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Facts
The assessee, a non-filer, deposited ₹66,66,000/- cash, leading to reopening of his case under section 147 of the Income Tax Act, 1961. The Assessing Officer (AO) levied a penalty of ₹15,39,000/- under section 271D for accepting cash deposits. The CIT(A)/NFAC subsequently dismissed the assessee's appeal due to a 50-day delay in filing, without adjudicating on the merits.
Held
The ITAT condoned the 50-day delay in filing the appeal before the CIT(A), accepting it was due to the assessee's serious medical condition and not intentional. Citing Supreme Court precedents on prioritizing substantial justice over technicalities, the Tribunal set aside the CIT(A)'s order and remanded the case back for a fresh decision on merits after condoning the delay. The assessee was also directed to pay a cost of ₹1,000/- for his unresponsiveness to lower authorities.
Key Issues
Whether the CIT(A)/NFAC was justified in dismissing the appeal solely due to a 50-day delay without condoning it, and whether the penalty proceedings under section 271D are sustainable if the underlying assessment under section 147 is challenged.
Sections Cited
Section 147, Section 148, Section 151, Section 142(1), Section 144B, Section 269SS, Section 271D
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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI RAMA KANTA PANDA, VICE- & Ms. ASTHA CHANDRA
I.T.A.No. 2186/PUN/2025 (Assessment Year 2018-2019) Pravin Shriram Tapare, ITO, Ward-1(5), K 23/4, Navjeevan Colony, Aurangabad. Hudco N 11, Aurangabad, vs. Maharashtra. PAN : AKRPT 3031 B (Appellant) (Respondent) For Assessee : Shri Girish Ladda (virtual) For Revenue : Smt. Indira R. Adakil, Addl.CIT Date of Hearing : 04.12.2025 Date of Pronouncement : 01.01.2026 ORDER PER : ASTHA CHANDRA, JM
This appeal of the assessee is directed against the order of National Faceless Appeal Centre/ Commissioner of Income Tax (Appeals), Delhi [“CIT(A)/NFAC”], dated 29/07/2025 for the Assessment Year (AY) 2018-19.
Briefly stated the facts are that assessee is an individual, identified as a non-filer. Based on the information received by the Department about cash deposits of ₹ 66,66,000/- in the assessee‟s bank account, case of the assessee was reopened u/s. 147 of the Income Tax Act, 1961 („Act') by issue of notice u/s. 148 on 07/04/2022 requiring him to file return of income.
In response to the notice u/s. 148, assessee did not file his return within the stipulated time limit, but later filed it on 04/07/2023 declaring income of ₹ 1,57,560/-. On verification of information during the assessment proceedings, it was found that actual cash deposited was ₹ 16,66,500/-. Statutory notices u/s. 142(1) were issued and served upon the assessee from time to time calling for necessary documentary evidence and to justify the financial transactions. In response thereto, assessee filed written submissions and stated that cash deposited in the bank account was received from his relatives and out of his personal savings. The contention of the assessee was accepted by the then Ld. Assessing Officer (“AO”) and he completed assessment u/s. 147 r.w.s. 144B of the Act vide order dated 08/02/2024 accepting the returned income of ₹1,57,560/-. Thereafter, Ld.AO initiated penalty proceedings by issue of notice u/s. 271D, dated 08/02/2024 on the ground that assessee has contravened the provisions of section 269SS of the Act by accepting and depositing cash in his bank account. According to Ld.AO, assessee accepted deposit of ₹ 15,39,000/- and he therefore imposed penalty of ₹ 15,39,000/- u/s. 271D of the Act.
Aggrieved, assessee carried the matter before the Ld.CIT(A) /NFAC. Appeal was filed with a delay of 50 days.
