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Facts
The assessee, a retired employee, deposited Rs. 24,91,500/- in cash during the demonetisation period. The Assessing Officer treated this amount as unexplained income under Section 69A of the Income Tax Act as no satisfactory explanation was provided. The CIT(A) upheld this addition.
Held
The Tribunal condoned the delay in filing the appeal due to the demise of the assessee's consultant and the assessee's health issues. The Tribunal admitted additional evidence and directed the Assessing Officer to verify the details and grant the assessee an opportunity to explain the cash deposits.
Key Issues
Whether the addition made by the Assessing Officer on account of cash deposits during demonetisation is justified without proper verification and opportunity to the assessee?
Sections Cited
69A, 139(4), 143(1), 143(2), 250, 253
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Income Tax Appellate Tribunal, SMC-‘C’ BENCH : BANGALORE
Before: SMT BEENA PILLAI & SHRI LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL SMC-‘C’ BENCH : BANGALORE BEFORE SMT BEENA PILLAI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No. 748/Bang/2024 Assessment Year : 2017-18 Shri Amrutur Ningaiah Gangadharaiah, 151, 6th Cross, The Income Tax Bapuji Layout, Officer, Attiguppe, Ward – 3(3)(3), Vijayanagar S.O., Bangalore. Bengaluru North, Vs. Bengaluru – 560 040. PAN: ADPPG1594H APPELLANT RESPONDENT
Assessee by : Shri Ravikiran, CA Revenue by : Shri Ganesh R. Gale, Standing Counsel for Department Date of Hearing : 28-05-2024 Date of Pronouncement : 12-06-2024 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of the order passed by NFAC dated 20.09.2023 for A.Y. 2017-18 on following grounds of appeal: “1. The learned assessing officer has erred in making an addition solely on the basis of a surmise, and has not adduced any evidence or recorded any finding to controvert the claim of the Appellant regarding the source of the cash deposited.
Page 2 ITA No. 748/Bang/2024
The order of appeal passed by the Learned Assessing Officer is grossly opposed to the principles of natural justice, the facts of the case and the applicable law. 3. The Learned Assessing Officer ought to have accepted the bona fide submissions and explanation furnished by the appellant, the particulars regarding the withdrawal of cash having thereby explained the source of such cash deposited. 4. Without prejudice, the Learned Assessing Officer has grossly erred invoking the provisions of Section 69A of the Act which has no application in the facts and under the circumstances of the case. 5. The appellant was prevented from sufficient cause in presenting his case before the First Appellate authority, as the hearing notices issued by the said authority could not be accessed by your appellant due to the demise of the consultant. 6. The appellant craves for leave, to add to, to delete from or to amend the grounds of appeal 7. For the above and other grounds to be urged during the course of hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.” 2. Brief facts of the case are as under: 2.1 The assessee is an Individual filed his return of income u/s 139(4) electronically on 31.03.2018 declaring a Total Income of Rs. 4,39,790/-. The same was processed by CPC u/s 143(1) on 25.07.2018 and resulted in Refund of Rs. 280/- and the same was issued through "ECS" on 03.08.2018.
2.2 The case is selected through CASS (Computer Assisted Selection of Scrutiny) under category "Compulsory" and type of
Page 3 ITA No. 748/Bang/2024 scrutiny is "LIMITED". The reason(s) for selection of scrutiny is(are) as under : a. “Cash deposit during demonetisation period” Notice u/s 143(2) dated 17.09.2018 was issued to the assessee. In response to the notices issued, Assessee's authorised representative e-filed the details of one bank account statement(cash credit). Assessee is a retired employee public sector undertaking (Gas Turbine and Research). He was in receipt of Salary/Pension income and income from other sources during the financial year 2016-17, relevant to A.Y. under consideration. The Ld.AO noted that the assessee deposited cash of Rs.24,91,500/- during demonetisation period in SBN, for which satisfactory explanation was not offered. Accordingly, the Ld.AO treated cash deposited in the bank account in the SBN of Rs. 24,91,500/- as unexplained money u/s. 69A of the Act.
