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Income Tax Appellate Tribunal, SMC-A BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
ORDER
PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order passed by the CIT(A) vide DIN & Order No: ITBA/APL/S/250/2023-24/1062957587(1) dated 19/03/2024 for A.Y. 2017-18 on following grounds of appeal: “The Appellant objects to the Assessment Order on the following grounds in so far as it is prejudicial to the Appellant as it is opposed to law and circumstances of the case:-
1. The CIT (A) was not correct in not condoning the delay in filing of Appeal by 1138 days, though the Appellant has explained reasons in the condonation application filed along with Appeal Memo.
2. The CIT (A) was not correct in confirming the addition made by A.O. to the extent of Rs. 4,25,900/- being 10% of cash deposits of Rs. 42,59,000/-as unexplained business receipts, without verifying Appellant's nature of business.
Page 2 of 8 ITA No. 1235/Bang/2024
The CIT (A) was not correct in not appreciating the fact the cash deposits are out of cash sales of Petrol and Diesel 'for the captioned year.
The CIT (A) was not correct in confirming the disallowance of deduction under chapter VIA of Rs.1,50,000/- made by AO, though the same was claimed in the Return of Income 5. The CIT (A) was not correct in not giving sufficient opportunity to Appellant as all the notices were uploaded in E — Proceeding system and no physical notices were sent. Hence the Appellant could not submit the reply to the notices issued in E — Portal. 6. The Appellant objects the levy Interest u/s.234B and C consequent to above addition. 7. The Appellant craves leave to add, to alter, to amend or to delete any of the grounds that may be urged at the time of hearing of the Appeal Wherefore on the above grounds and on such other grounds the Appellant prays the Appellate Authority to set aside the Assessment order and may pass such other as the Appellate Authority deems fit.” 2. The brief facts of the case are that assessee filed return of income on 07/11/2017 declaring a total income of Rs. 9,39,650/- consisting income from business & profession and income from other sources. The case was selected for scrutiny and statutory notices were issued to the assessee.
3. During the course of assessment proceedings, it was noticed that the total sales / gross receipts reported by the assessee is at Rs. 22.23 crores and it was noted that the assessee ought to have got the books of accounts audited and furnished the audit report along with the return of income and there was no audit report furnished along with the return of income. As per the information available with the department, the assessee had deposited cash in its two bank accounts as under: 1) State Bank of India A/c. No. 34816152569 – Rs. 39,21,500/- 2) State Bank of India A/c. No. 35700978257 – Rs. 3,37,500/- 4. The assessee was asked to furnish the source of the above cash deposits during the demonetisation period. A proposal for computing the assessment u/s. 144 was sent to the assessee on 23/11/2019 but there was no response from the assessee side till the date of passing of the assessment order. In the absence of any clarifications, for the source of cash deposits in the bank account during the demonetisation period, the assessing officer treated the 10% as unexplained business receipts which was Rs. 4,25,900/- and completed the assessment on 21/12/2019. Against the assessment order, the assessee filed appeal before the Ld.CIT(A) on 15.02.2023 with a delay of 1138 days stating the reasons which is incorporate by the CIT(A) in his order which is as under: “2.1 It is seen from Form 35 submitted that the order u/s 144 was passed on 21.12.2019 and the same was served upon the appellant along with notice of demand on 21.12.2019. However, the appellant has filed the appeal on 15.02.2023. Thus. it is seen that there is a delay of 1138 days in filing of appeal. The appellant has made the request for condonation of delay for the reasons herein there: “The Appellant is moving this application for condonation of delay in fling of appeal before Commissioner of Income Tax (Appeals) NFAC on the following grounds. The AO has uploaded order u/s 144 passed on 21.12.2019 in E proceedings Systems on 21.12.2019 and Hard copy was not received by the Appellant and has not received SMS communication also to the registered mobile. The Appellant should have fled the Appeal before CIT (A) with in the 30 days from the receipt of the order i.e. by 20.01.2020. The Appeal is being fled Appeal before CIT (A) now. Hence there is a delay of 1138 days in fling the Appeal before C/T(A). The Appellant has not received any communication through portal channels, E-Mail and Mobile number as the same was relating to Auditors of the Appellant. After the death of previous Auditor his son was looking after the fling of tax return. However, Auditor did not inform about the scrutiny proceedings and notices issued. Hence the Appellant was not aware of the notices issued and not replied to the notices. As the Appellant has not replied to the notices, the AO has completed the Assessment u/ s.144 on best judgment basis and the same was uploaded under E proceeding system. However hard copy of the same was not served on the Appellant. The Appellant has come to know about the assessment proceedings when the demand recovery letter was sent by speed post during January 2023. Thereafter the Appellant has consultant its Auditor and given the order to Tax Professional for fling of Appeal before CIT (A). Hence, there is a delay in fling of Appeal by 1138 days, which is beyond the control of the Appellant. Based on the above the Appellant prays CIT (A) to Condon the delay in fling the Appeal of 1138 days and admit and adjudicate the Appeal.””