Ld.CIT(A)/NFAC did not condone the said delay and dismissed the appeal in limine without adjudicating the case on merits observing the said delay to be inordinate and for the reason that assessee failed to demonstrate that sufficient cause existed for non-filing the appeal within due date. 4. Dissatisfied, assessee is in appeal before this Tribunal raising the following grounds of appeal:- 1) The notice u/s 148 for A.Y 2018-19 was issued on 07.04.2022 by obtaining approval u/s 151 from Pr. CIT
1. Nashik Pune whereas prescribed authority was CCIT being issued after three years from end of A.Y.2018-19 and therefore, the proceedings u/s 147, in the course of which the impugned penalty proceedings u/s 271D, were initiated, itself are null and void in the eyes of law and therefore, the consequential penalty proceedings u/s 271D are also unsustainable in law. Reliance placed on direct judgment of PUNE ITAT Karia Builders ITA 2401/PUN/2024. 2) On the facts of the case and in law, it may please be held that the penalty proceedings u/s 271D are unsustainable since the very foundation of assessment proceedings u/s 147 itself is invalid. 3) On the facts of the case and in law, it may please be held that entire penalty proceedings u/s 271D are patently illegal, void ab initio and the same may please be quashed. 4) Without prejudice to above grounds, On the facts of the case and in law, the AO has erred in levying penalty u/s 271D Rs 15,39,000, hence the same may please be deleted. 5) Without prejudice to above grounds, the Id. CIT(A) erred in dismissing the appeal by not condoning the delay in filing appeal before him, hence the order of CIT(A) may please be set aside and appellant prays before Hon ITAT that the penalty u/s 271D Rs. 15,39,000 may please be deleted. 6) The appellant craves leave to add, amend, delete or substitute its grounds of appeal and lead evidence.
5. Ld.AR submitted that admittedly appeal has been filed before the Ld. CIT(A)/NFAC with a delay of 50 days and however, the delay of 50 days is not an inordinate delay and the assessee had a reasonable/sufficient cause for not being able to file the appeal within the stipulated time limit. He submitted that the Ld.CIT(A)/NFAC has not condoned the delay as the assessee in Form No. 35 did not explain the reasons for delay, but only mentioned that “due to some unavoidable reason, I was not filed appeal in time”. He submitted that the delay occurred due to critical medical condition of the assessee during the relevant period from 03/08/2024 to 15/10/2024. He submitted that assessee was under continues medical treatment and was advised rest and avoid physical and mental stress, which prevented him from attending his regular affairs including timely filing of the appeal. Upon recovery, the assessee immediately took necessary steps to file the appeal before the Ld. CIT(A)/NFAC. The delay was, therefore, neither intentional nor deliberate and not attributable to any lack of bonafide or negligence on the part of the assessee. Learned counsel for the assessee placed on record an affidavit of the assessee along with medical document to support his above contention. He pleaded that the assessee has a strong case on merits and given an opportunity, the assessee is now in a position to substantiate his case by filing the requisite details/documents before the Ld.CIT(A)/NFAC. He further submitted that liberty may be granted to the assessee to raise an additional legal ground before the Ld. CIT(A)/NFAC challenging the validity of assessment and the penalty proceedings which has been raised by the assessee before the Tribunal for the first time. He therefore requested that in the interest of justice, matter may be restored to the file of Ld. CIT(A)/NFAC with a direction to condone the delay and to decide the appeal afresh on merits as well as legal grounds, that may be raised by the assessee before him after affording opportunity of hearing to the assessee.
6. Ld. Departmental Representative (DR), on the other hand, supported the order of Ld. CIT(A)/NFAC.
We have heard Ld. representatives of the parties and perused the material available on record. Admittedly, there is a delay of 50 days in filing of appeal before the Ld. CIT(A)/NFAC. It is also seen that assessee has not explained the reasons for such delay before the Ld. CIT(A)/NFAC. Even in Form No.35, assessee has only stated that “due to some unavoidable reason, I was not filed appeal in time”. We find that Ld. CIT(A)/NFAC has dismissed the appeal of the assessee for the reason that there is an inordinate delay in filing of the appeal and the assessee failed to demonstrate the delay with sufficient cause. He, therefore dismissed the appeal of the assessee in limine being barred by limitation without deciding the issues on merits of the case. Before us, Ld.AR, has placed an affidavit along with medical certificate issued by the concerned hospital of the assessee demonstrating that the delay was not intentional, but occurred on account of serious medical condition of the assessee during the relevant period. We therefore, find some force in the contention of the assessee that there was sufficient cause which led to delay in filing of the appeal before the Ld. CIT(A)/NFAC.
We find, the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) has held that when substantial justice and technical considerations are pitted against each other, 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 non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out 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.
We find recently the Hon‟ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339 has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”
In the light of the above decisions of Hon‟ble Supreme Court cited (supra), we deem it proper to set aside the order of the Ld. CIT(A)/NFAC and restore the matter back to his file with a direction to condone the delay and decide the appeal afresh after giving due