2.3 On an appeal before the Ld.CIT(A), the Ld.CIT(A) dismissed the appeal of assessee by observing that no details were filed and no explanations were provided neither before the Ld.AO nor Ld.CIT(A) by the assessee. The Ld.CIT(A) accordingly confirmed the addition made.
2.4 Aggrieved by the order of the Ld.CIT(A), assessee is in appeal before this Tribunal.
Page 4 ITA No. 748/Bang/2024 3. At the outset, it is submitted that there is a delay of 155 days in filing the present appeal before this Tribunal. The Ld.AR has furnished affidavit for condonation of delay that reads as under:
Page 5 ITA No. 748/Bang/2024 “APPLICATION FOR CONDONATION OF DELAY FILED UNDER SECTION 5 OF THE LIMITATION ACT, 1963 The Appellant most respectfully submits the following for the kind consideration of this Hon'ble Tribunal: 1. An order under Section u/ s 250 of the Income Tax Act, 1961 for the Assessment Year 2017-18 was passed by the learned Commissioner of Income Tax [Appeals], National Faceless Appeal Centre, Delhi on 20.09.2023. It is submitted that the Appellant is uncertain about the date of receipt of the first appellate order and hence out of abundance of caution, the date of CIT[A] order is considered as the date of receipt for the purpose of preferring the present appeal. 2. The Appellant being aggrieved by the aforesaid order is preferring the present appeal under Section 253 of the Act before this Hon'ble Tribunal on 22/04/2024 giving rise to a delay of 155 days. 3. In this regard, the Appellant humbly submits that the appeal proceedings pending before Hon'ble Commissioner of Income Tax (Appeals) were being coordinated and handled by Mr. Anandmurthy, who was a practicing chartered accountant. The said Chartered Accountant has met with untimely death on 1st December 2022. This resulted in non receipt of the notices / orders served by the faceless appellate authority. 4. The e-mail address available in the profile of the Appellant to receive the communications from the department is lakshmanas1990@gmail.com and the said e-mail ID belongs to the consultant of the Appellant and due to the unexpected demise of the consultant, none of the communications with regard to the appeal proceedings have reached your Appellant. 5. The Appellant himself was suffering from chronic back pain and was hospitalized on several occasions in last 3 years and was not aware of the status of the appeal proceedings due to unavailability of the Chartered Accountant who was handling the proceedings on the Appellant's behalf. The Appellant submits he couldn't keep the track of the appeal proceedings due to the unfortunate events resulted from pandemic.
Page 6 ITA No. 748/Bang/2024 6. Further the Appellant respectfully submits that he was not in receipt of any notices physically or electronically in connection with the appeal proceedings as the e-mail address available for communication belongs to the consultant of the Appellant. The Appellant out of utmost diligence would have responded in a timely manner, if he was aware of the receipt of any notices in connection with proceedings. 7. The Appellant only realized about the order u/s 250 by the Commissioner of Income Tax (Appeals) only on 10th March, 2024, when he received a letter from Income tax department seeking recovery of tax. He has approached the present counsel for advice as to the next course of remedy available by the 18th day of April 2024, as his previous consultant has expired. The Appellant was advised to immediately prefer further appeal before the Hon'ble Tribunal. The Appellant thereafter has taken all possible steps and is now filing the present appeal. 8. The Appellant ought to have filed the appeal against the impugned order on or before 19th November, 2023 but is filing the appeal on 22nd April, 2024 due to the aforementioned circumstances and there is a delay 155 days in filing the appeal. The delay is unintentional and for a bonafide reason. 9. The Appellant is a retired officer of Ministry of Defense (DRDO), Government of India and has filed all his returns in most diligent and timely manner. Your appellant also suffers from Cervical and Lumbar Spondylolisthesis, due to which he has constant numbness and leg pain; he also has diabetes and thyroid problem and prostate problems; these health issues pose significant challenges and hardship to your appellant. His only source of income is the pension income and he will face great hardship if the delay of 155 days is not condoned by Hon'ble Tribunal. 10. It is humbly prayed that this Hon'ble Tribunal takes a lenient and compassionate view and condone the delay of 155 days in filing the present appeal against the order of the learned CIT [A] passed under section 250 of the Act before this Hon'ble Tribunal and hear the same on merits for the advancement of substantial cause of justice. 11. It is humbly submitted that if this application for condonation of delay in filing the appeal is not allowed, the
Page 7 ITA No. 748/Bang/2024 Appellant would be put to great hardship and irreparable injury and on the other hand no hardship or injury would be caused to the Respondents if this application of condonation of delay is allowed. Reliance is placed on the decision of the Hon'ble ITAT, Jaipur in the case of Natthi Singh Vs ITO ITA No. 117/JP/ 2023 where the Hon'ble tribunal has condoned a delay of 223 days as the communications regarding the appeal proceedings pending before CIT (A) were directly received in spam folder of the authorized representative of the assessee.” 3.1 In view of the above, the assessee could not file the appeal before this Tribunal well in time and by the time the appeal papers were prepared for filing, there arose delay of about 155 days in filing the present appeal before this Tribunal. The reason for the delay in filing the present appeal was due to reason beyond the control of the assessee. He thus prayed for the delay to be condoned.
