Harminder Singh Vs ITO (ITAT Chandigarh)
ITAT Chandigarh held that addition on account of failure to provide necessary explanation in respect of source of cash deposits in bank confirmed without considering explanation set aside with one more opportunity to assessee in the interest of substantial justice and fair play.
Facts- This is an appeal filed by the assessee against the ex-parte order passed by the ld. CIT(A)-3, Ludhiana dated 10.07.2019 pertaining to Assessment year 2011-21 wherein the action of the Assessing officer in treating the source of cash deposit amounting to Rs.49,40,750/- by treating the same as unexplained has been confirmed.
Conclusion- Held that the AO has passed the order u/s 144 read with Section 147 dated 14.12.2018 wherein an addition of Rs.49,40,750/- has been made for failure on the part of the assessee to provide necessary explanation in respect of the source of cash deposits in his bank account maintained with Axis Bank Ltd. Further, even before the ld. CIT(A), though notices have been issued which were not responded to and which has resulted in ex-parte order so passed by the ld. CIT(A). We, therefore, find that both before the AO as well as before the ld. CIT(A), the additions have been made and confirmed without considering the explanation which the assessee may like to submit in support of the source of the cash deposit in his bank account maintained with Axis Bank. Therefore, in the interest of substantial justice and fair play, we believe that the assessee deserves one more opportunity and the matter is, accordingly, set aside to the file of the AO to decide the same afresh after providing reasonable opportunity to the assessee. Needless to say, the assessee shall file the necessary information and documentation in support of his claim explaining the source of the cash deposit and attend to the proceedings before the AO and ensure timely completion of the proceedings without seeking unnecessary adjournments in the matter.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the assessee against the ex-parte order passed by the ld. CIT(A)-3, Ludhiana dated 10.07.2019 pertaining to Assessment year 2011-21 wherein the action of the Assessing officer in treating the source of cash deposit amounting to Rs.49,40,750/- by treating the same as unexplained has been confirmed.
2. At the outset, it is noted that there is a delay in filing the present appeal. During the course of hearing, the ld. AR taken us through the application filed by the assessee seeking condonation of delay in filing the present appeal by 1241 days. It was submitted that the ld. CIT(A) has passed the impugned order on 10.07.2019 and the appeal has been filed with the Registry on 03.02.2023 with the delay of 1241 days. It was submitted that the parents of the assessee and his elder brother are residents of USA from June, 2017 to December, 2022. The assessee had to go to USA frequently to attend to the family affairs as well as illness of his father Sardar Kartar Singh which is evident from the copy of the his passport and the Visa stamps of departure and arrival. It was further submitted that after return from USA on 30.12.2022, the assessee had gone to his banker i.e. Bank of India, Jagraon in the first week of January, 2023 to carry out certain banking transactions and therein, he was informed that his bank account has been attached by the Income Tax Officer, Jagraon in terms of the order passed u/s 226(3). It was submitted that subsequently, the assessee sought the assistance of his Counsel and thereafter, on perusal of the IT Portal, it came to his notice that his appeal filed against the order passed by the AO dated 14.12.2018 has been dismissed ex-parte by the ld. CIT(A), Ludhiana vide his order dated 10.07.2019. It was submitted that subsequently, the assessee with the assistance of his Counsel has filed the present appeal on 03.02.2023.
3. It was further submitted that during his brief stay in India from 23.02.2020 to 22.06.2020, from 11.01.2021 to 25.02.2021 and from 30.12.2021 to 08.03.2022, the assessee remained confined to his village home in Chachrari in Tehsil Jagraon due to fear of Covid. It was further submitted that the Hon’ble Supreme Court in view of the Covid Pandemic has also extended the period of limitation for filing the appeals from time to time from 15.03.2020 to 28.02.2022.
4. It was, accordingly, submitted that the delay which has happened in filing the present appeal is on account of bonafide and sufficient reasons as the assessee had no knowledge about the passing of the order by the ld. CIT(A) and the fact that he was not physically present in India and the copy of the order was also not served on him. It was, accordingly, submitted that these are genuine and valid reasons which has resulted in the delay in filing of the present appeal and in the interests of substantial justice, especially considering the fact that the order of the ld. CIT(A) has also been passed ex-parte qua the assessee, the delay in filing the present appeal may be condoned and the appeal be admitted for adjudication.
