the Hon'ble Supreme Bhattacharya. (118 ITR 461) (Pages 477, 478), the Hon'ble Supreme Bhattacharya. (118 ITR 461) (Pages 477, 478), the Hon'ble Supreme Court held that appeal does not mean, the mere filing of the Court held that appeal does not mean, the mere filing of the Court held that appeal does not mean, the mere filing of the memo of the appeal but effectively pursuing the same". The Hon'ble Delhi High the appeal but effectively pursuing the same". The Hon'ble Delhi High the appeal but effectively pursuing the same". The Hon'ble Delhi High Court in the case of CIT vs Gold Leaf Capital Corporation Ltd on Court in the case of CIT vs Gold Leaf Capital Corporation Ltd on Court in the case of CIT vs Gold Leaf Capital Corporation Ltd on 02.09.2011 in of 2009 held that a negligent appellant 02.09.2011 in of 2009 held that a negligent appellant 02.09.2011 in ITA No.798 of 2009 held that a negligent appellant should not be given many opportunities just bec should not be given many opportunities just because the quantum of ause the quantum of the amount involved is high. The necessary course of action is to draw the amount involved is high. The necessary course of action is to draw the amount involved is high. The necessary course of action is to draw an adverse inference, otherwise, it would amount to giving a premium an adverse inference, otherwise, it would amount to giving a premium an adverse inference, otherwise, it would amount to giving a premium to the appellant for his negligence. When the appellant is non to the appellant for his negligence. When the appellant is non to the appellant for his negligence. When the appellant is non- cooperative, it can safely be con cooperative, it can safely be concluded that the appellant did not cluded that the appellant did not want to adduce evidence as it would expose the falsity and non want to adduce evidence as it would expose the falsity and non want to adduce evidence as it would expose the falsity and non- genuineness of his claim. The Hon'ble ITAT, Delhi in the case of genuineness of his claim. The Hon'ble ITAT, Delhi in the case of genuineness of his claim. The Hon'ble ITAT, Delhi in the case of Whirlpool India Ltd vs DCIT (ITA No.2006/Del/ 2011 dated Whirlpool India Ltd vs DCIT (ITA No.2006/Del/ 2011 dated Whirlpool India Ltd vs DCIT (ITA No.2006/Del/ 2011 dated 19.12.2011) has dismissed the appeal 19.12.2011) has dismissed the appeal for non-attending hearing attending hearing inferring that the appellant is not effectively pursuing the appeal. inferring that the appellant is not effectively pursuing the appeal. inferring that the appellant is not effectively pursuing the appeal. 4.4. In this regard, the decision of the Hon'ble High Court of Mumbai 4.4. In this regard, the decision of the Hon'ble High Court of Mumbai 4.4. In this regard, the decision of the Hon'ble High Court of Mumbai in the case of M/S Chemipolvs Union of India, Central Excise Appeal in the case of M/S Chemipolvs Union of India, Central Excise Appeal in the case of M/S Chemipolvs Union of India, Central Excise Appeal No.62 of 2009 may furt No.62 of 2009 may further be referred to wherein the Hon'ble Court her be referred to wherein the Hon'ble Court clearly held that every court, judicial Body or Authority, which has a clearly held that every court, judicial Body or Authority, which has a clearly held that every court, judicial Body or Authority, which has a duty to decide a case between two parties, inherently duty to decide a case between two parties, inherently duty to decide a case between two parties, inherently -possesses the power to dismiss the case in default power to dismiss the case in default 4.5. On merits also, the appellan 4.5. On merits also, the appellant has no case. The main ground t has no case. The main ground taken by the appellant relates to addition of of taken by the appellant relates to addition of of Rs. 11,10,93,681/ Rs. 11,10,93,681/- on Umashankar Shiwaprasad Modi account of unexplained cash deposit under section 68 of the Income account of unexplained cash deposit under section 68 of the Income account of unexplained cash deposit under section 68 of the Income Tax Act, 1961 and addition Rs. 46,00,926/ Tax Act, 1961 and addition Rs. 46,00,926/-on account of interest on account of interest paid on unsecured loan paid on unsecured loans. It is seen from the assessment order that It is seen from the assessment order that the appellant filed a return of income declaring total income Rs. the appellant filed a return of income declaring total income Rs. the appellant filed a return of income