From the reasons stated above by the assessee for condoning the delay, the Ld.CIT(A) observed that there was no “sufficient cause” as stated in section 249(3) of the IT Act. The assessee was unable to file within the specified period as per section 249(2) and r.w.s. 5 of the limitation act, the delay was not condoned. Further, the Ld.CIT(A) issued notices to the assessee but there was no response from the assessee side. Accordingly, the Ld.CIT(A) upheld the order passed by the assessing officer and dismissed the appeal of the assessee.
Aggrieved from the above order, the assessee filed appeal before the ITAT with a delay of 39 days. In this regard, the assessee has filed an affidavit dated 20/06/2024 showing the delay caused for filing appeal before the ITAT which is as under: “I SHIVANNA NAGARAJA S/O. T.G.SHIVANNA aged about 65 Years, presently residing at 3778, Taluk office Road, Dodballapura, BANGALORE RURAL, 561203. Do hereby declare as follows. That the Deponent has filed Appeal in the Hon'ble Tribunal against the order of CIT (Appeals) NFAC dated 19.03.2024 and ITO Ward 6(3)(4),Bangalore dated 21/12/2019, The Appeal case was being handled by my Authorized Representative Mr. Venkatesh CA. I have totally dependent on my Authorized representative, who has filed-'his Appeal Papers. During the Appellate Proceedings, the I have not followed up with my Authorised Representative, as I was fallen sick during 1st week of March 2024, diagnosed with Hyper tension and variation in sugar level. I had undergone for medication and taken bedrest. I was slowly recovered and started for coming to office during second week of June 2024. However the CIT (A) has passed an order stating that the Appellant has not utilized opportunity given and also failed to respond to the notices issued during the course of Appellate Proceedings and disposed of the Appeal on 19.03.2024 and the same was uploaded in E- proceeding system.
Page 5 of 8 ITA No. 1235/Bang/2024
Due to ill-health, I could not follow up with my Authorised Representative. Hence the Authorised Representative could not submit any reply to notice. However, after recovery from my ill- health during second week of June 2024, I came to know about CIT (A) order through his Authorised Representative. Accordingly, I have approached Legal professional for filing of Appeal before Hon'ble ITAT. Bangalore. Accordingly the legal professional has prepared the Appeal papers by taking all the details and documents from my earlier AR and filing Appeal before Hon'ble ITAT now. In view of the above reasons, the Deponent could not file Appeal within due date, and there is a delay of 40 days, which is beyond the control of the deponent. Hence the Deponent submits that the same may be condoned and the Appeal filed be allowed in the interest of equity and natural justice.”
6.1. The Ld.AR prayed for the delay to be condoned as there is no malafide mistake / intention that could be attributable on the assessee in causing the delay in filing the present appeal before this Tribunal.
6.2. On the contrary, the Ld.DR though vehemently opposed the condonation of delay and relied on the order of the lower authorities.
We have perused the submissions advanced by both sides in the light of records placed before us. From the affidavit filed by the assessee, we noted that there was no malafide intention on behalf of assessee for not filing the present appeal within time. In our view, the assessee has made out a reasonable cause for the delay that is caused in filing the present appeal 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.
7.1. 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.”
7.2. Considering the rival 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 appeal 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.
7.3. 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 appeal before this Tribunal. Accordingly, we condone the delay in filing the present appeal before this Tribunal.
On merits of the case, it is noted that the addition made by the Ld.AO is in respect of cash deposited during the demonetization period. It is also noted that the assessment order is passed u/s. 144 of the act as assessee did not furnish the relevant details as called for.
As the assessee failed to furnish the relevant details as called for during the assessment proceedings. The AO thus issued 133(6) to the bank in which cash was found to be deposited during the demonetisation period amounting to Rs 42,59,000/- The AO made adhoc addition in respect of the amount deposited during the demonetisation period in the hands of the assessee u/s. 68 of the act and invoked the provisions of section 115BBE and assessment was completed u/s 144 of the Income Tax Act..
We note that the authorities below have not considered the CBDT circulars in order to verify the same. Even the Ld.AO during the assessment proceedings has not considered the relevant CBDT circulars that was issued for the purposes of verifying the demonetized cash deposited during the year under consideration. In the interest of justice, we remit this issue to the Ld.AO to verify the cash dposited into the bank accounts during the year under consideration in accordance with the following circulars whichever is applicable to the facts of the case. a) The 1st instruction was issued on 21/02/2017 by instruction number 03/2017. b) The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. c) The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F.no.225/145/2019-ITA.II.
The assessee is also directed to furnish all relevant evidences in support of its claim. The Ld.AO shall verify the documents and consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, the grounds raised by the assessee stands partly allowed. In the result, the appeal filed by the assessee stands allowed for statistical purpose with a cost of Rs. 5,000/- to be paid by the assessee and produce the proof of payment before the AO.
In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 18th October, 2024.