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Facts
The assessee filed an appeal with the CIT(A) which was delayed by 208 days. The assessee indicated in Form 35 that grounds for condonation of delay would be submitted at the hearing, but the CIT(A) dismissed the appeal without considering this or providing an opportunity for hearing. The ITAT noted that the CIT(A) did not follow due process in dismissing the appeal.
Held
The Tribunal held that dismissing the appeal without giving the assessee an opportunity to present reasons for the delay, especially when indicated in Form 35, is not justified. Technicalities should not override substantial justice.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal due to a delay without providing an opportunity for the assessee to explain the delay, and whether merits of the case should be considered.
Sections Cited
Section 249(3), Section 143(3), Section 254, Section 69A, Section 234
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : Bengaluru (Bangalore
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
Per Prashant Maharishi, Vice President 1. This appeal is filed by Shri Balappa Hanamantappa Nandeppanavar (the assessee/appellant) for the assessment year 2009-10 against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(Appeals)] dated 29.06.2024 wherein the appeal filed by the assessee against the
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assessment order passed u/s. 143(3) r.w.s. 254 of the Income-tax Act, 1961 (the Act) dated 19.5.2022 was dismissed without condoning the delay of 208 days. Therefore the assessee is in appeal before us.
Assessee has raised the following grounds of appeal: -
“1. The orders of the learned CIT(A), NFAC in so far as it is against the Appellant is opposed to law, equity and weight of evidence, probabilities, facts and circumstances of the case 2. The appellant denies himself liable to be assessed at an income of Rs. 10,75,422/- as against the returned income of Rs. 53,070/- for the impugned assessment year, on the facts and circumstances of the case. 3. Grounds on dismissal of appeal on delay: a. The learned CIT(A), is not justified in dismissing the appeal of the appellant by holding that there was no sufficient cause for delay of 208 days in filing the appeal, on the facts and circumstances of the case. b. The learned CIT(A), has failed to appreciate that the appellant has reasonable cause for delay in filing the appeal and ought to have condoned the delay by exercising the powers conferred under section 249(3) of the Act, on the facts and circumstances of the case. c. The learned CIT(A) should have provided another opportunity of hearing in the interest of natural justice before dismissing the appeal, on the facts and circumstances of the case. 4. Grounds on merits of the matter: a. The learned Assessing officer failed to appreciate that the issue was only restricted to the deposit of refund received out of the advance given to purchase of drilling rig, which was originally made out of encashment of fixed deposits, verifiable
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from the bank account available on record, on the facts and circumstances of the case. b. The learned assessing officer was not justified in appreciating that the appellant has paid advances of Rs. 12,50,000/- through banking channels and the refund received partly through banking channels of Rs. 1,10,000/-and cash of Rs. 11,00,000/- was required to be accepted as genuine, on the facts and circumstances of the case. c. The learned assessing officer was not justified in appreciating that the source of cash deposits of Rs. 4,38,600/- was out of the withdrawals from the same bank and alternatively out of the agricultural income of himself and also the HUF, on the facts and circumstances of the case. d. The learned Assessing Officer was not justified in appreciating that the HUF was not required to obtain a PAN as the only source of income was agricultural in nature and the source of income could not have been doubted, to make deposits, of Rs. 15,38,600/-on the facts and circumstances of the case. e. Without prejudice, the income from the agricultural lands ought to have been estimated to arrive at the possible source of funds to make deposits of Rs. 4,38,600/-, on the facts and circumstances of the case. f. The learned Assessing officer failed to appreciate that, it is settled position of law that "consent does not confer jurisdiction" on the facts and circumstances of the case. 5. The appellant denies the liability to pay interest under section 234 of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied is not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case. 3. The brief facts of the case show that the assessee is an individual. He filed his return of income on 03.12.2009 at Rs. 53,070/-. On
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first round of litigation, the matter was restored by the ITAT back to the file of the ld. AO, ld. AO passed an assessment order on 19/05/2022 under section 143 (3) read with section 254 of The Income Tax Act 1961 [ the Act] wherein the total income of the assessee was assessed at ₹ 1,075,422/–. The Only addition was Rs 9,89,114/- arising out of the cash deposit of Rs. 15,38,600/- in Corporation bank savings account of the assessee.
The assessee preferred appeal against the above assessment order before the learned CIT – A wherein the appeal of the assessee was delayed by 208 days and the assessee did not submit request for condonation of delay along with the appeal filed but mentioned that it would be submitted at the time of hearing. The learned CIT – A did not take the case of the assessee for adjudication for the reason that (i) the appeal is barred by limitation of time and there is a substantial delay of 208 days, (ii) request for condonation of delay is the prerequisite for proceeding with the appeal, which is not filed by assessee along with appeal. The learned CIT – A held that as appellant has not provided a plausible explanation for the delay in form no 35 , according to him, the case does not merit consideration and therefore the appeal was dismissed without addressing the ground on the merits of the case. Thus the appeal of the assessee was dismissed.