5. Per contra, the ld. DR submitted that there is a substantial delay in filing the present appeal and mere non presence in the Country could not be a reason for non filing of the present appeal. It was further submitted that even before the ld. CIT(A), the assessee has not appeared which clearly shows that the assessee was not diligent in pursuing its appeal even before the ld. CIT(A) and thereafter, there is also a delay in filing the present appeal before the Tribunal.
6. In the rejoinder, the ld. Counsel for the assessee submitted that as far as non appearance before the ld. CIT(A) is concerned, the notices were sent by Speed Post by the office of the ld. CIT(A) which were never served upon the assessee for the reason that during the period from 24.06.2018 to 23.02.2020, the assessee was staying in USA as is evident from the copy of the Passport and the arrival and departure stamps contained therein.
7. We have heard the rival submissions and purused the material available on record. There is no dispute that there has been a delay in filing the present appeal and the period of delay as admitted by the assessee comes to 1241 days wherein the order of the ld CIT(A) is dated 10/09/2019 and the appeal has been filed before the Tribunal on 03/02/2023. The explanation of the assessee therefore becomes relevant to determine whether the same reflects sufficient cause on his part in not presenting the present appeal within the prescribed time.
8. In the instant case, the assessee has contended that from July 2017 to December 2022, the assessee has been regularly travelling to USA to attend to his family affairs and to take care of his father who is not keeping well and is suffering from some illness and for the period he has spent in India, he is mostly confined to his village home due to spread of Covid pandemic and thus unable to attend to his tax affairs including the present appeal. It has been further contended that during this period, his bank account was also attached by the Revenue authorities and as soon as he was seized of this matter after enquiring from his banker and later on, consulting with his Counsel, he came to know that the order has been passed by the ld CIT(A) disposing off his appeal where the order passed by the AO has been confirmed and the tax demand has been sustained. It was submitted that as he was travelling to USA, he couldn’t attend to the proceedings before the ld CIT(A) and even, he didn’t receive the order so passed by the ld CIT(A) and it is only on receipt of information from his banker that his bank account has been attached, he took steps to obtain copy of the order passed by the ld CIT(A) and thereafter, has filed the present appeal.
9. We find that the period of delay comprises of period of Covid 19 pandemic where all activities in the economy came to a standstill due to national lockdown and appreciating the said situation, the Hon’ble Supreme Court has taken cognizance of the matter and has directed to exclude the period during the Covid lockdown while computing the limitation and reference can be drawn to its decision in case of Babasaheb Raosaheb Kobarne & ANR. Vs Pyrotek India Private Limited & ORS (Special Leave Petition (C) No. 2522/2022 dated 09/05/2022) wherein it was held as under:
“Having heard the learned counsel appearing on behalf of the respective parties and having considered order dated 10.01.2022 passed by this Court in Miscellaneous Application No.21/2022 by which the following order was passed and order dated 04.01.2022 passed by this Court in SLP (C) No.17298/2021 in the case of Centaur Pharmaceuticals Pvt. Ltd. & Anr. Vs. Standford Laboratories Pvt. Ltd., the impugned order passed by the High Court is unsustainable. The operative portion of the order passed by this Court in Miscellaneous Application No.21/2022 reads as under – “
I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021. It is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings.
II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.
III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.
IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12 A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.”
In that view of the matter, the period from 15.03.2020 till 28.02.2022 shall have to be excluded for the purposes of limitation as may be prescribed under any General or SPECIAL LAWS in respect of all judicial or quasi-judicial proceedings. The Commercial Courts Act, 2015 being a Special Law, the said order shall also be applicable with respect to the limitation prescribed under the Commercial Courts Act, 2015 also.
