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Income Tax Appellate Tribunal, ‘C’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Shri Girish Agrawal
Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 31.03.2022 passed for A.Y. 2016-17.
Assessment Year: 2016-2017 Swapan Chandra Mandal 2. The Registry has pointed out that appeal is time barred by 266 days. In order to explain the delay, the assessee has filed an application and thereafter in the paper book filed an affidavit. The stand of the assessee is that he is 71 years and partner in the partnership firm named Kargalighat C.S. Shop. He has engaged an Advocate, namely Shri Ashok Kumar Chandra of Purulia and Shri Udayan Dasgupta, Advocate of Asansol. The records were with them and they have not attended the proceeding beyond the understanding of the assessee. The appeal has been decided ex-parte for want of prosecution without deciding the issues on merit. When assessee came to know about the orders, then, he immediately collected the papers and filed the appeal before the Tribunal.
The ld. D.R., on the other hand, contended that the assessee failed to appear before both the revenue authorities and thereafter failed to file the appeal well in time. It suggests that he is a careless person, who did not handle the income-tax proceeding with diligently. Therefore, no sympathy be shown to the assessee.
With the assistance of the ld. Representatives, we have gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was 2 Assessment Year: 2016-2017 Swapan Chandra Mandal a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Honble High Court as well as before the Honble Supreme Court, then, Honble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: 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.
Assessment Year: 2016-2017 Swapan Chandra Mandal 3. "Every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Assessment Year: 2016-2017 Swapan Chandra Mandal 5. Similarly, we would like to make reference to authoritative pronouncement of Honble Supreme Court in the case of N. Balakrisknan Vs. M. Krishnamurtky (supra). It reads as under: “Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. 5 Assessment Year: 2016-2017 Swapan Chandra Mandal But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.
We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Honble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach.
In the light of the above, we are of the view that the delay has not been adopted by the assessee as a strategy to litigate with the Revenue because by making the appeal time-barred, he will not gain anything. The assessment order and ld. CIT(Appeals)’s order are required to be challenged otherwise he cannot be absolved from the tax liability. It appears there is some bonafide mistake for not appearing before the lower authorities and filing the appeal well in time. Apart from the above, we are going to comment on the merits and how ld. Assessing Officer has framed the assessment order. Thus in our opinion, the delay Assessment Year: 2016-2017 Swapan Chandra Mandal in filing the appeal deserves to be condoned. We accordingly condone the delay and proceed to decide the appeal on merit.
Before proceeding further, we would like to take note of the complete assessment order, which is a non-speaking and sketchy one. It reads as under:-
“Return of income for the A.Y. 2011-12 was electronically furnished on 20.03.2017 disclosing total income at Rs. 7,37,500/-. The case was selected for scrutiny manually and notice u/s. 143(2) was issued on followed by issue of notice u/s 142 (1) on 01.02.2018, which was duly served on the assessee along with questionnaire. In response to these notices, the Assessee has furnished documents time to time. , The assessee has income from business and profession and earned income from investment in commodity.
The case was selected for scrutiny under the purview of CASS on the issue “Whether the cash deposit has been made form disclosed sources”.
On perusal of bank account details of UBI bearing account No. 0707010103140 it was found that there is total debit amount of Rs.72,66,584/- (As expenses) but in the assessee's ITR the total turnover is shown amounting to Rs.6,39,400/- as gross receipt u/s. 44AD of the IT Act 1961 which is not matching with the above debit amount of Rs.72,66,584/-. A show cause notice was issued to the assessee on 06.09.2018 to explain the source of debit amount but till date the assessee neither submitted any documents requisitioned u/s. 142(1) nor submitted any reply of show cause notice, hence assessment order is being passed u/s. 144 of the IT Act 1961 Thus the above debit amount (expenses) is treated as unexplained expenditure u/s.69C of the IT Act 1961 and added back to the total income. Penalty u/s 271(1)(c) is initiated on this issue for concealment of income 3. On perusal of bank account details of OBI bearing account No. 0707010103140 it was found that there is a closing balance of cash in hand is Rs.24,00,490/- but on the perusal of ITR the above mentioned cash in hand was not shown. A show cause notice was issued to the assessee on 06.09.2018 to explain the source of cash in hand but till date the assessee neither submitted any documents requisitioned u/s. 142(1) nor submitted any reply of show cause Assessment Year: 2016-2017 Swapan Chandra Mandal notice, hence assessment order is being passed u/s.144 of the IT Act 1961 Thus the above closing balance amount (expenses) is treated as Cash credit u/s.68 of the IT Act 1961 and added back to the total income. Penalty u/s.271(1)(c) is initiated on this issue for concealment of income. .
4. Copy of order, penalty notice and demand notice is issued to the assessee. Copy of calculation sheet is attached herewith. Sd/- Rajesh Kumar, Ward-3(3), Asansol
With the assistance of ld. Representatives, we have gone through the record carefully. A perusal of the assessment order, specifically paragraph no. 2, the ld. Assessing Officer has alleged that on going through a Bank Account details of UBI bearing No. 0707010103140, it revealed that there was a total debit balance of Rs.72,66,584/- (as expenses). The ld. Assessing Officer has verified this expenses in comparison to the turnover shown by the assessee under section 44AD. This exercise has been made by the ld. Assessing Officer while passing a best judgment assessment order. We failed to appreciate under which law a debit balance from a Bank account could be added to the income of the assessee. The available balance was not treated as an unexplained balance in the Bank account. It might be flowing from the earlier years, out of that the assessee had made the payments. The ld. Assessing Officer was unable to lay his hands on any of the details that such payments were not in connection with the business of the assessee. He simply considered the total withdrawal from the Bank, vis-à-vis the turnover of the assessee and then held that debit balance from the Bank is to be treated Assessment Year: 2016-2017 Swapan Chandra Mandal as unexplained income of the assessee under section 69C of the Income Tax Act. In our view, it is just an absurd conclusion without any cross verification and without collecting any information. It is further found that the ld. 1st Appellate Authority has also again not appreciated any of these circumstances but dismissed the appeal for want of prosecution.
During the course of hearing, ld. D.R. submitted that since the assessee failed to give any explanation and it is an ex-parte order, then, let the issue be set aside again to the file of ld. Assessing Officer.
On due consideration of the facts and circumstances, we are of the view that no doubt in a best judgment, element of assumption will always be invoked, but that estimation could not be yield one and it cannot be used as a tool to punish the assessee. The ld. Assessing Officer is supposed to collect information from the surroundings of the assessee and thereafter formed a reasonable belief that the available income required to be assessed from the assessee. Due to this simple reason, we have reproduced the complete assessment order. Therefore, in our opinion, the addition is not sustainable.
In the second item, the ld. Assessing Officer has observed that cash in hand shown at Rs.24,00,490/- but on perusal of the ITR, the abovementioned cash in hand was not shown. According to the ld. Counsel for the assessee, this is again an incorrect Assessment Year: 2016-2017 Swapan Chandra Mandal assumption at the end of the assessee. The cash in hand in the books is only Rs.4,000/-, rest is available in the accounts and it cannot be construed as cash in hand.
On taking due consideration of these facts, we allow this appeal and delete both the additions.