Vidya Shankar Jaiswal Bhagat Singh Vs ITO ( Andhra Pradesh High Court)
The appellant filed an appeal under Section 260A of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal (ITAT) dated 13.02.2024, which had dismissed his appeal as barred by 166 days, arising from assessment proceedings for Assessment Year 2014-15.
According to the facts, the appellant did not file his income tax return for AY 2014-15 due to illness. Based on information available in the Actionable Information Monitoring System, the Assessing Officer (AO) determined the appellant’s income at Rs. 34,67,700 by treating cash deposits in the appellant’s savings bank account as unexplained money under Section 69A. The assessment was completed under Sections 144/147 by order dated 16.12.2018. The appellant subsequently filed his return on 27.12.2018, declaring total income of Rs. 9,99,250. His appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed on 29.03.2023, and the subsequent appeal before the ITAT was dismissed on the ground of delay.
Read SC Judgment in this case: SC Condones 166-Day Income Tax Appeal Delay, Citing Liberal View
The appellant contended that the second appeal before the ITAT had been filed along with an application seeking condonation of the 166-day delay, explaining that notices under Section 250 and the CIT(A)’s order had merely been uploaded on the Income Tax Business Application (ITBA) e-filing portal and that he became aware of the order only on 02.11.2023 while checking the portal. It was argued that the faceless appeal scheme required electronic communication with real-time alerts and that merely uploading orders on the portal without such alerts was contrary to the applicable procedure. The appellant relied upon Rule 46 of the Income Tax Rules, 1962, Section 282 of the Act, Rule 127 of the Income Tax Rules, and Section 13 of the Information Technology Act, 2000, contending that the date of receipt should be treated as the date when the communication was downloaded. The appellant also relied on several judicial precedents to support a liberal approach towards condonation of delay and service of electronic notices.
The Revenue submitted that the assessment order, affirmed by both the CIT(A) and the ITAT, suffered from no illegality. It pointed out that the AO had issued several notices during the assessment proceedings but the appellant neither filed the return in time nor participated in the proceedings. Consequently, the AO completed the best judgment assessment under Sections 144/147, treating the entire cash deposits of Rs. 34,67,700 as unexplained money under Section 69A. The Revenue further submitted that the appellant had also failed to participate before the CIT(A), despite four notices of hearing, and had not furnished any explanation or documentary material regarding the source of the cash deposits.
The High Court noted that the appellant had failed to participate before the AO as well as the CIT(A). It further observed that the ITAT had examined the application for condonation of delay and found that the reasons advanced did not establish bona fide grounds for condoning the 166-day delay. The Court also referred to the ITAT’s observation that condoning the delay despite the appellant’s non-participation before both the AO and the CIT(A) would send a wrong message and create an undesirable precedent.
The Court observed that Section 69A permits treating money as income where the assessee is found to be the owner of money not recorded in the books of account and fails to offer a satisfactory explanation regarding its nature and source. It further observed that the appellant had neither filed his return within time nor participated in the assessment proceedings or produced any plausible explanation regarding the cash deposits. The Court held that, considering the appellant’s conduct before the authorities and the absence of sufficient reasons explaining the delay, the request for condonation did not merit acceptance.
Relying upon the principle that the expression “sufficient cause” must receive a liberal construction only where the reasons are reasonable and intended to advance substantial justice, the Court found that the appellant had failed to establish good and sufficient cause for condonation of the delay. Accordingly, the High Court upheld the ITAT’s reasons for refusing to condone the delay and dismissed the appeal.
Cases Discussed
- Munjal BCU Centre of Innovation and Entrepreneurship vs. CIT(E) (Punjab & Haryana High Court), 2024(3)TM1479 (P&H HC)
- Senior Bhosale Estate (HUF) v. The Assistant Commissioner of Income Tax (Supreme Court), (2019) 419 ITR 732 SC
- The Deputy Commissioner of Income Tax, Circle -4(1) Raipur v. M/s. Chhattisgarh State Electricity Board (Through Chhattisgarh State Power Holding Company Ltd.)
