ITAT Condones Delay, Directs CIT(A) to Re-examine Appeal on Merits in Unexplained Fixed Deposit Case [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Pune Bench directed the Commissioner of Income Tax (Appeals) CIT(A) to condone the delay in filing the appeal and re-examine the case on its merits. The appeal, filed by Shrirang Dattatraya Altekar against the order of the CIT(A)-National Faceless Appeal Centre (NFAC), Delhi, pertained to an addition of Rs. 20 lakhs made by the Assessing Officer (AO) as unexplained fixed deposits for the Assessment Year 2012-13.

The case originated when the Income Tax Department received information that the appellant had sold an immovable property in Pune for Rs. 71.50 lakhs and had made fixed deposits amounting to Rs. 1.60 crore in the Oriental Bank of Commerce. This led the AO to believe that an amount of Rs. 2.31 crore had escaped assessment. Consequently, the AO initiated proceedings under Section 147 of the Income Tax Act, issuing a notice under Section 148 on March 29, 2019.

Know Practical Aspects of Tax Planning, Click Here

During the assessment, the appellant provided details of his financial transactions. However, apart from the previously identified cash deposits, the AO found an additional fixed deposit of Rs. 20 lakhs and a capital gains deposit of Rs. 40.05 lakhs. Since the appellant failed to disclose the source of the Rs. 20 lakh deposit, the AO treated it as unexplained and added it to the total income, assessing the taxable income at Rs. 20.92 lakhs under Section 144 read with Section 147.

The appellant subsequently filed an appeal before the CIT(A), but with a delay of 558 days. The CIT(A), considering the Supreme Court's ruling in Cognizance for Extension of Limitation, excluded 468 days of the delay that fell within the COVID-19 period. However, the CIT(A) did not condone the remaining 45-day delay and dismissed the appeal as time-barred.

Know Practical Aspects of Tax Planning, Click Here

Aggrieved by the dismissal, the appellant approached ITAT Pune. The tribunal, after hearing both parties, found that the appellant had provided reasonable explanations for the delay in filing the appeal. The ITAT cited the Supreme Court’s ruling in Collector, Land Acquisition v. MST Katiji (167 ITR 471), which emphasized that substantive justice should prevail over technicalities. The ITAT held that denying condonation of delay could result in a meritorious case being rejected at the threshold, thereby defeating the cause of justice.

Considering these principles and the totality of circumstances, the ITAT Pune Bench, comprising Vice President Rama Kanta Panda and Judicial Member Astha Chandra, set aside the CIT(A)'s order and directed it to condone the 45-day delay. The tribunal instructed CIT(A) to hear the appeal on its merits and issue a ruling in accordance with the law. The tribunal also emphasized that the appellant must be given a fair opportunity to present his case during the proceedings.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates