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Facts
The assessee's appeal arises from an order by the CIT(A) for AY 2017-18, pertaining to an addition of Rs. 14,00,000/- as unexplained cash credit under Section 68 of the Income Tax Act. The assessee had filed the appeal with a delay of 164 days, attributing it to an employee leaving and lack of intimation regarding the order.
Held
The Tribunal condoned the delay of 164 days, citing reasonable cause and relying on Supreme Court judgments regarding condonation of delay. On merits, the Tribunal found that the assessee had sufficient cash balance as of April 1, 2016, and that the addition sustained by the CIT(A) was not justified.
Key Issues
Whether the addition of Rs. 14,00,000/- as unexplained cash credit is justified, and whether the delay in filing the appeal should be condoned.
Sections Cited
68, 69, 143(1)
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Income Tax Appellate Tribunal, MUMBAI “J (SMC
Before: SMT. BEENA PILLAI, & SHRI RATNESH NANDAN SAHAY
O R D E R
PER SMT. BEENA PILLAI, JM :
The present appeal arises out of the order dated 19.09.2023 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [‘CIT(A)’ in short] for A.Y. 2017-18.
The grounds of appeal
raised by the assessee read as under:
1. In the facts and circumstances of the case and in law, the Ld. National Faceless Appeal (NFAC), CIT(Appeals) has erred in sustaining addition made by the Ld. Assessing Officer of Rs.14,00,000/-as unexplained cash credit under Section 68 of the Act. 2. The appellant craves leave to add, alter, delete or modify all or any of the above grounds of appeal. All the above grounds are without prejudice to each other.”
3. At the outset, the Ld. AR submitted that there is a delay of 164 days in filing the present appeal before this Tribunal. The assessee has filed an application for condonation of delay along with affidavit. It is submitted therein that the order passed by the CIT(A) was uploaded on the portal and no copy of the order was served on the assessee either physically or through email. The assessee has submitted in the affidavit that an employee who was looking after the appeal work, left the job during October, 2023 and therefore, assessee could not be informed about the order passed. The assessee has thus prayed for the delay to be condoned in the interest of justice. 3.1 On the contrary, the ld. DR though vehemently objected to the condonation petition and could not controvert the submissions of the assessee in the affidavit. 3.2 From the affidavit filed by the assessee, there does not arise any malafide intention on behalf of assessee for not filing the present appeal before this Tribunal.
3.3 In our view, the assessee has made out a reasonable cause for the delay that is caused in filing the present appeals before this Tribunal. Nothing to establish any contrary intention has been filed by the revenue before this Tribunal. In our opinion there is a sufficient cause for condoning the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 in support of his contentions.
3.4 We place reliance on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:- “The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits". The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life- purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that :
1. 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
2. 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. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”
3.5 Considering the submissions by both sides and respectfully following the observation by Hon’ble Supreme Court, we find it fit to condone the delay caused in filing the present appeals as it is not attributable to the assessee. In any event, though the procedural law pertaining to the limitation has been drafted to construe it strictly, the fact remains that, considering such technicalities will not advance the cause of justice.
3.6 We take support from the observations of Justice Krishna Iyer wherein he has quoted at various occasion while dealing with technicalities that “any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities”. Even Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 has laid down a ratio of similar principles. Respectfully following the thoughts propounded by Late Hon’ble Justice Krishna Iyer, as well as various decisions of Hon’ble Supreme Court on similar issues, I condone the delay caused in filing the present appeals before this Tribunal.
Accordingly, the delay of 164 days in filing the present appeal before this Tribunal is hereby condoned.
On merits of the case, it is submitted that the assessee deposited cash during the demonization period amounting to Rs.14 lakh. It is submitted that, the assessee had sufficient cash as on 01.04.2016 for which reliance is placed on the cash book statement filed by the assessee for the period starting from Financial Years 2013-14 to 2016-17 placed at pages 6 to 16 of the paper book. The ld. AR also relied on the bank statement of Indian Bank and State Bank of India for the period 01.04.2015 to 31.03.2018 placed at pages 26 to 65 of the paper book, wherein there are cash withdrawals in order to substantiate the cash in hand as per the cash book at the end of each Financial Years 2013-14 to 2016-17. 4.1 The ld. AR submitted that, the assessee deposited cash of Rs.24,25,000/- during the entire previous year relevant to assessment year under consideration. The Ld. AO accepted the deposits of Rs.10,05,000/- deposited upto 09.11.2016 as arising out of cash in hand. It is submitted that the cash deposited subsequent to the demonetization date amounting to Rs.14 Lakh was disallowed even though the assessee had cash balance of Rs.23,61,680/- as on 01.04.2016. 4.2 The Ld. AR prayed that the requirement as per Section 69 stands discharged as assessee had sufficient cash in hand as on 01.04.2016 which has not been questioned by authorities in the preceding assessment years.
