HARUNBHAI NOORMAMD JINDANI,JAMNAGAR vs. ITO, WARD 2(7), JAMNAGAR, JAMNAGAR

On the other hand, Ld. DR for the revenue, opposed the prayer for condonation of delay and submitted that mistake committed by the Advocate/ Tax consultant, should not be treated sufficient cause, hence the appeal should be dismissed, as the assessee failed to explain the sufficient cause.

I note that the power to condone the delay is discretionary and the discretion must be judicially exercised. The Tribunal would be justified in refusing to admit a time-barred appeal, if there was no sufficient cause for not presenting the appeal within the limitation period. However, the words ‘sufficient cause’ should receive a liberal construction so as to advance substantial justice where no negligence nor inaction nor want of bona fides is imputable to the applicant. The ‘Sufficient cause for non-compliance’, must be demonstrated by the assessee. I find that mistake of the lawyer or accountant may be a good reason for condoning delay. Therefore, I note that the reasons given in the affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing this appeal. Having heard both the parties and after having gone through the affidavit as well the delay condonation, application, I am of the considered opinion that in the interest of justice, the delay deserves to be condoned. I, accordingly, condone the delay.

On merit, facts of the assessee`s case are as follows. In the assessee`s case, as per instructions issued by CBDT, in the form of SOP dated 21/02/2017, verification was carried out, in respect of the transactions of cash deposits made in bank account relating to demonetization period and it was found that the assessee has not filed return of income for assessment year (A.Y.) 2017-18. Therefore, a notice u/s 142(1) of the Act was issued on 21.12.2017, requesting the assessee to file the return of income, which was duly served to the assessee. In response to the notice the assessee had not made any compliance. Accordingly, the assessee`s case was selected for scrutiny, keeping in view the instruction issued as SOP for handling of cases related to substantial cash deposit during demonetization period dated 05/03/2019. Further, in order to appropriately 3 Harunbhai N. Jindani assess the income under verification, a letter u/s 133(6) of the Act 1961 dated 24/05/2019 was also issued to Commercial Co-operative Bank Ltd, Grain Market Branch and Department of Post, Indian Post, Jamnagar. The assessing officer noticed that as per the information available in AIMS module on ITBA, the captioned assessee had deposited cash amounting to Rs.10,48,000/-, during demonetization period in his bank account No. 001010100022173 of Rs.7,50,000/- with the Commercial Co- operative Bank Ltd., Grain Market Branch and in account no. 1623606655 of Rs.2,98,000/- with Post Office, Jamnagar. The information received under section 133(6) of the Income Tax Act, 1961 matches with the information already available in AIMs in ITBA Module. The following accounts have been found in the name of the assessee:

The assessee had failed to file his return of income for the year under consideration and the assessee did not submit reply before the assessing officer, therefore, assessing officer framed the assessment order under section 144 of the Act, and made addition in the hands of the assessee on account of cash deposited in banks of Rs. 12,48,000/-, and cash so deposited was treated as unexplained cash credit u/s 68 of the Act and taxed u/s 115BBE of the Act.

Further, on verification of the bank account statements, it was noticed by the assessing officer that assessee earned interest of Rs.3,508/- on saving bank account and of Rs.83,462/- from term deposit. Total amount of interest income earned by the assessee during the year under consideration was to the tune of Rs.86,970/- ( Rs.3,508 + Rs.83,462), which was also added to the total income of the assessee.

Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal.

Shri Vimal Desai, Learned Counsel for the assessee, argued that during the assessment proceedings, the assessee has submitted the possible evidences before Harunbhai N. Jindani the old Assessing Officer to prove the cash deposit in the bank account to the tune of Rs. 10,48,000/- during the demonetization period. However, total aggregate cash deposited by the assessee to the tune of Rs. 12,48,000/-, was disallowed by the assessing officer. The Ld. Counsel submitted that although the order was framed under Section 144 of the Act, by the assessing officer, however, the assessee had submitted all the possible evidences before the old assessing officer as well as, before the Ld. CIT(A). The assessee has produced cash book for A.Y. 2014-15, 2015-16 and 2016-17 to explain the source of cash deposit, where the sufficient cash was available. The Ld. Counsel further submitted that out of total cash deposit of Rs. 12,48,000/- and only 10,48,000/- was deposited in the demonetization period. The Ld. Counsel also submitted that the assessee is engaged in a small business i.e. sale of milk and in this kind of business (sale of milk) the customer pay him cash only and such amount of cash was deposited in the bank account. Therefore, the assessee had filed all the possible evidences before the lower authorities, however, the addition was not deleted by lower authorities.

Alternatively, Ld. Counsel for the assessee also submitted that considering the smallness of amount Rs. 7,48,000/-, the addition sustained by the learned CIT(A), a profit element should be added in the hands of the assessee.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A)

I note that on account of past savings, the learned CIT(A) had already deleted the addition to the tune of Rs.3,00,000/-. However, up to some extent, I find that the assessee has explained the source of the cash deposit, by submitting some documents and evidences and the fact that the assessee is engaged in the business of sale of milk, therefore, such small assessee is not required to maintain the books of accounts. Hence, the alternative before me is to uphold the profit element, out of the cash deposited in the bank account, as the entire cash deposit in the bank account should not be treated profit of the assessee. Therefore, taking into account the peculiar facts and circumstances, I estimate 10% profit element in the cash so deposited, which was sustained by the learned CIT( A) during the demonetization period, which comes to Rs. 74,800/- (10% of Rs. 7,48,000/-). Therefore, I direct the Assessing Officer to make the addition in the hands of the assessee to the tune of Rs. 74,800/-.