JITHENDER REDDY POLU,NALGONDA vs. ITO, WARD-1, SURYAPET

Any other ground or grounds that may be urged at the time of hearing.

The appellant preferred an appeal before the Learned Commissioner of Income-tax (Appeals) [CIT(A)]. However, the appeal was decided exparte without affording a proper opportunity of hearing. There was a gap of more than three years between the first hearing notice (28/01/2021) and the second notice (26/03/2024), leading the appellant to believe that the matter was dropped. Being aggrieved, the appellant is before this Hon'ble Tribunal.”

Succinctly stated, the AO based on information received through Actionable Information Monitoring System (“AIMS”) that the assessee had made cash deposits aggregating to Rs.13,16,010/- in his bank accounts during the demonetization period, i.e., 09/11/2016 to 31/12/2016, but had not filed his return of income, issued notice under section 142(1) of the Act, dated 08/03/2018 calling upon him to file his return of income in compliance thereto. However, the assessee failed to file his return of income in compliance to the aforesaid notice. Thereafter, the AO issued notice under section 142(1) of the Act, dated 07/05/2019 calling for certain information, in compliance the assessee vide his reply filed on 30/05/2019 submitted that he is a Kisan (farmer) deriving income only from agricultural operations which were exempt under section 10(1) of the Act.

During the course of the assessment proceedings, the AO observed that the assessee during the subject year had made substantial cash deposits/credits in his bank accounts aggregating to Rs.76,98,151/-, as under:-

Ostensibly, the assessee vide his letter, dated 30/05/2019 (filed in response to notice under section 142(1) of the Act, dated 07/05/2019) had come forth with an explanation regarding the source of the cash deposits of Rs.5,27,000/-, viz., (i) out of the amount raised against the gold loan account No.132230100063723: Rs.1,17,000/-; (ii) amount received towards agricultural debt waiver from State Government: Rs.12,500/-; (iii) cash withdrawals from savings bank account No.62257843425 with SBI: Rs.3,13,400/-; and (iv) out of miscellaneous cash in hand available: Rs.84,800/-, but the AO being of the view that the said explanation of the assessee was not supported by any corroborative material declined to accept the same. Accordingly, the AO vide his order under section 144 of the Act, dated 05/12/2019 determined the income of the assessee at Rs.76,98,151/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the assessee despite having been afforded 3 opportunities, i.e., vide notices, dated 29/12/2020, 19/03/2024 and 29/11/2024 failed to respond and participate in the proceedings before the CIT(A), therefore, the latter finding no infirmity in the view taken by the AO upheld the addition made by him and dismissed the appeal.

The assessee aggrieved by the order of the CIT(A) has carried the matter in appeal before us.

Shri Nagaraju, Advocate, the Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the same involved a delay of 175 days. Elaborating on the reasons leading to the delay, the Ld. AR had drawn our attention to the application filed by the assessee seeking condonation of delay, dated 24/11/2025 accompanied with his “affidavit” of even date. The Ld. AR submitted that the assessee had neither received the notices intimating the fixation of the appeal nor the order passed by the CIT(A) dismissing the appeal. The Ld. AR submitted that as the assessee is a farmer who does not maintain his own email Id, therefore, he had provided the same belonging to his counsel in the “Memorandum of Appeal”, i.e., Form-35, which, but for bona fide reasons had remained omitted to be taken cognizance of by him. Elaborating further on his contention, the Ld. AR submitted that the assessee had gathered about the dismissal of his appeal only when he was in receipt of a notice, dated 07/07/2025 through EMS Speed Post on 24/07/2025 from ReFAC, Verification Unit, 6th Floor, B-Block, IT Towers, AC Guards, Hyderabad. The Ld. AR submitted that on learning about the dismissal of the appeal by the CIT(A) the assessee had immediately deposited the appeal fees on 04/08/2015 and without any further loss of time filed the present appeal through online mode after overcoming certain technical glitches involved in uploading of the requisite documents. The Ld. AR submitted that as the delay in filing of the present appeal by the assessee who being a farmer, is not a regular assessee and is unaware about the intricacies of the Income Tax proceedings had crept in because of bona fide reasons and not on account of any lackadaisical approach, therefore, the same in all fairness be condoned.

