Vinaya Prasanna Kulkarni Vs ITO (ITAT Mumbai)
The assessee, a housewife, filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] against an assessment order passed under section 147 read with section 144 for the assessment year 2019–20. The assessment involved additions of ₹1,00,00,000 under section 69A on account of alleged unexplained fixed deposits, along with taxation of interest income of ₹88,656. The assessee contended that the fixed deposit of ₹50,00,000 had been reported twice, resulting in an incorrect addition of ₹1,00,00,000, and that the interest income was below the taxable threshold. She stated that the deposits were sourced from transfers received from her husband through banking channels. She also argued that her explanations were never considered by the CIT(A).
However, the CIT(A) dismissed the appeal solely on the ground of limitation. The appeal had been filed nearly five months after the order was served, far beyond the statutory period of 30 days under section 249(2). The CIT(A) held that the assessee had not shown any extraordinary circumstances justifying condonation of the delay under section 249(3), characterised her conduct as negligent in attending to statutory notices, and concluded that the delay could not be condoned. Since the appeal was held to be time-barred, the CIT(A) did not examine the merits of the additions.
Before the Income Tax Appellate Tribunal (ITAT), the assessee filed an affidavit explaining the reasons for the delay. She stated that she had shifted from the address recorded in her PAN nearly 15 years earlier and, being a non-filer, did not update her details on the income-tax portal. Consequently, she did not receive notices issued by the Assessing Officer. She became aware of the assessment order only when her banker forwarded departmental communication to her email address during recovery proceedings. She then promptly engaged a professional and filed the appeal.
The ITAT examined these circumstances and noted that section 249(3) empowers the CIT(A) to condone a delay when “sufficient cause” is established. The Tribunal referred to the Supreme Court’s decision in Collector, Land Acquisition vs. Katiji, which emphasises that “sufficient cause” must receive a liberal interpretation so that substantial justice is not defeated by technicalities. The Tribunal reiterated that what matters is not the length of the delay but the genuineness and bona fides of the explanation, and that, in the absence of mala fides or deliberate inaction, the matter should ordinarily be decided on merits rather than dismissed procedurally.
Applying these principles, the Tribunal held that the assessee’s explanation for the delay was bona fide and supported by the circumstances in which she was unaware of the assessment proceedings. The Revenue had not produced any material to rebut her assertions. The Tribunal concluded that the assessee was prevented by reasonable cause from filing the appeal within the prescribed period and that the CIT(A) had erred in refusing to condone the delay.
Because the CIT(A) had dismissed the appeal at the threshold without examining the additions made by the Assessing Officer, the ITAT set aside the order on limitation and directed the CIT(A) to admit the appeal, condone the delay, and adjudicate all issues afresh on their merits, in accordance with law. The appeal before the Tribunal was thus allowed for statistical purposes.