4.3 On the contrary, the ld. DR relied on the orders passed by the authorities below.
We have perused the submission advanced by both sides in light of record placed before us.
Admittedly, the assessee has not maintained any books of account and it is noted that the cash deposited were from savings of her personal allowance without there being any adverse inference drawn by the authorities below in respect of same.
We note that at page no.71 of the paper book, the assessee provided following details.
Cat Item Amount A.4 Cash deposit between 9th Nov. 2016 and 30th 14,00,000 Dec. 2016 (as reported) A.5 Cash deposit between 9th Nov. 2016 and 30th 14,00,000 Dec. 2016 (as confirmed) B.1 Cash out of earlier income or savings 9,44,000 B.2 Cash out of receipts exempt from tax NIL B.3 Cash withdrawn out of bank account 4,56,000 B.4 Cash received from identifiable person (with NIL PAN) B.5 Cash received from identifiable person (without NIL PAN) B.6 Cash received from un-identifiable persons NIL 5.1 It was submitted that during the preceding assessment year, the source of income were the same, being from loans and advances and cash in hand. It is submitted in the paper book that, the assessee filed return of income for the immediately preceding assessment years, the details of which are as under:
Assessment Return Income Assessed Income Remark Year 2016/2017 3,138,460 3,138,460 u/s.143(1) 2015/16 3,095,190 3,095,190 u/s.143(1) 2014/15 1,419,600 1,419,600 u/s.143(1)
5.2 At pages 6 – 16 of the paper book, the assessee has produced the cash book from 01/04/2013 to 31/03/2017 along with the capital account for year ending on each of the financial year preceding to the year under consideration. Further on perusal of the cash book, it is noted that the cash balance of the assessee has steadily increased in the past years and without there being any corroborative material to disbelieve the same, it would unreasonable not to accept the explanation given by the assessee.
5.3 We also note that immediately after the demonetization an assertion was given by the Government that cash deposits upto Rs.2.5 Lakh shall not be inquired in case of small businessman, housewife, artist, labour etc. Thereafter, an announcement was made by the Government on 12.11.2016 that deposit of notes upto Rs.2.5 Lakh made by March, 2017 will not be subject to inquiries. In the present facts of the case, the assessee before us is a senior citizen lady and without there being any material with the Revenue to disbelieve the cash in hand that arises out of the preceding assessment years, it would be not appropriate to disbelieve the submissions of the assessee. 5.4 For the assessment year under consideration, it is noted at page 81 that, the assessee deposited cash in following manner:
Date Amount Rs. April 2016 120,000 May 2016 85,000 August 2016 2,00,000 September 2016 2,00,000 October 2016 4,00,000 10,05,000 5.5 It is also noted that, the assessee had withdrawn sum of Rs.2 Lakh and Rs.2.5 Lakh in the month of June and July, respectively. The AO rejected the explanation of deposit of cash between 09/11/2016 to 31/12/2019 and added it as unexplained cash credit under Section 68 of the Act. It is noted that, assessee had cash balance as on 01.04.2016, out of which the assessee deposited sum of Rs.10,05,000/- which was accepted by the Ld. AO. However, balance of Rs.14 Lakh was disallowed. 5.6 In our view, the Ld. AO accepted the partial cash deposited out of total cash in hand and partial rejection of the same cannot be accepted. There is nothing on record brought in by the Ld. AO to establish that the cash available with the assessee deposited post demonetization date was unaccounted cash. It is further noted that immediately preceding assessment year, there has been no scrutiny and Section 143(1) has been passed accepting the return of income filed by the assessee wherein the assessee had cash in hand. There was no alternative proceeding initiated by the authorities under any other provisions of the Act and therefore, the cash in hand at Rs.23,61,680/- as on 01.04.2016 cannot be doubted for the year under consideration. 5.7 Under such circumstances, we do not find any merit in the addition sustained by the CIT(A), only for the reason that the assessee do not have any business activity. Accordingly, the appeal filed by the assessee on this solitary issue stands allowed. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on 23.09.2024
Sd/- Sd/- [RATNESH NANDAN SAHAY] [BEENA PILLAI] ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: /09/2024 Prabhat