declaring total income Rs. 60,43,310/- for the AY 2018 for the AY 2018-2019. Notices under section 142(1) were 2019. Notices under section 142(1) were issued but not responded. The assessee in this regard said that the issued but not responded. The assessee in this regard said that the issued but not responded. The assessee in this regard said that the notices were received by the accountant of the appellant, however, ere received by the accountant of the appellant, however, ere received by the accountant of the appellant, however, the said accountant resigned and the assessee was not able to the said accountant resigned and the assessee was not able to the said accountant resigned and the assessee was not able to submit response. Consequently, due to non submit response. Consequently, due to non-compliance of the notices compliance of the notices the national e-assessment center proceeded with the information assessment center proceeded with the information assessment center proceeded with the information available on records and completed the assessment under section lable on records and completed the assessment under section lable on records and completed the assessment under section 144 of the income tax act. While completing the assessment of the 144 of the income tax act. While completing the assessment of the 144 of the income tax act. While completing the assessment of the appellant additions were made under section 68 wherein the loans appellant additions were made under section 68 wherein the loans appellant additions were made under section 68 wherein the loans taken from the related parties were added as unexplained cash cre taken from the related parties were added as unexplained cash cre taken from the related parties were added as unexplained cash credit which amounting to Rs 11,10,93,681/ amounting to Rs 11,10,93,681/-. The Ld.AO had mentioned in . The Ld.AO had mentioned in the assessment order that the assessee had failed to respond to the assessment order that the assessee had failed to respond to the assessment order that the assessee had failed to respond to notices and proved that the assessee had nothing to explain in the notices and proved that the assessee had nothing to explain in the notices and proved that the assessee had nothing to explain in the matter regarding addition of interest disallowed of Rs. matter regarding addition of interest disallowed of Rs. matter regarding addition of interest disallowed of Rs. 46,00,926/-. 4.6. During the course of appellate proceeding, the appellant failed to 4.6. During the course of appellate proceeding, the appellant failed to 4.6. During the course of appellate proceeding, the appellant failed to explain the grounds taken against the issues. The reason for addition explain the grounds taken against the issues. The reason for addition explain the grounds taken against the issues. The reason for addition was mentioned in the assessment order. However, the appellant was mentioned in the assessment order. However, the appellant was mentioned in the assessment order. However, the appellant made no effort to counter the findings made no effort to counter the findings of the Ld. AO either by of the Ld. AO either by uploading relevant document(s) or explaining the matter in detail and uploading relevant document(s) or explaining the matter in detail and uploading relevant document(s) or explaining the matter in detail and chose to remain silent about the issue. It is seen from the assessment chose to remain silent about the issue. It is seen from the assessment chose to remain silent about the issue. It is seen from the assessment order that The auditor in form 3CD had reported unsecured loan The auditor in form 3CD had reported unsecured loan The auditor in form 3CD had reported unsecured loan raised during the year whic raised during the year which was mentioned in table Table 1 S Name Name of of the the PAN No. Amount of loan or Amount of loan or Maximum No. lender lender or or deposit taken Or deposit taken Or amount depositor accepted outstanding in the account at any time during the year previous 1 Overseas AAAC00576G 10,86,82,105/ 0,86,82,105/- 94121021 Packing Industries Industries Pvt Pvt Ltd 2 Pancheel plastic Pancheel plastic AAACP0521C 14,11,576/- 1411576 Pvt Ltd
