2024 (6) TMI 968 - AT - Income Tax

Delay in filing of the appeal - delay in filing the present appeal of 233 days - Delay occured due to CA for gross negligence in his professional duties - HELD THAT - Application for Condonation of Delay and such submissions have not been controverted on behalf of the Department that the Manager and staff of the assessee Society are from the nearby villages. They are not aware of the provisions and technicalities of the Income Tax Act. They also have no knowledge as to how to operate Income Tax Portals. The Society changed its Chartered Accountant and engaged anther C.A. for taxation purposes. He was provided user name and password of Income Tax Site. He was asked to keep a check on the portal and to e-mal any notice or order and to do the needful. He assured that the needful was being done. Manager of the assessee Society was transferred in March,2022. He, however, did not provide any password of the Income Tax Site or e-mail which was registered with the Income Tax Department, nor did he inform the assessee Society about any messages regarding any notice or order. C.A. informed the Manager of the assessee Society that the CIT(A) had rejected the first appeal filed in January, 2020 and appeal had to be filed before the ITAT. He asked the Manager of the assessee Society to send him Rs.10,000/-, to be deposited on account of Appeal Fee in the Tribunal. The said amount was immediately paid to him. He deposited the Challan for the Appeal Fee before the ITAT on 05.01.2023 and a copy of the Challan Deposit Receipt was given to the Society. The assessee had no access to the e-mail registered with the Income Tax Department. As such, it was not aware of the order passed by the ld. CIT(A), till the time their C. A. informed them about the same, in December,2022. In April,2023, when all the bank accounts of the assessee Society, as running in the Ambala Central Co-operative Bank, Ambala were attached by the Income Tax Department, did it come to the notice of the assessee Society, that a huge demand was outstanding against the Society due to some orders passed in assessment years 2015-16 and 2017- 18. Immediately on receipt of notice in this regard, issued u/ s 226(3) of the Income Tax Act that the assessee Society immediately contacted CA to do the needful. It was only after a lot of persuasion that he filed an appeal before the Tribunal against the CIT(A) s order for assessment year 2017- 18 on 04.05.2023. It was at that time only, that he informed the assessee Society that assessments for assessment year 2015-16 and 2016-17 had also been made in March, 2022 and that some penalty orders had also been passed in September,2022 . The assessee Society was shocked to find that no appeals had been filed by him against these orders also, within the prescribed time. He was again requested to do the needful. However, again he kept the Society in the dark, stating that the needful had been done. It was in these circumstances, that the assessee contacted another C.A., Mr. Mukesh Jain in Ambala, to know the status of the cases. It came to knowledge that no appeals against the assessment orders and penalty orders for assessment year 2015-16 and 2016-17 had been filed and also that the appeal before the ITAT had not been attended on the date of hearing by Shri Vagish Sharma, C.A In the above undisputed facts and circumstances, the assessee is found to have suffered for no fault of their own. After considering all the facts and circumstances, we are of the considered opinion that in the interest of justice, the assessee should be given an opportunity of being heard and the assessee should not suffer for the mistake and negligence of the counsel. Appeal of the assessee is allowed for statistical purposes.

Issues:
1. Condonation of delay in filing the appeal.
2. Addition of Rs. 1,64,33,133 as unexplained cash credit under section 68 of the Income Tax Act.
3. Failure to explain the nature and source of cash deposits during assessment year 2017-18.
4. Dismissal of the appeal by the ld. CIT(A) and confirmation of the addition made by the Assessing Officer.
5. Negligence of the previous Chartered Accountant and subsequent actions taken by the assessee.

Detailed Analysis:
1. The assessee filed an appeal with a delay of 233 days, attributing the delay to managerial changes and lack of awareness regarding income tax procedures. An affidavit was submitted explaining the circumstances leading to the delay. The Tribunal, after considering the application and affidavit, found the delay to be inadvertent and bonafide, thereby condoning the delay and allowing the appeal to proceed on merits.

2. The Assessing Officer made an addition of Rs. 1,64,33,133 as unexplained cash credit under section 68 of the Income Tax Act. The assessee, a primary agriculture cooperative society, explained that the cash deposits were from members during the demonetization period. Despite providing details of the deposits and members, the Assessing Officer was not satisfied, leading to the addition. The ld. CIT(A) upheld the addition due to the assessee's failure to explain the nature and source of the cash deposits.

3. The failure to explain the nature and source of cash deposits during the assessment year 2017-18 was a crucial issue. The society's explanation regarding members and the purpose of deposits was not considered sufficient by the authorities, resulting in the addition of the amount as unexplained cash credit under section 68 of the Act.

4. The appeal before the ld. CIT(A) did not yield a favorable outcome for the assessee as no material facts were presented to counter the Assessing Officer's findings. The dismissal of the appeal and confirmation of the addition highlighted the lack of compliance and explanation on the part of the assessee, leading to the decision against them.

5. The negligence of the previous Chartered Accountant in handling the tax matters of the assessee society was a significant factor in the case. The new Chartered Accountant highlighted the lack of timely actions, missed deadlines for appeals, and failure to attend hearings. The Tribunal acknowledged the hardships faced by the assessee due to the negligence of the previous counsel and restored the file to the ld. CIT(A) for a fresh decision, emphasizing the need for a fair opportunity for the assessee to present their case.

← Previous Next →