2024 (1) TMI 307 - AT - Income Tax

Condonation of delay in filing appeals beyond the limitation period - sufficient cause of delay - delay of 424 days - Addition u/s 69A - assessee has deposited a sum into his bank account during demonetization period - HELD THAT - The assessee has explained that assessee is of 74 years old and not well acquainted and conversant with the digital system in order to follow up with the income tax notices, which are posted in IT portal. - The assessee has not seen the NFAC s order in its portal and the same has been came to knowledge of assessee when it received a message about penalty notice issued u/s 270A 270AAC of the Act directing him to file reply in response to the notice issued. This Tribunal is bound to remove the injustice by condoning the delay on technicalities- If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay has to be condoned. Whether delay was excessive or inordinate? - There is no question of any excessive or inordinate when the reason stated by the assessees was a reasonable cause for not filing the appeals. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. 1984 (4) TMI 24 - MADRAS HIGH COURT considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd 2004 (5) TMI 531 - ITAT MUMBAI has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. Thus in the matter of condonation of delay in filing appeals beyond the limitation period, the courts are empowered to condone the delay, provided the litigant is able to demonstrate that there was sufficient cause in preferring appeal beyond the limitation period. The Courts have also held that the expression sufficient cause should receive liberal construction so as to advance substantial justice. Hence, the question of condonation of delay is a factual matter and the result would depend upon the facts of the case and the cause shown by the assessee for the delay. It has also been opined that generally delays in preferring appeals are required to be condoned in the interest of justice, where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay. In view of the foregoing, we are of the view that the assessees have shown sufficient cause for the delay in filing the appeals before the Tribunal. Accordingly, we condone the delay in filing this appeal before us and admit the appeal for adjudication. After condoning the delay, the issue on merit of the additions is covered by the judgement of coordinate bench in the case of Bhoopalam Marketing Services Ltd 2022 (11) TMI 331 - ITAT BANGALORE , thus we inclined to remit the issue in dispute to the file of AO to examine the issue in the light of various circulars issued by CBDT on addition relating to deposit of demonetized currency to the bank account of the assessee. Appeal of the assessee is partly allowed for statistical purposes.

Issues Involved:
1. Legality of assessment and violation of natural justice.
2. High pitch addition of Rs. 27,87,500/- during the demonetization period.
3. Application of Section 69A r.w.s. 115BBE of the Income-tax Act.
4. Recording of transactions in books of account.
5. Maintenance and audit of books of accounts.
6. Appreciation of facts and principles of natural justice.
7. Reliance on judicial precedents.
8. Evidence of cash deposits.
9. Levy of interest and penalty.
10. Additional grounds of appeal.

Summary:

1. Legality of Assessment and Violation of Natural Justice:
The assessee contended that the assessment was "bad in law" and that the order confirming the additions violated the principles of natural justice.

2. High Pitch Addition During Demonetization Period:
The CIT(A) confirmed the addition of Rs. 27,87,500/- made by the AO due to cash deposits during the demonetization period, raising a demand of Rs. 29,14,015/-. The assessee argued that the explanation and documents provided were not considered.

3. Application of Section 69A r.w.s. 115BBE:
The CIT(A) confirmed the addition under Section 69A for "Unexplained Money," ignoring the appellant's professional background and the fact that the money was part of gross receipts from his profession, already offered to tax in previous years.

4. Recording of Transactions in Books of Account:
The CIT(A) erred in invoking Section 69A, which applies only to unaccounted assets not recorded in books of account. The assessee had recorded the transactions in his books during the demonetization period.

5. Maintenance and Audit of Books of Accounts:
The appellant maintained duly audited books of accounts, and the transactions were recorded. Thus, the additions under Section 69A were argued to be legally untenable.

6. Appreciation of Facts and Principles of Natural Justice:
The lower authorities were accused of not properly appreciating the facts and ignoring submissions, explanations, and information provided by the appellant, breaching the principles of natural justice.

7. Reliance on Judicial Precedents:
The appellant cited decisions from the ITAT Bangalore and Mumbai Benches, which held that additions under Section 69A could not be made for assets recorded in the books of account.

8. Evidence of Cash Deposits:
The appellant argued that the lower authorities failed to show that the cash deposits were not from withdrawals or professional services. The ITAT Delhi's decision was cited, stating that no addition could be made under Section 68 solely due to a time gap between withdrawals and redeposits.

9. Levy of Interest and Penalty:
The CIT(A) erred in confirming the levy of interest under Sections 234/234B/234C and initiating penalty under Section 271AAC.

10. Additional Grounds of Appeal:
The appellant reserved the right to add, amend, or modify grounds of appeal during the proceedings.

Condonation of Delay:
The Tribunal condoned a 424-day delay in filing the appeal, citing the Supreme Court's principles favoring substantial justice over technicalities. The assessee's age and unfamiliarity with the digital system were considered reasonable causes.

Merit of Additions:
The Tribunal referred to a coordinate bench's judgment, remanding the issue back to the AO for de novo verification in light of CBDT circulars on demonetized currency deposits.

Conclusion:
The appeal was partly allowed for statistical purposes, with the issue remitted to the AO for further examination.

Order Pronouncement:
The order was pronounced in the open court on 6th Dec, 2023.

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