3 Kaushal Kumar Kaushal Kumar AFJPM2298G 28,78,180/- 1756038 Modi 4 R G Chawada R G Chawada 10,00,000/- 1000000 sons HUF and sons HUF and Total Rs. 11,39,71,861 11,39,71,861 Only one lender i.e. Kushal Kumar Modi Only one lender i.e. Kushal Kumar Modi submitted confirmation letter, submitted confirmation letter, copy of ledger account pertaining to the assessee, copy of ITR of A.Y copy of ledger account pertaining to the assessee, copy of ITR of A.Y copy of ledger account pertaining to the assessee, copy of ITR of A.Y- 2018-19 and bank statement; thus unsecured loan extended by 19 and bank statement; thus unsecured loan extended by 19 and bank statement; thus unsecured loan extended by Kushal Kumar Modi of Rs. 28,78,180/ Kushal Kumar Modi of Rs. 28,78,180/- was verified and accepted, was verified and accepted, while others did not respond, t while others did not respond, the genuineness of the unsecured loan he genuineness of the unsecured loan could not be ascertained to the satisfaction of AO, hence unsecured could not be ascertained to the satisfaction of AO, hence unsecured could not be ascertained to the satisfaction of AO, hence unsecured loan loan amounting amounting of of Rs. 11,10,93,681/ Rs. 11,10,93,681/-(Rs. 11,39,71,861 (Rs. 11,39,71,861- Rs. 28,78,180) was treated as unexplained cash credit u/s. 68 of the 28,78,180) was treated as unexplained cash credit u/s. 68 of the 28,78,180) was treated as unexplained cash credit u/s. 68 of the Income Tax Act. 1961 and ad Income Tax Act. 1961 and added to the income of the appellant. It is ded to the income of the appellant. It is also seen from the assessment order that, on perusal of ITR, it was also seen from the assessment order that, on perusal of ITR, it was also seen from the assessment order that, on perusal of ITR, it was found that the assessee paid found that the assessee paid Rs. 46,82,747/- as interest during the as interest during the year. The assessee reported to have raised unsecured loan year. The assessee reported to have raised unsecured loan year. The assessee reported to have raised unsecured loan amounting to Rs. 11, amounting to Rs. 11,39,71,861, during the year. It is quite pertinent to It is quite pertinent to mention here that both the assessee and lenders had failed to mention here that both the assessee and lenders had failed to mention here that both the assessee and lenders had failed to respond to notices issued which showed their gross non respond to notices issued which showed their gross non respond to notices issued which showed their gross non-compliance to the statutory notices and proved that neither the assessee nor the the statutory notices and proved that neither the assessee nor the the statutory notices and proved that neither the assessee nor the lenders had nothing to submit/explain in the matter. The assessee in nothing to submit/explain in the matter. The assessee in nothing to submit/explain in the matter. The assessee in the ITR had claimed an expense on account of the ITR had claimed an expense on account of interest of Rs. 46,82,747/-. However, as the unsecured loans were treated as . However, as the unsecured loans were treated as . However, as the unsecured loans were treated as unexplained cash credit in the hands of the assessee, interest unexplained cash credit in the hands of the assessee, interest unexplained cash credit in the hands of the assessee, interest expense on the same could not be allowed. The lender Kushal Kumar on the same could not be allowed. The lender Kushal Kumar on the same could not be allowed. The lender Kushal Kumar Modi confirmed the loan and submitted that the interest of Rs. Modi confirmed the loan and submitted that the interest of Rs. Modi confirmed the loan and submitted that the interest of Rs. 81,821/- was received on the loan during the year. The same was was received on the loan during the year. The same was was received on the loan during the year. The same was allowed out of total interest component of 46,82,747/ Rest of the allowed out of total interest component of 46,82,747/ Rest of the allowed out of total interest component of 46,82,747/ Rest of the interest rest amount amount of of Rs. Rs. 46,00,926/- 46,00,926/ (46,82,747 (46,82,747-81,821) was disallowed and added to the total income of the appellant. The disallowed and added to the total income of the appellant. The disallowed and added to the total income of the appellant. The assessee failed to meet the onus of providing documentary evidence assessee failed to meet the onus of providing documentary evidence assessee failed to meet the onus of providing documentary evidence to establish the genuineness, creditworthiness and identity of to establish the genuineness, creditworthiness and identity of to establish the genuineness, creditworthiness and identity of lenders, leading to the inclusion of unsecured loan amount in the leading to