Baljit Singh Vs ITO (ITAT Amritsar)
Every Bank Credit Is Not Income: ITAT Accepts 258-Day Delay and Orders Fresh Examination
Substantial Additions Deserved Examination on Merits
The Amritsar Bench of the Income Tax Appellate Tribunal accepted the assessee’s explanation for a 258-day delay in filing five appeals and restored the disputed issues to the Assessing Officer for fresh adjudication.
The assessments had treated all cash and cheque credits appearing in the assessee’s bank accounts as unexplained money under section 69A. The assessee contended that withdrawals had been ignored and that cheque deposits represented transfers from his own bank accounts.
The Tribunal held that these contentions deserved consideration and factual verification. However, it did not delete the additions on merits. It granted a fresh opportunity to explain the transactions before the Assessing Officer.
Bank Credits Led to Reopening of Five Assessments
The assessee was a resident individual. According to the Assessing Officer, he had not filed returns under section 139(1) for the assessment years concerned.
On examining information available on record, the Assessing Officer noticed cash and cheque credits in the assessee’s bank accounts for AYs 2013-14 to 2017-18. Believing that income chargeable to tax had escaped assessment, he reopened the assessments under section 147.
The order records that notices under sections 148A and 142(1) were issued, but the assessee did not comply. A further notice under section 144, proposing best-judgment assessments, also remained unanswered.
The Assessing Officer consequently completed the assessments ex parte under section 147 read with section 144, adding all bank credits for the respective years as unexplained money under section 69A.
First Appeals Dismissed at the Threshold
The assessee challenged the assessments before the first appellate authority. However, the appeals were filed with a delay of 258 days.
Although the assessee furnished an explanation for the delay, the appellate authority found it unsatisfactory and dismissed the appeals in limine, without deciding the additions on merits.
Thus, the bank credits had been assessed without the assessee’s explanation, and the first appellate proceedings ended without an examination of that explanation.
Before the Tribunal, the assessee sought restoration directly to the Assessing Officer for a fresh factual enquiry.
Own-Account Transfers and Withdrawals Required Verification
The assessee’s counsel argued that the Assessing Officer had mechanically added the entire bank credits without considering withdrawals and expenses incurred.
He further submitted that the cheque deposits were transfers from other bank accounts belonging to the assessee, rather than fresh income.
These assertions challenged the treatment of every credit as an independent unexplained receipt. If supported by bank records, transfers between an assessee’s own accounts would require consideration before determining the nature of the credits.
The Revenue opposed the request. It argued that the assessee had neither established the source of the deposits before the Assessing Officer nor properly explained the delay before the appellate authority.
Gurbani Preacher’s Explanation Found Reasonable
In explaining the delay, the assessee stated that he was a preacher of Gurbani at a Gurdwara and that income from preaching had been declared in a return.
He described himself as a layman who was unaware that assessment orders had been passed. His explanation also referred to learning about the ex parte disposal when the Department contacted him by telephone for recovery of the demand.
The Tribunal found the reasons reasonable in the circumstances. It observed that the assessee would gain nothing by failing to contest substantial additions across five assessment years, particularly when the demands, including interest, imposed a heavy burden.
It accordingly concluded that the assessee had been prevented by sufficient cause from filing the appeals within time.
The relief was based on the explanation and circumstances of this case. The order does not establish that being a layman, by itself, excuses every delayed appeal.
Fresh Adjudication Ordered Before the Assessing Officer
The Tribunal also found that the contention concerning the treatment of all bank credits as income, without considering withdrawals, merited consideration.
Likewise, the claim that cheque credits represented own-account transfers required factual verification.
Since the first appellate authority had not examined the case on merits, the Tribunal set aside its orders and restored the disputed issues to the Assessing Officer for fresh adjudication, after providing due and reasonable opportunity of hearing.
All five appeals were allowed for statistical purposes. The sources and character of the deposits remain to be established in the fresh proceedings.
Author’s Comments
The decision highlights two practical concerns: a delayed appeal should be examined fairly where sufficient cause exists, and bank credits require analysis before they are treated as taxable income.
However, withdrawals do not automatically explain subsequent deposits. The assessee must establish the connection through dates, amounts, availability of funds and supporting records. Similarly, an own-account transfer should be demonstrated through corresponding debit and credit entries in the respective accounts.
A complete reconciliation across all bank accounts will therefore be crucial in the remand proceedings.
The Tribunal reopened the opportunity to explain; it did not accept every deposit as explained. The assessee must now use that opportunity to substantiate the transactions and distinguish genuine income from transfers or other properly supported receipts.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT AMRITSAR
Captioned appeals by the same assessee arise out of separate orders of National Faceless Appeal Centre [NFAC], Delhi, pertaining to the Assessment Years 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18.