Per contra, Ms. Aditi Goyal, Learned Senior Departmental Representative (for short “Ld. Sr-DR”) objected to the seeking of the condonation of the delay by the assessee.

We have given a thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties regarding the delay involved in filing of the present appeal before us. In our view, as there are justifiable reasons explaining the delay involved in filing of the present appeal, therefore, the same in all fairness merits to be condoned. Our aforesaid view that a liberal approach should be taken while considering an application seeking condonation of the delay involved in filing of an appeal is supported by the judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025. The Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income-Tax Appellate Tribunal, Raipur Bench, had observed, that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal. We thus, in terms of our aforesaid observations, condone the delay involved in the filing of the present appeal.

Coming to the merits of the case, we find that as the assessee depsite having been afforded sufficient opportunity by the AO had failed to substantiate based on supporting documentary evidence the cash deposits/credits aggregating to Rs.76,98,151/- made in his bank accounts during the subject year, therefore, the entire amount was added by treating it as his unexplained money under section 69A of the Act.

We find that the assessee after filing the appeal before the CIT(A) on 06/01/2020, had in the course of the physical hearing of the appeal on 10/01/2020 filed before him certain documents to support his explanation regarding the source of the cash deposits/credits in his bank accounts, viz., (i) affidavit/confirmation of the assessee, dated 01/01/2020, wherein he had elaborated of having been divested of a sufficient opportunity to explain the source of the cash deposits/credits in his bank accounts before the AO, and also had come forth with an explanation regarding the source of the aforesaid amounts, Page 1 to 4 of APB; (ii) affidavit, dated 10/01/2020 of Shri Polu Jithender Reddy (father of the assessee), wherein he had deposed to have given an amount of Rs.20 lakhs to his son during the Financial Year 2015-16 and Financial Year 2016-17, which in turn was sourced out of his agricultural income, Page No.5 of APB; (iii) affidavit/confirmation of Smt. Polu Sujatha (wife of the assessee), wherein she had deposed about her agricultural land holding of 7.305 acres and had stated to have supported the assessee by an amount of Rs.10 lakhs during the Financial Year 2016-17 out the cash available with her from agricultural activities, Page Nos.6 to 8 of APB; and (iv) copies of the explanation, dated 30/05/2019 about the cash deposits of Rs.5,27,700/- made by the assessee in his bank account during demonetization period. However, we find that there is no whisper in the CIT(A) order about the aforementioned affidavits/documents that were filed by the assessee before him in the course of the appellate proceedings (during physical hearing).

Be that as it may, we are of firm conviction that the CIT(A) while disposing of the appeal of the assessee had failed to consider the documents/depositions that were filed by the assessee in the course of the proceedings before him. Apart from that, we find that though the AO had in the assessment order observed that the assessee had failed to respond to the show cause notice (SCN), dated 17/09/2019 (Para-4 of the assessment order), but the said observation is found contrary to the affidavit, dated 01/01/2020 filed by the assessee before the CIT(A), Page Nos.2 to 4 of APB, wherein it is deposed by him that the notice, dated 17/09/2019 received from the ITO, Ward-1(1), Suryapet was duly replied by his counsel and an explanation was filed by email on 26/09/2019.

We have given thoughtful consideration and are of firm conviction that as the explanation supported by documentary evidence/affidavits filed by the assessee before the lower authorities had either not been properly considered or lost sight of by them while passing their respective orders, therefore, the matter in all fairness requires to be restored to the file of the AO with a direction to readjudicate the case. Needless to say, the AO shall in the course of the set aside proceedings afford a reasonable opportunity to the assessee to support his explanation/contentions based on a fresh documentary evidence, if any.

Before parting, we may herein observe that as the assessee had failed to remain vigilant regarding his Income Tax proceedings before the authorities below, therefore, his conduct needs to be deprecated. Accordingly, we impose a cost of Rs.5,000/- on the assessee which he is directed to deposit within a period of 15 days from the date of the receipt of this order with the Prime Minister’s National Relief Fund.

In the result, appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.