the inclusion of unsecured loan amount in the leading to the inclusion of unsecured loan amount in the assessee's income. Although in the statement of facts, the appellant assessee's income. Although in the statement of facts, the appellant assessee's income. Although in the statement of facts, the appellant stated that various unforeseen situations such as resignation of the stated that various unforeseen situations such as resignation of the stated that various unforeseen situations such as resignation of the accountant and pandemic related situation refrained him from accountant and pandemic related situation refrained him from accountant and pandemic related situation refrained him from complying, the appellant offered no explanation or supporting the appellant offered no explanation or supporting the appellant offered no explanation or supporting evidence about the nature and source of the money. During the evidence about the nature and source of the money. During the evidence about the nature and source of the money. During the appellate proceedings, in spite of filing elaborate grounds of appeal appellate proceedings, in spite of filing elaborate grounds of appeal appellate proceedings, in spite of filing elaborate grounds of appeal and being provided adequate opportunities of filing explanatio and being provided adequate opportunities of filing explanatio and being provided adequate opportunities of filing explanations and supporting documents the appellant preferred to remain silent by not supporting documents the appellant preferred to remain silent by not supporting documents the appellant preferred to remain silent by not Umashankar Shiwaprasad Modi availing the opportunities provided. The appellant did not comply to availing the opportunities provided. The appellant did not comply to availing the opportunities provided. The appellant did not comply to the departmental notices both during assessment proceedings as well the departmental notices both during assessment proceedings as well the departmental notices both during assessment proceedings as well as during appellate proceedings. as during appellate proceedings. 4.6 In view of this, I find no reason to interfere into the order of the ew of this, I find no reason to interfere into the order of the ew of this, I find no reason to interfere into the order of the Ld. AO and the same is upheld accordingly. Therefore, Ld. AO and the same is upheld accordingly. Therefore, Ld. AO and the same is upheld accordingly. Therefore, all the substantial grounds taken by the appellant are dismissed substantial grounds taken by the appellant are dismissed substantial grounds taken by the appellant are dismissed.”
Before us, the Ld. Counsel for the assessee prayed for one 5. Before us, the Ld. Counsel for the assessee prayed for one Before us, the Ld. Counsel for the assessee prayed for one final opportunity to substantiate the claims on merits and to place portunity to substantiate the claims on merits and to place portunity to substantiate the claims on merits and to place relevant material on record. The Ld. Departmental Representative relevant material on record. The Ld. Departmental Representative relevant material on record. The Ld. Departmental Representative strongly opposed the request, contending that repeated non- strongly opposed the request, contending that repeated non strongly opposed the request, contending that repeated non compliance at both assessment and appellate stages disentitled the compliance at both assessment and appellate stages disentitled the compliance at both assessment and appellate stages disentitled the assessee from any further indulgence. see from any further indulgence.
We have thoughtfully considered the rival submissions and We have thoughtfully considered the rival submissions and We have thoughtfully considered the rival submissions and examined the record. examined the record. It is not in dispute that the assessee failed to It is not in dispute that the assessee failed to comply with the statutory notices issued during the assessment comply with the statutory notices issued during the assessment comply with the statutory notices issued during the assessment proceedings as well as during proceedings as well as during the first appellate proceedings. Such the first appellate proceedings. Such conduct cannot be approved and ordinarily disentitles a litigant conduct cannot be approved and ordinarily disentitles a litigant conduct cannot be approved and ordinarily disentitles a litigant from seeking repeated indulgence. from seeking repeated indulgence.
