KOMPELLA RAMA SUBRAHMANYA SARMA,KAKINADA vs. INCOME TAX OFFICER, WARD-1, KAKINADA

Briefly stated the facts of the case are that the assessee is an individual filed his return of income for the AY 2017-18 admitting an income of Rs. 4,38,360/- on 30/03/2018. The case has been selected for scrutiny to verify “cash deposits during the demonetization period” under CASS and accordingly notices U/s. 143(2) and 142(1) of the Act were issued from time to time calling for information in respect of the sources for cash deposits made during the financial year 2016-17. Since there was no reply from the assessee, the Ld. AO issued a show cause notice on 16/11/2019 requesting the assessee to explain the sources for cash deposits by way of affixture on 20/11/2019. The Ld. AO also mentioned in the said show cause notice that if the assessee failed to furnish the information as called for, the assessment would be finalized based on the information available on record. Thereafter, the Ld. AO caused enquiries by the Income Tax Inspector and came to know that the assessee has vacated his residential premises. Further, the Ld. AO also obtained information from the SBI, Venkat Nagar Branch, Kakinada U/s. 133(6) of the Act where the assessee maintains his account and wherein the alleged cash deposits were made and observed that the assessee made cash deposits to the tune of Rs. 15,26,000/- during the demonetization period. Considering the fact that the assessee did not respond either to the statutory notices or to the show cause notice issued to the assessee as well as based on the information gathered by the Inspector with regard to the cash deposits made by the assessee during the demonetization period, the Ld. AO proceed to complete the assessment ex-parte U/s. 144 of the Act based on merits of the case and also the material available on record. Accordingly, the Ld. AO treated the cash deposits made by the assessee during the demonetization period of Rs. 15,26,000/- as unexplained money U/s. 69A r.w.s 115BBE of the Act and determined the total income at Rs. 19,64,360/- in the assessment order passed on 30/11/2019. Aggrieved by the order of the Ld. AO, the assessee filed an appeal belatedly before the Ld. CIT(A) with a delay of 84 days.

Before the Ld. CIT(A)-NFAC the assessee explained the reasons for not filing the appeal within the stipulated time and submitted that due to ill health, the appeal could not be filed within the time. In support of his claim, the assessee also produced the medical certificate before the Ld. CIT(A)-NFAC.

Any other grounds that may be urged at the time of hearing.”

On the other hand, the Ld. Departmental Representative [DR] heavily relied on the orders of the Ld. Revenue Authorities. The Ld. DR further submitted that while passing the ex-parte order the Ld. AO has given sufficient opportunities to the assessee and also cause enquiries by the Inspector to find out the sources of cash deposits made by the assessee during the demonetization period. Therefore, the Ld. AO is right in his action in making the addition of Rs. 15,26,000/- as unexplained money U/s. 69A r.w.s 115BBE of the Act. The Ld. DR further submitted that before the Ld. CIT(A)-NFAC even though there is a delay, the onus is on the assessee to explain every day’s delay with proper evidence. The Ld. DR also submitted that since the assessee has not discharged his onus, the Ld. CIT(A)-NFAC has rightly dismissed the appeal of the assessee as inadmissible. In toto, the Ld. DR supported the decision of the Ld. Revenue Authorities and pleaded to upheld the decision of the Ld. AO.

I have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is a fact that on being aggrieved by the addition made by the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC with a delay of 84 days. It is also a fact that with respect to the belated filing of the appeal, the assessee has explained his reasons by stating that due to ill health suffered by the assessee the appeal could not be filed within the stipulated time before the Ld. CIT(A)-NFAC. Further, in support of the reasons advanced by the assessee, the assessee has also produced the Medical Certificate before the Ld. CIT(A)-NFAC and the same is extracted by the Ld. CIT(A)-NFAC in his order. In my considered opinion, the Ld. CIT(A)-NFAC ought to have considered the explanation given by the assessee for belated filing the appeal and ought to have disposed of the appeal on merits. Instead, the Ld. CIT(A)-NFAC dismissed the appeal in- limine. The Bench cannot appreciate the decision of the Ld. CIT(A)-NFAC while dismissing the appeal of the assessee. Therefore, considering the facts and circumstances of the case and the reasons advanced by the Ld. AR as to why the assessee could not file the appeal within the stipulated time before the Ld. CIT(A)-NFAC and also on careful perusal of the documentary evidence ie., Medical Certificate submitted by the assessee before the Ld. CIT(A)-NFAC, I have no hesitation to set-aside the order passed by the Ld. CIT(A)-NFAC and thereby remit the matter to the file of the Ld. CIT(A)-NFAC with a direction to dispose of the appeal on merits. Further, I also hereby caution the assessee to cooperate before the Ld. CIT(A)-NFAC in their proceedings, otherwise Ld. Revenue Authorities are at liberty to pass orders in accordance with law based on the material available on record. It is ordered accordingly.