2. The basic grievance of the assessee in these appeals is against dismissal of appeals in limine by the First Appellate Authority without condoning the delay.
3. Briefly the facts are, the assessee is a resident individual. As alleged by the Assessing Officer, the assessee did not file any return of income under Section 139(1) of the Income-tax Act, 1961 [in short, “the Act”] for the assessment years under dispute. Whereas, upon verifying the information available on record, Assessing Officer noticed that in all the assessment years under dispute, there were credit entries, both in cash and in cheque, appearing in assessee’s bank accounts. Thus, based on such information, the Assessing Officer formed the belief that income chargeable to tax has escaped assessment. Accordingly, he reopened the assessments under Section 147 of the Act. In course of assessment proceedings, as observed by the Assessing Officer, notices under Sections 148A and 142(1) of the Act were issued to the assessee from time to time. However, the assessee did not comply with any of these notices. Therefore, the Assessing Officer issued a notice under Section 144 of the Act, expressing his intention to complete the assessments to the best of his judgment in view of the non-compliance by the assessee. Since the assessee failed to respond to the said show-cause notice as well, the Assessing Officer proceeded to complete the assessments ex-parte to the best of his judgment, under Section 147 read with Section 144 of the Act. While doing so, he added all the credited entries appearing in the respective bank accounts during the relevant assessment years by treating them as unexplained money under Section 69A of the Act.
4. Against the assessment orders so passed, the assessee preferred appeals before the First Appellate Authority. However, the appeals were filed with delay of 258 days. Though, the assessee explained the delay by stating certain reasons, however, the First Appellate Authority did not find the explanation satisfactory. Accordingly, he proceeded to dismiss the appeals in limine without condoning the delay.
5. Before us, learned counsel appearing for the assessee submitted that the Assessing Officer has added the entire credit entries appearing in the bank accounts of the relevant assessment years without taking into consideration the withdrawals and expenses incurred. He submitted, the cheque deposits appearing in the bank accounts are, in fact, money transferred from other bank accounts of the assessee. He submitted, without examining the facts in their correct perspective, the Assessing Officer has added the deposits as income on purely mechanical basis. He submitted, since assessee’s appeals were dismissed on the ground of delay, assessee was prevented from establishing his case on merits before the First Appellate Authority. In any case of the matter, he submitted, the cause of delay shown by the assessee cannot simply be brushed aside as unsatisfactory. Thus, he submitted, issue arising in the appeals may be restored back to the Assessing Officer for de novo adjudication.
6. Per contra, learned Departmental Representative (DR) submitted that the assessee had neither established before the Assessing Officer the source of the cash deposits/credits in the bank accounts nor properly explained the cause of delay in filing the appeals before the First Appellate Authority.Thus, he submitted, the appeals were rightly dismissed without condoning delay.
7. We have considered rival submissions and perused the materials on record. Undisputedly, the First Appellate Authority has not decided assessee’s appeals on merits but has simply dismissed them on the ground of delay. Admittedly, there was a delay of 258 days in filing the appeals before the First Appellate Authority. While explaining the delay, the assessee had submitted that he is a preacher of Gurbani at a Gurdwara and income from preaching has been declared in the return of income. He further submitted, the assessee could not file the appeals in time because he is a layman and was not aware of the fact that assessment orders have been passed. It was only when the Department pressed him for recovery of the demand through telephone call, the assessee could come to know that appeals had been disposed of ex-parte and dismissed on the ground of delay. Thus, he submitted, the reasons stated by him for delay constitute reasonable cause. However, this explanation of the assessee apparently did not find favour with the First Appellate Authority.
8. According to us, the reasons for delay shown by the assessee appeared to be reasonable, considering the fact that the assessee would not gain in any manner by not contesting the additions made by the Assessing Officer in five assessment years, which are quite substantial, and demands including interest, certainly created heavy burden on the assessee. Therefore, in our view, the assessee was prevented by sufficient cause from filing the appeals in time. Even, otherwise also, the contention of the assessee that the entire credit entries appearing in the bank statements cannot be treated as income without taking note of the withdrawals, merits consideration. Further, the claim of the assessee that the cheque deposits appearing in the bank accounts represent transfers from other bank accounts of the assessee requires factual verification. Since assessee’s case on merits was not at all examined the first appellate stage due to dismissal of the appeals in limine, we are inclined to set aside the impugned orders of learned First Appellate Authority and restore the issues arising in the appeals for fresh adjudication by the Assessing Officer, after providing due and reasonable opportunity of being heard to the assessee.
9. In the result, appeals are allowed for statistical purposes.
(Order pronounced in the open court on 30/09/2026)
