KODANDARAM NADAVATI,NELLORE vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE -1, NELLORE

This appeal filed by the assessee is directed against the order dated 27.01.2023 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2016-17.

Although a number of grounds have been raised by the assessee, however, these all relate to the order of the learned CIT(A)-NFAC in confirming the addition of Rs.63,48,500/-to the total income of the assessee by not condoning the delay of 138 days in filing of the appeal.

Facts of the case, in brief, are that the assessee is an individual and filed his return of income for the impugned A.Y on 14.03.2-017 declaring total income of Rs.3,08,380/- and Page 1 of 5 agricultural income of Rs.85,700/-. The case was selected for limited scrutiny to verify as to whether the cash deposits made are from disclosed sources or not. The assessment was completed u/s 143(3) on 5.12.2018 wherein the returned income of the assessee was accepted. However, later on it was found that the assessee had deposited cash of Rs.38,45,766/- and Rs.42,68,500/- in SB Account Nos. 35416150604 and in 30241553661 respectively maintained with SBI. During the course of assessement proceedings it was explained vide letter dated 19.11.2018 that the account number 35416150604 belongs to M/s. Vijyaya Indane Gas Agency wherein the assessee has been working in the capacity of Manager and the cash of Rs. 38,45,766/- was accounted for. However, he had not produced any explanation in connection with the 2nd deposit of Rs.42,68,500/-. It was further observed from the CIB details that the assessee has sold an immovable property for Rs.20,80,000/- during the financial year 2015-16 but had not offered any capital gain in his income tax return. Accordingly, the case of the assessee was reopened after recording reasons u/s 147 of the Act and notice u/s 148 of the Act was issued on 29.3.2021 and was served on the assessee through email.

Since there was no response from the side of the assessee, notice u/s 142(1) of the Act was issued and served on the assessee. Again, there was no response from the side for which a reminder letter was issued and served on the assessee asking him to explain as to why the order should not be completed ex-parte. Thereafter, the assessee appeared before the Assessing Officer and filed certain details. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. In absence of any response from the Page 2 of 5 assessee regarding the cash deposit of Rs. .63,48,500/-, the Assessing Officer added the same as unexplained and undisclosed income u/s 69A of the Act. Similarly, in absence of any submission in connection with the capital gain earned by him on sale of immovable property for a value of Rs.20,80,000/- , the Assessing Officer made addition of the same as LTCG. The Assessing Officer accordingly determined the total income of the assessee at Rs.66,56,880/-.

The assessee filed an appeal before the learned CIT (A) NFAC with a delay of 138 days. However, the learned CIT (A) NFAC rejected the condonation application filed by the assessee and dismissed the appeal by observing as under:

Aggrieved with such order of the learned CIT (A) NFAC, the assessee is in appeal before the Tribunal.

The learned Counsel for the assessee referring to the order of the learned CIT (A) NFAC submitted that he has not at all considered the ill health of the assessee as well as the death of his mother. Further, the allegation of the learned CIT (A) NFAC is that the assessee did not check the service of assessment order from the ITBA Portal. It is the submission of the learned Counsel for the assessee that given an opportunity, Page 3 of 5 the assessee is in a position to substantiate his case before the learned CIT (A) NFAC with documentary evidence including the death of his mother for which he could not go to his tax consultant for filing of the appeal.

The learned DR, on the other hand, heavily relied on the order of the Assessing Officer and the CIT (A) NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We find the AO in the instant case made addition of Rs.42,68,500/- u/s 69A on the ground that the assessee could not explain the cash deposit made in account No. 30241553661 maintained with SBI. Similarly, the Assessing Officer made addition of Rs.20,80,000/- on account of LTCG earned by the assessee being sale of an immovable property on the ground that the assessee did not make any submission. We find the learned CIT (A) NFAC dismissed the appeal on the ground that the assessee could not substantiate with evidence to substantiate his ill health and the death of his mother for which there was a delay in filing of the appeal for 138 days. It is the submission of the learned Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate with evidence to the satisfaction of the learned CIT (A) NFAC regarding the sources of cash deposit as well as the issue relating to LTCG. It is an admitted fact that the assessee in the statement of facts before the learned CIT (A) NFAC has explained the reasons for the delay which is due to his ill health and death of his mother. Further, every assessee is not tech savy so as to see himself the service of the assessment order in ITBA. In view of the above, we are of the considered opinion that the learned CIT (A) NFAC Page 4 of 5 should not have taken a pedantic view on the issue of delay in filing of the appeal. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the file of the learned CIT (A) NFAC with a direction to condone the delay and grant one more opportunity to the assessee to substantiate his case with evidence to his satisfaction regarding the source of cash deposit and the issue relating to capital gain. The learned CIT (A) shall decide the issue as per fact and law and after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, appeal filed by the assessee is allowed for statistical purposes.