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Facts
The assessee, a senior citizen and full-time agriculturist, deposited substantial cash in his bank account during the demonetization period (Nov-Dec 2016) without filing an income tax return for AY 2017-18. The Assessing Officer (AO) treated Rs. 3,50,500/-, deposited in the bank account, as unexplained money under section 69A of the Act and also taxed interest income of Rs. 17,554/-, completing assessment under section 144. The CIT(A) partly allowed the appeal, giving relief to the extent of Rs. 2,50,000/-, but confirmed the addition of Rs. 1,00,500/-.
Held
The Tribunal noted that the CIT(A) had verified the assessee's claim of agricultural activity as genuine and had explained the cash deposit of Rs. 2,50,000/-. The Tribunal found it inconsistent to not consider the remaining cash deposit of Rs. 1,00,500/- as explained, given that the source of income (agriculture) was accepted. Therefore, the Tribunal directed the AO to delete the addition of Rs. 1,00,500/-.
Key Issues
1. Whether the remaining cash deposit of Rs. 1,00,500/- could be treated as unexplained income when the source of income (agriculture) was accepted as genuine by the lower appellate authority. 2. Whether the delay of 29 days in filing the appeal should be condoned based on the assessee's health issues and other reasonable causes.
Sections Cited
69A, 115BBE, 144, 250, 253(5), 234A, 234B, 139, 142(1)
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Income Tax Appellate Tribunal, “SMC’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. Addl/JCIT(A)-6, Kolkata dated 13.6.2025 vide DIN & Order No. ITBA/APL/S/250/2025-26/1077018259(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the Assessment Year 2017-18.
The assessee has raised the following grounds of appeal:
At the outset, the ld. A.R. of the assessee submitted that there is a delay of 29 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee also drew our attention to an affidavit dated 5.11.2025 in original sworn before the notary public stating the reasons for the delay along with a medical certificate dated 1.8.2025 issued by Dr. U.K. Shetty, Shree Clinic, Sorab, which are reproduced below for ease of reference and convenience:
Sri Jamballi Shivappa, Shivamogga Page 6 of 12 4. On going through the above affidavit, we find that the main cause for delay in filing the appeal was the health issues of the assessee for which the assessee had also submitted the medical certificate from Dr. U.K. Shetty, Shree Clinic, Sorab. The ld. A.R. also submitted that the delay is unintentional and no benefit can be attributed to the assessee in filing the appeal belatedly. He thus prayed to condone the short delay and requested to consider the issues raised by the assessee on merits.
On the contrary the ld. D.R. vehemently objected for granting the condonation of delay and requested to dismiss the appeal in limine.
We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly before us. We are also of the consideration that the assessee has demonstrated sufficient cause for delay in filing the appeal before the Tribunal. It is to be noted that u/s 253(5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeals within the prescribed period. The explanation therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing the appeal within the prescribed time.
6.1 While considering a similar issue the Apex 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.
Sri Jamballi Shivappa, Shivamogga Page 7 of 12 (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.
6.2 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 nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in 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 Sri Jamballi Shivappa, Shivamogga Page 8 of 12 condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.
6.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein 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”.
6.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 29 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 29 days has to be condoned and accordingly we condone the delay occurred in filing the appeal before this Tribunal and admit the appeal for adjudication.