In view of the above and for the reasons stated above and more particularly when the 120 days period expired in the present case on 09.05.2020 which was during the aforesaid period as prescribed by this Court in the aforesaid order, the High Court ought to have excluded the aforesaid period for the purpose of filing the written statement and ought to have permitted to take the written statement on record. The impugned judgment and order passed by the High Court refusing to condone the delay and take on record the written statement is hereby quashed and set aside. It is directed that the written statement, already filed, be taken on record and the same be considered in accordance with law.”
10. In view of the above, the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation for the filing the appeal and effectively, the said period need not be counted and has to be excluded for working out the delay in filing the present appeal.
11. As far as period prior to 15/03/2020 and post 28/02/2022 till filing of present appeal is concerned, it is no doubt true that the assessee was outside the country and travelling to USA to attend to his family affairs for sufficient long period except for some intermittent period, however, the fact that he was travelling doesn’t take away his obligation to attend to the tax proceedings and that too, his own appeal which has been filed before the ld CIT(A). It is not a case where the assessee has permanently shifted to USA and has no connect in the Country. He continues to hold the Indian Passport and is thus obligated to abide by the laws of the land including the tax laws. Where he can travel to USA and attend to the family affairs, we are sure he is competent enough to attend to the tax proceedings in India. Merely filing the appeal is not enough to seek shelter from the tax obligations or the consequent tax liability. Once the appeal is filed, he is equally required to attend to the proceedings before the ld CIT(A) and/or appoint the Counsel who can seek his instructions and attend to the proceedings and file necessary documentation/submission in support of the grounds of appeal.
In the instant case, the appeal was filed on 18/01/2019 and disposed off by the ld CIT(A) on 10/07/2019 and in between, three notices were sent through speed post which remained unattended. Once the appeal has been dismissed ex-parte by the ld CIT(A) due to non-prosecution and his bank account has been attached by the Revenue authorities, the assessee has woken up again and filed the present appeal that too with a substantial delay.
12. We therefore find that there are clearly latches and negligence on part of the assessee in not filing the present appeal within prescribed time frame. At the same time, we believe that where the assessee has come in appeal before this Tribunal, he deserves an opportunity to be heard on merits of his case before the matter is consigned to records. In Writ Petition No. 783 of 2012 in the case of Sanchit Software and Solutions Pvt. Ltd Vs. Commissioner of Income Tax and Others, Hon’ble Bombay High Court held that in any civilized system, the assessee is bound to pay the tax which he liable under the law to the Government. The Government on the other hand is obliged to collect only that amount to tax which is legally payable by an assessee. The entire object of the administration of tax is to secure the Revenue for the development of the country and not to charge assessee more tax than which is due and payable by the assessee. As held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. Therefore, in exercise of powers under section 253(5) of the Act and in interest of substantial justice, we hereby condone the delay in filing the present appeal subject to cost of Rs 5,000/- which shall be deposited in PM National Relief Fund and evidence thereof should be brought on record. In light of aforesaid discussions, the delay is condoned and the appeal is hereby admitted for adjudication on merits.
13. Further, it is noted that the AO has passed the order u/s 144 read with Section 147 dated 14.12.2018 wherein an addition of Rs.49,40,750/- has been made for failure on the part of the assessee to provide necessary explanation in respect of the source of cash deposits in his bank account maintained with Axis Bank Ltd. Further, even before the ld. CIT(A), though notices have been issued which were not responded to and which has resulted in ex-parte order so passed by the ld. CIT(A). We, therefore, find that both before the AO as well as before the ld. CIT(A), the additions have been made and confirmed without considering the explanation which the assessee may like to submit in support of the source of the cash deposit in his bank account maintained with Axis Bank. Therefore, in the interest of substantial justice and fair play, we believe that the assessee deserves one more opportunity and the matter is, accordingly, set aside to the file of the AO to decide the same afresh after providing reasonable opportunity to the assessee. Needless to say, the assessee shall file the necessary information and documentation in support of his claim explaining the source of the cash deposit and attend to the proceedings before the AO and ensure timely completion of the proceedings without seeking unnecessary adjournments in the matter.
14. In the result the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 22nd May,2023.