6.1 At the same time, it is equally well settled that the principles of At the same time, it is equally well settled that the principles of At the same time, it is equally well settled that the principles of natural justice are not empty formalities but natural justice are not empty formalities but are intended to ensure are intended to ensure that no person is condemned unheard, particularly where the that no person is condemned unheard, particularly where the that no person is condemned unheard, particularly where the determination entails serious civil consequences. The additions determination entails serious civil consequences. The additions determination entails serious civil consequences. The additions made in the present case are substantial in nature and pertain to made in the present case are substantial in nature and pertain to made in the present case are substantial in nature and pertain to alleged alleged alleged unexplained unexplained unexplained unsecured unsecured unsecured loans loans loans and and and consequential con con
Umashankar Shiwaprasad Modi disallowance of interest, which strike at the very root of the disallowance of interest, which strike at the very root of the disallowance of interest, which strike at the very root of the assessment and directly affect the civil rights of the assessee. assessment and directly affect the civil rights of the assessee. assessment and directly affect the civil rights of the assessee.
6.2 The appellate process is ultimately intended to advance the The appellate process is ultimately intended to advance the The appellate process is ultimately intended to advance the cause of justice, and where an assessee expresses willingness to cause of justice, and where an assessee expresses wil cause of justice, and where an assessee expresses wil comply and substantiate the claim, a final opportunity may be comply and substantiate the claim, a final opportunity may be comply and substantiate the claim, a final opportunity may be granted, subject to safeguards, so that the matter is decided on granted, subject to safeguards, so that the matter is decided on granted, subject to safeguards, so that the matter is decided on merits rather than on technical defaults. merits rather than on technical defaults.
6.3 Considering the totality of facts and circumstances, and in the Considering the totality of facts and circumstances, and in the Considering the totality of facts and circumstances, and in the interest of justice, we deem it appropriate to t of justice, we deem it appropriate to set aside set aside the impugned order of the Ld. CIT(A) and order of the Ld. CIT(A) and restore the matter to the file of the restore the matter to the file of the Assessing Officer for fresh adjudication, after granting adequate for fresh adjudication, after granting adequate for fresh adjudication, after granting adequate opportunity to the assessee to furnish evidence and explanations in opportunity to the assessee to furnish evidence and explanati opportunity to the assessee to furnish evidence and explanati support of the unsecured loans and related interest. support of the unsecured loans and related interest.
6.4 However, having regard to the past non However, having regard to the past non-compliance, this compliance, this indulgence is made subject to payment of costs of subject to payment of costs of ₹11,000/ 11,000/-, which shall be deposited by the assessee in the Prime Minister’s Relief Prime Minister’s Relief shall be deposited by the assessee in the Fund within one month from the date of receipt of this order. The within one month from the date of receipt of this order. The within one month from the date of receipt of this order. The assessee is further directed to strictly comply with all notices issued assessee is further directed to strictly comply with all notices issued assessee is further directed to strictly comply with all notices issued by the Assessing Officer within the time prescribed, failing which by the Assessing Officer within the time prescribed, failing which by the Assessing Officer within the time prescribed, failing which the Assessing Officer shall be at liberty to proceed in accordance the Assessing Officer shall be at liberty to proceed in the Assessing Officer shall be at liberty to proceed in with law.
6.5 Accordingly, the ground No the ground Nos. 1 and 2 of the appeal are . 1 and 2 of the appeal are allowed. The other grounds raised on the merits of the issue are not allowed. The other grounds raised on the merits of the issue are not allowed. The other grounds raised on the merits of the issue are not Umashankar Shiwaprasad Modi required to be adjudicated at this stage to be adjudicated at this stage as the matter is restore the matter is restored back to the file of the back to the file of the ld AO.
In the result, appeal of the assessee is allowed for statistical appeal of the assessee is allowed for statistical appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 13/0 /01/2026.