- Karnataka Forest Development Corpn. Ltd. v. Assistant Commissioner of Income Tax (TDS) Circle 11(3), Bangalore (Karnataka High Court), 2010 (8) TMI – 1134
- Collector, Land Acquisition v. Mst. Katiji & Others (Supreme Court), (1987) 167 ITR 471
- Sandhya Rani Sarkar v. Sudha Rani Debi (Supreme Court), 1978 AIR 537
- State of West Bengal Vs. Administrator, Howrah (Supreme Court), 1972 AIR SC 749
- Shakti Steel Trading v. The Asstt. Commissioner (ST), WP No.4122 & 4255 & 4256
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
1. Heard Mr. Manoj Kumar Sinha, learned counsel for the appellant as well as Ms. Naushina Afrin Ali, learned counsel for the respondent.
2. By the present appeal under Section 260A of the Income Tax Act, 1961 (for short, the Act), the appellant/assessee seeks to challenge the order passed by the Income Tax Appellate Tribunal, Raipur Bench (for short, the ITAT) dated 13.02.2024 passed in ITA No. 351/RPR/2023 arising out of order passed by the Commissioner of Income-Tax (Appeals) {for short, the CIT(A)}, National Faceless Appeal Center (NFAC), Delhi, dated 29.03.2023, which in turn arises from the order passed by the Assessing Officer (for short, the AO) under Section 144/147 of the Act dated 16.12.2018 for the Assessment Year (for short, the AY) 2014-15.
3. The facts, in brief, are that the appellant, on account of his illness, could not file his income tax return for the AY 2014-2015, the Assessing Officer e. the Income Tax Officer, Ward 2, Ambikapur, (for short, the AO) assessed the income of the appellant to be Rs. 34,67,700/- on the basis of information available in the Actionable Information Monitoring System of the Income Tax Business Application and was also imposed with penalty and interest for not submitting the return within time, vide its order dated 16.12.2018. The appellant submitted its return for the AY 2014-2015 declaring his total income to be Rs. 9,99,250/- on 27.12.2018. Thereafter, the order of the AO dated 16.12.2018 was was challenged before the Commissioner of Income Tax (Appeals) {for short, the CIT(A)} which was also dismissed vide order dated 29.03.2023 on the ground that despite giving several opportunities during the appellate proceedings, the appellant failed to explain the nature and source of cash deposited to the tune of Rs. 34,67,700/- in the Savings Bank Account. The order of the CIT(A) was further challenged before the learned ITAT which also stood dismissed on 13.02.2024 on the ground that the said appeal was barred by 166 days.
4. Mr. Manoj Kumar Sinha, learned counsel for the appellant submits that the case was re-opened and in assessment made on 16.12.2018 under Section 147 read with Section 144 of the Act, total income was determined at Rs. 34,67,700/- treating amount of cash deposit of in bank account as deemed income under section 69A of the Act. The first appeal filed under Section 246A was dismissed on the grounds of non-compliance and it appears that the notices under Section 250 and order of learned CIT(A) were uploaded on appellant’s ITBA e-filing portal and he came to know about this only on 02.11.2023 while randomly checking the portal. The second appeal before learned ITAT was filed on 10.11.2023 along with application for condonation of delay of 166 days along with affidavit. The learned ITAT has dismissed the appeal on grounds of delay without considering the fact that the notices and order under Section 250 of the Act were not served upon the appellant as required under Rule 46 of Income Tax Rules, 1962 but were merely uploaded on his e-filing portal without any real time alert. The scheme of filing and disposal of appeals under Income-tax Act has been converted from physical mode to faceless mode and various notifications were issued by CBDT in this regard.
5. As per Mr. Sinha, the faceless appeal scheme was initially launched w.e.f. 01.04.2020 and most of the period was covered under Covid-19 period and several notifications were issued subsequently stating the procedure. As per faceless mechanism, all communications need to be sent electronically with real time alert and it appears that order of learned CIT(A) was dropped on the e-filing portal of the appellant without any further real time alert which is contrary to legal provisions. Such delays have also occurred in several cases and appellant could get list of 26 cases mentioned at paragraph Nos. 21 and 22 of appeal memorandum. This substantiates genuineness of ill-effects of migration from physical mode to faceless mode, which is faced by income-tax assessees at large. Out of 26 appeals, 17 appeals were dismissed mainly on the grounds of delay on the presumption that appellants were not alert and delay is attributable to the lackadaisical conduct; while they were allowed in 9 cases. In all these cases mandate of Rule 46 of Income Tax Rules, 1962 was overlooked.
