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Facts
The assessee filed an appeal before the Tribunal with a delay of 601 days. The delay was attributed to the assessee's lack of access to the email account where notices were sent and a change in auditors. The assessment order for AY 2017-18 involved an addition of Rs. 5,08,500/- under section 69A for unexplained money deposited during demonetization. The assessee claimed the assessment order was bad and the CIT(A) upheld the addition without verifying details.
Held
The Tribunal condoned the delay of 601 days, citing the Supreme Court's liberal approach to condoning delays and the assessee's reasonable cause. On merits, the Tribunal noted that the lower authorities did not consider CBDT circulars regarding demonetized cash deposits. Therefore, the issue was remitted to the Assessing Officer (AO) to verify sales made by the assessee that were deposited in bank accounts, considering the relevant CBDT circulars.
Key Issues
Whether the delay of 601 days in filing the appeal should be condoned? Whether the addition made under section 69A for unexplained money deposited during demonetization is valid, considering the non-consideration of CBDT circulars by the lower authorities?
Sections Cited
144, 69A, 115BBA, 250, 51 of the Limitation Act of 1963, Order XXI of the Code of Civil Procedure, 1908
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Income Tax Appellate Tribunal, SMC-‘B’ BENCH : BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 03.06.2022 passed by NFAC, Delhi for A.Y. 2017-18.
At the outset, the Ld.AR submitted that there is a delay of 601 days in filing the present appeal before this Tribunal. The assessee has furnished an affidavit in support of the delay explaining the reasons which is scanned and reproduced as under:
The Ld.DR though opposed for the condonation of delay could not controvert the submissions made therein. We have perused the submissions advanced by both sides in the light of records placed before us.
The reason that caused delay in filing appeal before this Tribunal was because the assessee was not having access to the mail id mentioned in Form 35 to which all the notices and the impugned order were sent by the office of Ld.CIT(A).
It is noted that upon the Auditor being changed by the assessee, the ex-parte order by the Ld.CIT(A) was informed to the assessee.
The Ld.AR submitted that immediately the assessee approached the present AR and an appeal was filed before this Tribunal. He prayed that the assessee was under a bonafide belief that, the notices forwarded by assessee to the then tax consultant was being taken cognizance of by the erstwhile tax consultant. He thus 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.
On the contrary, the Ld.DR though vehemently opposed the condonation of delay was of the opinion that the issue should be decided on merits.
We have perused the submissions advanced by both sides in the light of records placed before us.
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.
The assessee was not aware about the appellate order being passed ex-parte. In our view, the assessee has made out a reasonable cause for the delay that caused in filing the present
Page 7 of Tribunal. Nothing to establish any such 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.
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 Page 8 of sufficient cause for not preferring the appeal or making the application within such period.”
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 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.
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 Page 9 of demonetization period. It is also noted that the assessment order is bad 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 Ld.AO thus issued 133(6) to the bank in which cash was found to be deposited during the demonetisation period amounting to Rs. 43 Lakhs. The Ld.AO made 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 115BBA.
Aggrieved by the order of the Ld.AO, assessee preferred appeal before the Ld.CIT(A). The Ld.CIT(A) without verifying the details upheld the addition made by the Ld.AO.
Aggrieved by the order of the Ld.CIT(A), the assessee preferred appeal before this Tribunal.
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 sales made by the assessee that is deposited into the bank accounts during the year under Page 10 of 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 in accordance with law. Accordingly, the grounds raised by the assessee stands partly allowed. In the result, the appeal filed by the assessee stands partly allowed. Order pronounced in the open court on 01st August, 2024.