ITAT Condoned Delay, Restores ₹4.63 Cr Cash Deposit Case for Fresh Hearing

Primary Agricultural Credit Co-operative Society Ltd Vs ITO (ITAT Bangalore)

The Income Tax Appellate Tribunal (ITAT) in Bangalore has set aside the assessment and appellate orders against the Primary Agricultural Credit Co-operative Society Ltd. (PACCS) for the assessment year 2018-19, restoring the matter to the Assessing Officer (AO) for fresh adjudication. The case involved a significant cash deposit of ₹4.63 crore by the society, which the Income Tax Department had treated as unexplained money under Section 69A of the Income Tax Act, 1961. The society, located in a rural village in Chikkamagaluru district, had failed to respond to numerous notices from the tax authorities, resulting in a best-judgment assessment and subsequent dismissal of its appeal by the Commissioner of Income Tax (Appeals) (CIT(A)).

The appeal to the ITAT was delayed by 253 days, and the society filed a petition for condonation of the delay. The society’s Chief Executive Officer submitted a sworn affidavit explaining that the delay was due to the negligence of their local tax practitioner, who became untraceable after moving to Mumbai. The society, being a small-town entity with limited knowledge of income tax procedures, was unaware that its appeal had been dismissed by the CIT(A) until it received a notice from the Principal Commissioner of Income Tax regarding the rejection of a stay application on a tax demand of ₹7.29 crore. The ITAT, accepting the explanation as a sufficient cause for the delay and considering the potential hardship to the society, condoned the delay and proceeded to hear the appeal on its merits. This decision aligns with the principle established in Collector, Land Acquisition, Anantnag v. Mst. Katiji (1987), where the Supreme Court held that the courts should adopt a liberal approach when considering applications for condonation of delay, especially when the delay is not deliberate and the litigant is a state or a public body.