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Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi both dated 08/05/2024 in DIN Nos. ITBA/NFAC/ S/250/2024-25/1064723183(1) and ITBA/NFAC/S/250/2024-25/ 1064723270(1)for the assessment year 2013-14.
At the outset, it was noticed that there was a delay in filing the appeal by the assessee before us for 1 day. The assessee filed the condonation petition explaining the delay in filing the appeal. It was stated that the assessee was under the belief that the due date for filing the appeal will be 8/7/2024 as 7/7/2024 was Sunday. Thus, the delay of one day has occurred in filing the appeal. Accordingly, the ld. AR prayed to condone the delay.
On the other hand, the ld. DR did not raise any objection to the condonation of the delay but brought to our notice that the assessee has been non-cooperative right from the assessment stage till CIT(A) stage. According to the ld. DR, the assessee has neither appeared during the assessment proceedings nor filed the appeal against the asst. order before the ld. CITA() within the statutory time limit. As such, the delay in filing the appeal before the ld. CIT(A) for more than 14 months and, therefore, the ld. CIT(A) did not admit the appeal filed by the assessee. As such, the ld. DR in sum and substance opposed to condone the delay in filing the appeal by the assessee but left the issue on the discretion of the Bench.
In the rejoinder, the ld. AR contended that the assessee stays in village and is a small job worker. Furthermore, the assessee does not know much about the provisions of the Act, and, therefore, he always depends upon the Tax Consultant. According to the ld. AR, the assessee engaged a Tax Consultant to pursue the matter before the ld. CIT(A), who failed to make necessary compliances. As per the ld. AR, there was no fault attributable to the assessee that the assessee willfully did not make any compliance during the appellate proceedings.
Besides the above, the ld. AR contended that the revenue in the absence of any reply from the assessee has treated the entire amount of cash and bank deposits as income of the assessee after giving marginal relief of Rs.20,000/- only.
According to the ld. AR, deposits in the bank do not per se represents the income of the assessee. The ld. AR prayed before us submitted that the assessee has a strong case on merit and, therefore, no addition is to be made to the income of the assessee on account of technical glitches. Thus, the ld. AR prayed to condone the delay occurred in filing the appeal before the ITAT as well as before the ld. CIT(A) and restore the issue to the file of the AO for fresh adjudication as per the provisions of law.
We have heard the rival contentions of both the parties and perused the materials available on record. Regarding the delay before us, we condone the same, as it is just for one day only. Admittedly, the delay before the CIT(A) is substantial and, therefore, such delay should be justified by the assessee based on cogent reasons.
7.1 Be that as it may be, the assessee admittedly has been non co- operative during the assessment proceedings but the question arises whether in the absence of any cooperation from the assessee, the deposits made by the assessee in the bank can be treated as income of the assessee. In this connection, it is important to note the submission of the assessee as appearing in the statement of facts, which is extracted below:
“7. A cash flow statement has been drawn with regard to these deposits, accordingly, the appellant was having sufficient cash balance to make these deposits on the date of deposit. A copy of the cash flow statement is enclosed for perusal. The total of cash deposits is at Rs.26,80,000/- whereas the cash withdrawals are at Rs.26,30,020/- during the financial year relevant for the subject assessment year.
8. The appellant has not accumulated the deposits at the end of the financial year or there is no substantial increase in the bank balance, which can be attributed to the concept of unexplained money'. There are .
Page 4 of 7 withdrawals also almost equivalent to the deposits made and the bank accounts were showing debit balances on several occasions, which goes to show that the appellant was using the bank account as a platform for receipt and payments in his business and nothing else. It is unscientific to treat the entire receipts as unexplained money without considering the element of withdrawals involved. The receipt and payments are routine transactions in appellant's business and no suspicion can be attached to push them as `unexplained money'.”
7.2 From the above submission, it appears that there was regular cash withdrawals as well as cash deposits in the bank and in such facts and circumstances presumption can be drawn that the cash withdrawal by the assessee has been utilized for redeposit in the bank until and unless it is based on record that the cash withdrawal has been used for some other purposes such investment, personal expenses etc. However, no such finding is arising from the order of the AO. Thus, apparently the contention of the ld. AR appeals to us that the assessee has a strong case on merit. In our considered view, a meritorious case should not be dismissed on account of technical lapses. We also note that the Hon’ble Gujarat High Court in the case of S.R. Koshti Vs. CIT reported in 276 ITR 165 has held as under: 18. The position is, therefore, that, regardless of whether the revised return was filed or not, once an assessee is in a position to show that the assessee has been over-assessed under the provisions of the Act, regardless of whether the over- assessment is as a result of assessee’s own mistake or otherwise, the CIT has the power to correct such an assessment under section 264(1) of the Act. If the CIT refuses to give relief to the assessee, in such circumstances, he would be acting de hors the powers under the Act and the provisions of the Act and, therefore is duty-bound to give relief to an assessee, where due, in accordance with the provisions of the Act.
In the present case, the respondent-CIT has nowhere stated that the petitioner is not entitled to the relief under section 10(10C) of the Act. In fact, the said position is undisputed. The Assessing Officer himself had passed an order under section 154 of the Act, granting such relief. In the circumstances, even the order under section 264 of the Act made on 29-3-2004, cannot be sustained.
A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly .
Page 5 of 7 instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of Vinay Chandulal Satia v. N.O. Parekh, CIT [Spl. Civil Application No. 622 of 1981 dated 20-8-1981], has laid down the approach that the authorities must adopt in such matters in the following terms: "The Supreme Court has observed in numerous decisions, including Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361, State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749 and Babutmal Raichand Oswal v. Laxmibai R. Tarte AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt."
7.3 From the above it is revealed that the income of the assessee should not be over assessed even if there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income.
7.4 We also note that the Hon’ble Gujarat High Court in the case of Vareli textile industry versus CIT reported in 154 Taxman 33 wherein it was held as under: It is equally well-settled that where a cause is consciously abandoned (as in the present case) the party seeking condonation has to show by cogent evidence sufficient cause in support of its claim of condonation. The onus is greater. One of the propositions of settled legal position is to ensure that a meritorious case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, at least prima facie, whether the assessee has or has not a case on merits.
7.5 In view of the above and after considering the facts in totality, we are of the view that it is a fit case where the delay in filing the appeal by the assessee before the learned CIT-A deserves to be condoned. Accordingly, we set aside the finding of the learned CIT-A and restore the issue to the file of the AO for fresh adjudication as per the provisions . of law. Hence, the ground of appeal of the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Now coming to 1285/Bang/2024 in assessment year 2013-14
As the quantum appeal has been set aside to the file of the AO for fresh adjudication, the penalty levied by the AO u/s 271(1)(c) of the Act also goes as it has no base to stand. Accordingly, we quash the penalty levied u/s 271(1)(C) of the Act and direct the AO to initiate the penalty proceedings as per the provisions of law after framing the fresh assessment u/s 147 r.w.s. 143(3) of the Act in accordance with the directions as given above. Thus, the penalty levied by the AO is dismissed as infructuous.
In the result, the appeal filed by the assessee is dismissed as infructuous.
Order pronounced in court on 20th day of September, 2024