Assessee aggrieved with the appellate order, is in appeal before us. The learned authorised representative submitted that :-
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i. Ld. CIT – A is not justified in dismissing the appeal of the assessee by holding that there is no sufficient cause for delay of 208 days in filing of the appeal without calling for reasons for delay in filing of the appeal, when in form number 35 assessee has specifically submitted that same would be submitted at the time of hearing. Thus according to him the learned CIT – A did not provide any opportunity for considering the request of the assessee for condonation of delay on merits. He specifically referred to Form no 35 wherein at Serial no. 14, assessee stated that there is a delay in filing of the appeal and with respect to the request for condonation of the delay and its grounds would be submitted at the time of hearing. He submitted that not a single notice was issued by the learned CIT – A even to consider the prayer of the assessee of submitting the grounds for condonation of delay at the time of hearing. Therefore the order of the learned CIT – A not admitting the appeal of the assessee on account of delay in filing of appeal by 208 days is not justified. ii. On the merits of the case it was submitted that the only addition made by the learned assessing officer's is with respect to the addition of ₹ 989,114/– as explained cash deposit under section 69A of the act. He referred to paragraph number 2 of the assessment order stating that assessee has deposited ₹ 1,538,600 in his savings bank account with Corporation bank from 1 April 2008 to 31 March 2009. Out of that the learned
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assessing officer has granted some relief and considered a sum of ₹ 1,189,114 as unexplained money. The learned CIT – A further allowed relief of Rs 2 Lakhs on account of agricultural income thereby addition of only ₹ 989,114/– was in dispute. The assessee approached the ITAT which remanded back the issue to the file of the assessing officer as assessee was found to be owner of 82.67 acres of land jointly as well as in his individual capacity. The assessee submitted an affidavit dated 5/3/2021 based on which assessee also produced copies of the records of rights of agricultural land held by the assessee and his family members of 62.38 acres of agricultural land. This was over and above the land held by the assessee of around 20 acres in his individual capacity. However there was no details of agricultural income therefore assessee was asked to produce the details of the same. The assessee submitted that the learned CIT – A has given a relief of ₹ 20,000/- per acre as agricultural income and therefore on the total landholding of the assessee and his family members, the assessee should get this relief. It was stated that the learned CIT – A has granted relief only up to the land area of 10 acres. However the assessee could not produce any proof of sale of agricultural produce and expenditure incurred on agricultural operation carried on in the 62.30 acres of joint family land, the learned assessing officer did not give any relief.
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iii. The further claim of the assessee that assessee has also received the advances returned for Borewell rig in cash amounting to ₹ 1,140,000 which was earlier paid by cheque. To examine this a summons were issued on 15/2/22 to the other party where the address was not found proper and fresh summons were issued in response to which the other party appeared along with the assessee. In the statement recorded under section 131 of the act the other party has confirmed that cash of ₹ 1,140,000 was returned by the employer of the deponent to the assessee. However as he could not produce any receipt issued to the assessee or any other documentary evidence, the learned assessing officer did not believe. Thus, sum of ₹ 1,140,000/– is also available with the assessee for depositing cash in his bank account. Thus, the claim of the learned authorised representative is that when the original advance given by the assessee is returned by the other party in cash, the credit for the same should have been granted to the assessee as the original advance were paid through banking channel. iv. It was further stated that the cash deposit of ₹ 438,600/– was out of the withdrawals from the same bank should also have been granted credit to the assessee is a source of the funds deposited in the bank account. v. The third claim is that the agricultural income of the joint family should also be considered as available with the
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assessee for depositing in the bank account. Therefore he submitted that even the addition on the merits of ₹ 989,114/– is not sustainable.
The learned departmental representative vehemently submitted that assessee has filed appeal before the learned CIT – A which is delayed by 208 days and did not file any request for condonation of delay and therefore the appeal of the assessee was dismissed by the learned CIT – A not admitted. Therefore now this appeal cannot be decided on merits.
We have carefully considered the rival contention and perused the orders of the learned lower authorities. We find that in this case admittedly the assessee has filed appeal before the learned CIT – A late by 208 days. This is evident from form number 35 filed by the assessee wherein at serial number 14 the assessee himself admitted that appeal is delayed. Further the details on the ground for condonation of delay is to be mentioned at serial number 15, assessee submitted that it would be submitting it at the time of hearing. Based on this, the learned CIT – A considered that as the appeal itself is filed by assessee is not coupled with the request for condonation of delay, same is not admitted and hence dismissed. We find that if in column number 15 of Form No 35, assessee has mentioned that such ground for condonation of delay would be submitted at the time of hearing, the assessee at least deserves a one opportunity of hearing to state
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that as he has not filed application for condonation of delay, why appeal of the assessee should not be dismissed as not admitted. Even the learned CIT – A has not granted this opportunity to the assessee. In fact, in the interest of the Justice, the learned CIT – A should have issued/granted an opportunity of hearing to the assessee to substantiate grounds for condonation of delay. If, the learned CIT – A was not satisfied that there is a sufficient reason for filing appeal late by 208 days, in that case perhaps the order of the learned CIT – A would have been justified. However, we find that process is absent in the appellate order. In Judicial matters, judicial process is also equally important. Therefore we do not find any justification to sustain the order of the learned CIT – A in dismissing the appeal of the assessee as not admitted. We also state that when the substantial justice is pitted against the technicalities, preference must always be given to the cause of substantial justice. Accordingly, we direct assessee to file a petition stating reasons for delay in filing of appeal, which may be considered by the ld CIT (A) and thereafter decide in accordance with the law. Thus Ground No 3 of the Appeal of assessee is allowed.
Ground No 4 & 5 of the Appeal are on merits of the case. The ld. CIT (A) has not decided this issue on merits, therefore, as the admission of appeal is itself remitted back to the file of the ld. CIT (A), decision on merits of the case would be putting cart
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before the horse. Therefore, both these grounds on merits are premature.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 13th day of November, 2024.
Sd/- Sd/-
( KESHAV DUBEY ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER VICE PRESIDENT
Bengaluru, Dated, the 13th November 2024.
/Desai S Murthy /
Copy to:
Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bengaluru.
By order
Assistant Registrar ITAT, Bengaluru.