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Facts
The assessee, an individual operating an Airtel recharge agency, faced an ex-parte assessment order adding Rs. 29,14,290 as unexplained credit under Section 69A. The CIT(A) dismissed the assessee's appeal due to a 35-day delay without addressing the merits. The assessee then appealed to the ITAT, citing lack of electronic communication for the delay.
Held
The ITAT condoned the 646-day delay in filing the appeal, finding sufficient cause due to non-communication of electronic notices and the assessee's limited business operations. It held that the CIT(A) should have admitted the appeal and decided it on merits. The ITAT found the source of the cash deposits to be explained by sales proceeds and remanded the case to the AO for verification.
Key Issues
The key legal issues were the condonation of delay in filing an appeal before the CIT(A) and ITAT, and the justification of an addition under Section 69A for unexplained cash deposits when the assessee claimed the source was from business sales.
Sections Cited
Section 69A, Section 115BBE, Section 144, Section 249(2), Section 249(3)
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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
ORDER DR. MITHA LAL MEENA, A.M.: The appeal by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi[hereinafter referred to as “the NFAC/CIT appeal”] dated 03.02.2023 with respect to Assessment Year 2017-18 challenging therein confirmation of the addition of Rs.29,14,290/- as unexplained credit in violation of principles of natural justice.
2. Having heard both the sides and perusal of record we find that there was delay of 646 days in filing the appeal by the assesee. The Appellant assessee has filed an application for condonation of the delay. The Ld. AR submitted that the Year - 2017-18) assessee is an individual having agency for the "Airtel", Bharti Hexcom Limited for re-charge of SIM for mobiles with very-very low commission/margin of 0.5% to 1.25%. The Ld. AR explained that the appellant was not having any communication of the electronic service of the notices and impugned order. It was only on contacting Shri S.V. Khatri CA, who verified from IT Portal that the appeal of the assessee was dismissed by the learned CIT(A)/NFAC and he immediately filed the appeal against the impugned order with the delay of 646 days. He contended that the Ld. CIT (A) has rejected the appeal of the assessee on short delay of 35 days without adjudicating the matter on merits in the case of exparte assessment order passed by the AO under Section 144 of the Act. The Ld. AR contended that the assesse has sufficient and reasonable cause due to non-communication of the electronic service of the notices and impugned order, the delay may be condoned by taking liberal view considering the peculiars facts and circumstances of the present case in the light of the Apex Court Judgement in the case of the Honble Supreme Court in the case of Collector, Land & Acquisition v. Mst. Katiji& Others (1987) 167 ITR 471 (SC). In support, he filed an affidavit on record. The Ld. DR although objected to the prayer of the assesee but he has no objection to condonation of short delay of 35 days. 2.1 Considering peculiar of the present case, we take a liberal view and we hold that the appellant has sufficient cause for the delay in filing the appeal. In Year - 2017-18) our view, the Ld. CIT(A) ought to have admitted the appeal of the assessee and decided the appeal on merits of the case. The appellant has good arguable case on merits and hence deserves one opportunity which has been denied by the authorities below. Accordingly, the delay is condoned and the appeal is admitted.
3. The Ld. AR submitted that the CIT (A) has passed the exparte order rejecting the condonation of short delay of 35 days in filing the appeal without taking rebuttal of the assessee on record by observing thatthe appeal is filed beyond the prescribed due date by 35 days. That assessee has not submitted specific reason for the delay in filing appeal during the appellate proceeding. Further, the appellant has also not submitted any specific submission and details related to the grounds of appeal during the appellate proceeding. There is a lapse on the part of the assessee regarding filing of the appeal within stipulated time. This shows that there is a delay in filing of the appeal in terms of section 249 (2) of the Act. In such a situation section 249(2) of the Act envisages that there should be sufficient cause for not prosecuting the appeal within the period prescribed. The Ld. CIT (A) stated that it is well-settled law that a distinction must be made between a case where the delay is inordinate and where the delay is of few days only and that the inordinate delay in the instant case clearly demonstrated that this appeal was not prosecuted with due care. Accordingly, Year - 2017-18) he held that the appellant has no "sufficient cause" in terms of section 249(3) of the Act, for not presenting the appeal within the prescribed period. It is well- settled law that an appellant is not entitled to the condonation as a matter of right.