3.2 The Ld.DR though objected however could not controvert the reasoning given by the Ld.AR for the delay that was caused in filing the present appeal. We have perused the submissions advanced by both sides in the light of records placed before us.
3.3 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.
Page 8 ITA No. 748/Bang/2024 3.4 It is also submitted by the Ld.AR that there is no malafide intention on behalf of assessee in not filing the present appeal within time. The Ld.DR on the contrary opposed the delay to be condoned.
3.5 Considering the circumstances under which the delay was caused in filing the present appeal before this Tribunal we are of the opinion that there was no malafide intention of the assessee in causing the delay to file the present appeal. It is also that nothing contrary could be established by the revenue before us.
3.6 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. 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.
Page 9 ITA No. 748/Bang/2024 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.”
3.7 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. Accordingly, the delay in filing the present appeal stands condoned.
The Ld.AR submitted that assessee may be granted an opportunity to explain the issue that led to the addition based on additional evidences filed before this Tribunal in the interest of justice.
4.1 The Ld.DR though objected to the argument of the Ld.AR, could not controvert the fact that the Ld.AO could not carry out necessary verification in respect of the cash deposited during demonetisation period based on the circulars issued by CBDT.
We have perused the submissions advanced by both sides in the light of records placed before us.
Page 10 ITA No. 748/Bang/2024 5. It is noted that assessee had made cash deposits in Bank account in SBN to the tune of Rs. 24,91,500/- during the demonetisation period. The authorities below did not verify any documents that was in possession of the assessee to explain the cash deposits and has made addition u/s. 69A of the act. The Ld.CIT(A) also did not consider the application for additional evidences. In our considered opinion, the evidences are for verification in the light of the circular issued by the CBDT and accordingly, the same is admitted.
It is noted that various standard operating procedures has been laid down by the Central Board of Direct Taxes issued from time to time in case of operation clean money. The 1st of such instruction was issued on 21/02/2017 by instruction number 03/2017. The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. 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. These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases.
In one of such instructions dated 09/08/2019 speaks about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not
Page 11 ITA No. 748/Bang/2024 where substantial evidences of vide variation be found between these statistical analyses. Therefore, it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money.
Instruction 21/02/2017 issued by the CBDT suggests some indicators towards verifying the suspicion of backdating of cash. It also suggests indicators to identify abnormal jump in cash trials on identifiable persons as compared to earlier history in the previous year. Therefore in our opinion it is important to examine whether assessee falls into any of these categories and transfer of deposit of cash is not in line with history of transactions in the preceding assessment years.
The assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions, to the facts in present case. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash.
Page 12 ITA No. 748/Bang/2024 10. The Ld.AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to the assessee. The assessee may be granted physical hearing in order to justify its claim. Accordingly, the grounds raised by the assessee stands allowed for statistical purposes. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 12th June, 2024.
Sd/- Sd/- (LAXMI PRASAD SAHU) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 12th June, 2024. /MS /
Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order
Assistant Registrar, ITAT, Bangalore