Brief facts of the case are that the assessee is a senior citizen full time agriculturist and as per the information available, the assessee had deposited substantial cash in the bank account during the demonetization period i.e. between 9.11.2016 to 30.12.2016 but did not file income tax return for the assessment year 2017-18. As the assessee failed to file return of income u/s 139 of the Act and also failed to comply with the terms of the notice issued u/s 142(1) of the Act, the information regarding cash deposits made by the assessee was called for from the banks. The total cash deposit made by the assessee during the financial year 2016-17 as per the bank account statement was Rs.3,50,500/-, out of which cash deposited during the demonetization period was only Rs.2,50,000/-. During the course of assessment proceedings, the show cause notice was issued. However, assessee did not furnish any books of accounts or other documents to demonstrate that cash deposited in the bank accounts are accounted/recorded in the books of accounts. The assessee had also failed to explain the nature and source of the credits into the bank accounts. Therefore, the total sum of credits found in the assessee’s bank account amounting to Rs.3,50,500/- was treated as unexplained money u/s 69A of the Act and brought to tax u/s 115BBE of the Act. Further, as the assessee had also earned interest income of Rs.17,554/-, the same was also brought to tax under the head “income from other sources”. Thus, the AO completed the assessment proceedings u/s 144 of the Act on a total assessed income of Rs.3,68,054/-.
Aggrieved by the order of AO passed u/s 144 of the Act dated 25.10.2019, the assessee preferred an appeal before the ld. Addl/JCIT(A)/CIT(A).
Sri Jamballi Shivappa, Shivamogga Page 10 of 12 9. The ld. Addl/JCIT(A)-6, Kolkata partly allowed the appeal of the assessee by giving relief to the extent of Rs.2,50,000/- after calling for the remand report from the AO.
Again aggrieved by the order of the ld. Addl/JCIT(A)-6, Kolkata, the assessee has filed the present appeal before this Tribunal challenging the confirmation of addition u/s 69A of the Act amounting to Rs.1,00,500/-
Before us, the ld. AR of the assessee vehemently submitted that when the ld. Addl./JCIT(A) found that the assessee’s claim of carrying agricultural activity was correct and genuine, the he should not uphold the addition of Rs. 1,00,500/- u/s 69A of the Act while delete the addition of Rs. 2,50,000/- in respect of the cas deposits.
The ld. Standing Counsel for Revenue relied upon the order of the ld. Addl./JCIT(A).
We have heard the rival submissions & perused the material available on record. We take note of the fact that during the course of Appellate proceedings as well as during the remand report proceedings, the assessee contended that he is a full time agriculturist and the owner of 4 acres of land. The assessee also submitted a copy of RTC in support of his claim. The assessee was cultivating Paddy & Maize and earning Rs.3 lakhs to Rs.3.5 lakhs per year. It was also verified from the bank statement of the assessee that total credits during the previous year in assessee’s bank account was Rs.3,56,994/-, which includes Rs.3,50,500/- cash deposit and balance of Rs.6,494/- was interest on savings bank account. The ld. Addl./JCIT(A) found that the assessee’s claim of carrying agricultural activity was correct and genuine. Further the ld. ld. Addl/JCIT(A)-6, Kolkata held that even Sri Jamballi Shivappa, Shivamogga Page 11 of 12 otherwise, cash amounting to Rs.2,50,000/- in today’s standard of life is not a very big amount and anybody with some means of earning can accumulate so much of cash over few years and accordingly, the cash of Rs.2,50,000/- deposited in the bank account was held to be explained. During the course of Appellate proceedings & remand proceedings, assessee’s bank statement had been verified and found that the assessee had deposited an amount of Rs.1,00,500/- within 4 days of withdrawal of cash deposit. We are of the considered opinion that once the source of income of the assessee being agricultural activity was found to be correct & genuine by the ld. Addl/JCIT(A), then we could not understand why only Rs. 2,50,000/- remain explained & not entire Rs. 3,50,500/- that too without bringing any adverse material on record. Therefore, we are of the considered opinion that once the source of income had been fully explained by the assessee & the same is also found to be genuine, then confirmation of balance addition u/s 69A amounting to Rs.1,00,500/- is not justified. The assessee claimed to be earning Rs.3 lakhs to Rs.3.5 lakhs per year by cultivating paddy and Maize which is also not refuted by the ld. Addl/JCIT(A)-6, Kolkata and therefore we find no merits in confirming the additions of balance Rs.1,00,500/- u/s 69A of the Act and accordingly, we direct the AO to delete Rs.1,00,500/- also.
In the result, appeal filed by the assessee is allowed.