6. It is further submitted that as per Rule 46 of IT Rules and provisions of Section 282 of the Act read with Rule 127 of IT Rules and Section 13 of the Information Technology Act, 2000, in case of dropping the notices and order on e-filing portal, the date of receipt is deemed to be the date when the addressee has downloaded the communication. Accordingly, the delay in this case is neither deliberate nor attributable to lackadaisical attitude of the appellant as presumed by learned ITAT.
7. In support of his contentions, Mr. Sinha relies on a decision of the Punjab & Haryana High Court in in Munjal BCU Centre of Innovation and Entrepreneurship vs. CIT(E)- 2024(3)TM1479 (P&H HC), wherein it has been held that it is essential that before any action is taken, a communication of the notice must be in terms of the provisions and a pragmatic view has to be adopted always in these circumstances. An individual or company is not expected keep the e-portal open all the time so as to have knowledge of departments actions. Further, in Shakti Steel Trading v. The Asstt. Commissioner (ST) WP No.4122 & 4255 & 4256 in GST matters, which are analogous to IT matters, the Hon’ble Madras High Court has held that it is advisable for the Department to serve notice on such assessee through other mode of communications prescribed when they failed to respond to the summons, orders, notices and other communications through e-mail. There has to be some amount of flexibility. Rigidity in administration of tax in such matters may not serve the purpose and can be counter productive. Mr. Sinha further relies on the decision of the Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others, {(1987) 167 ITR 471}, Sandhya Rani Sarkar v. Sudha Rani Debi {1978 AIR 537}, Senior Bhosale Estate (HUF) v. The Assistant Commissioner of Income Tax {(2019) 419 ITR 732 SC}, decision of the Karnataka High Court in Karnataka Forest Development Corpn. Ltd. v. Assistant Commissioner of Income Tax (TDS) Circle 11(3), Bangalore {2010 (8) TMI – 1134} and the decision rendered by the ITAT in The Deputy Commissioner of Income Tax, Circle -4(1) Raipur v. M/s. Chhattisgarh State Electricity Board (Through Chhattisgarh State Power Holding Company Ltd.).
8. On the other hand, Ms. Naushina Afrin Ali, learned counsel for the respondent/Revenue submits that the order passed by the AO which was affirmed by the CIT(A) as well as learned ITAT, does not suffer from any illegality and the appeal filed by the appellant/Assessee deserves to be rejected.
9. We have heard learned counsel for the parties, perused the pleadings and documents appended thereto.
10. From perusal of the documents available on record, it transpires that as per the information obtained from the Annual Information Return, it was observed by the AO that though the assessee made cash deposits of Rs. 34,67,700/- in his savings bank account during the year under consideration but had not filed his return of income. As the assessee failed to come forth with any explanation as regards the source of the aforesaid cash deposits, the AO reopened his case under Section 147 of the Act. During the course of the assessment proceedings, though the AO had issued several notices to the assessee but he did not comply with the same. Accordingly, the AO vide his order passed under Section 144 read with Section 147 of the Act dated 16.12.2018, determined the income of the assessee at Rs.34,67,700/- after treating the entire amount of cash deposits of Rs.34,67,700/- as the assessee’s unexplained money under Section 69A of the Act. The assessee carried the matter in appeal before the CIT(Appeals) but without success. As the assessee had failed to participate in the course of the proceedings before the CIT(Appeals), therefore, he dismissed the appeal of the assessee after considering material available on record.