4. In our view the period of 35 days is short period of time for an individual person/assessee who is engaged in the distribution agency for the "Airtel", Bharti Hexcom Limited for re-charge of SIM for mobiles with very-very low commission/margin of 0.5% to 1.25% to become user friendly with the newly introduced faceless functionality of the Department and electronic communications. In our view, the Ld. CIT (A) was not justified in observing that the assessee has no "sufficient cause" in terms of section 249(3) of the Act and rejecting the appeal of the assessee. He ought to have adjudicated the appeal on merits of the case in the case of exparte assessment order passed by the AO.
5. Admittedly, the assessee is having distribution agency of the "Airtel", Bharti Hexcom Limited for re-charge of SIM for mobiles with low commission/margin of 0.5% to 1.25% only. It is seen that the assessee has received an amount of Rs.29,14,290/- as commission out of sale proceeds of Rs.2,49,16,786 on recharge Mobile SIM of “Airtel", Bharti Hexcom Limitedand said sums of commission/ brokerages which were deposited into its bank account, out of such sale proceeds. Further the income of assessee was below Year - 2017-18) the taxable limit as per its knowledge, as such no return of income was filed by the assessee. The Assessing Officer has passed the assessment order passed exparte qua the assessee with the addition of Rs.29,14,290/-for all the amount deposited into the said bank account, u/s 69A r.w.s. 115BBE without taking rebuttal of the assessee.
6. On perusal of the facts as per record and bank statement , we find that the source of cash amounting to Rs.29,14,290/- deposited in to the bank account of assessee, namely M/S. Royal Telecom with Punjab National Bank Current A/c No-7362002100003022 during the period 09.11.2016 to 30.12.2016, was out of recharge of Mobile SIM of Bharti Hexacom Limited (airtel) as the service provider of mobile recharger and channel partner of Bharti Hexacom Limited (airtel) who provided services to various retail customers and out of them collected cash of Rs.2,41,90,540/- which were deposited in to the said bank account during the period of 01.04.2016 to 31-03.2017, including Rs.29,14,290/- during the period of 09.11.2016 to 30.12.2016. Even if the total cash deposit of Rs.2,41,90,540/- is proportionally distributed during the financial year, the deposit for the two months of Nov and Dec. 2016 would be about Rs. 40 lacs available with the assesee which is much higher than the disputed amount of Rs.29,14,290/- Meaning there that the source of the disputed amount of Rs.29,14,290/- deposited into the appellants bank stands explained Year - 2017-18) out of the sale proceed of November and December 2016. The source explained by the assessee is further supported by the following documentary evidence produced before the bench.
Copy Distributor Agreement entered on 8th March 2013 with Bharti Hexacom Limited (airtel).
Copy of BAL Debtors Ledger Report for FY 2016-17.
Sample Tax Invoices of Airtel (there were total number of 692 tax invoices etc. for the period 01.04.2016 to 31.03.2017).
Copy of Bank Statement.
Copy of Cash Flow Statement derived from the bank account.
In view of the aforesaid discussion and considering the peculiar facts of the case, we hold that the revenue authorities were highly unjustified in passing exparte orders in a prima facie case where source of cash deposit stand explained from manner and trend of deposits in the bank statement is being out of the sale proceeds of recharge coupon. We, therefore, accept the grievance of the assessee as genuine. However, it was ex parte order passed by the Revenue authorities and, therefore, we consider it deem appropriate to remand the matter back to the Jurisdictional Assessing Officer (JAO) for limited purpose to verify the deposits in the bank account vis-à-vis sales proceeds of recharge Year - 2017-18) coupon for the period of November and December 2016, after granting adequate opportunity to the assessee.
In the backdrop of the aforesaid discussion, the matter is restored to the JAO.
In the result, the appeal is allowed for statistical purpose.
Order pronounced in the open court on 28/01/2026.