11. Though the AO had provided sufficient opportunities to the assessee to represent his case, it was the assessee who, for reasons best known to him, despite being well informed about the ongoing assessment proceedings, had not only failed to file his return of income but had also evaded his participation in the said proceedings. Also, the assessee had failed to file any reply to the notices that were served on him during the assessment proceedings. Accordingly, the A.O., in the absence of any return of income and also any explanation forthcoming about the source of the cash deposits in the bank account of the assessee, who had chosen to lie low and neither participate in the assessment proceedings nor furnished any reply to the notices that were issued to him, thus, was constrained to treat the cash deposits of Rs.34,67,700/-(supra) as the assessee’s unexplained money under Section 69A of the Act, and framed the best judgment assessment vide his order under Sections 144/147 of the Act vide its order dated 16.12.2018. Even before the CIT(Appeals), the conduct of the assessee was no better than that he had adopted during the assessment proceedings. Although the CIT(Appeals) afforded sufficient opportunities to the assessee to put up his case on merits before him but he had once again adopted an evasive approach and on no occasion, participated in the proceedings before the first appellate authority. The CIT(A) has given proper opportunity to the assessee to participate in the hearing. Four notices were issued to the assessee informing the assessee about the date of hearing but the assessee did not participate in the proceedings before the CIT(A). The CIT(Appeals) taking notice of the fact that the assessee had adopted an evasive approach and, despite being well informed, had not only chosen not to participate in the proceedings before him but also, despite sufficient opportunities, had not placed on record any submissions whatsoever, whether documentary or otherwise to substantiate his claim that the A.O had erred in treating the cash deposit of Rs.34,67,700/- in his bank account as unexplained money under Section 69A of the Act, thus, upheld the order passed by the AO under Sections 144/147 of the Act, dated 16.12.2018.
12. In the course of the proceedings before the Tribunal, the conduct of the assessee remains the same as was there before the learned CIT(A) and the A.O. The appeal filed by the assessee before the learned ITAT involves a delay of 166 days. On a careful perusal of the facts leading to the delay in filing of the present appeal, the reason that the bonafides of the reasons leading to the delay in filing of the appeal by the assessee cannot be gathered from the application filed by the assessee seeking condonation of the delay involved in filing the appeal. The facts that can be gathered from the aforesaid application of the assessee are, viz. (i) the assessment order was passed by the A.O on 16.12.2018 and was issued on 29.12.2018 without any reasons for keeping the same with him; (ii) reasons recorded under Section 148(2) of the Act were not supplied to the assessee by the A.O; and (iii) appeal of the assessee was dismissed by the CIT(Appeals) vide an ex-parte order dated 29.03.2023 etc.
13. Under section 69A of the Act, what is provided is that if an assessee is found to be the owner of any money, jewellery or any other valuable articles and such money is not recorded in the books of account and fails to offer any explanation about the nature and source thereof or in case any such explanation, if offered, is not satisfactory in the opinion of the AO, then it may be deemed to be the income of the assessee for such financial year. Ultimately, therefore, it would be dependent on the nature of the explanation submitted by the assessee and the satisfaction of the AO about the acceptability thereof, which is the sine qua non for invoking the provisions contained in section 69A of the Act. In the present case, the assessee has failed to file his return of income but had also evaded his participation in the proceedings. In absence of any plausible explanation of the assessee as regards the delay in filing of the appeal, his request for condonation of the same, when read in the backdrop of his conduct before the authorities below cannot be summarily accepted on the very face of it. There is no substance in the claim of the assessee that the delay involved in filing of the appeal was due to bonafide reasons, as the same clearly smacks of the lackadaisical conduct on his part. In the totality of the facts leading to the delay in filing of the appeal read with the conduct of the assessee appellant before the AO and the CIT(Appeals), the request of the assessee for condoning the delay involved in filing of the appeal does not merit acceptance.
14. The learned ITAT, vide paragraph 12 has observed that “In fact, if I condone the delay involved in the present case where the assessee had not even participated in the proceedings either before the A.O or CIT (Appeals), then, it would send a wrong message and would lay down a wrong precedent for the times to come. …”
15. As has been rightly relied on by the learned ITAT that in the case of State of West Bengal Vs. Administrator, Howrah, reported in 1972 AIR SC 749, the Hon’ble Apex Court had held that the expression “sufficient cause” should receive a liberal construction so as to advance substantial justice, particularly when there is no motive behind the delay. The expression “sufficient cause” will always have relevancy to reasonableness. The action which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant. However, as the assessee appellant in the present case is habitually acting in defiance of law, where he had not only delayed in filing of the present appeal but also had adopted a lackadaisical approach and not participated in the course of the proceedings before the CIT(A), therefore, there can be no reason to allow his application and condone the substantial delay of 166 days involved in preferring of the captioned appeal. Now, when in the present appeal the appellant / assessee had failed to come forth with any good and sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeal, we hereby dismiss the present appeal upholding the reasons assigned by the learned ITAT.
16. Resultantly, this appeal stands dismissed
