MR. MADENERALU ANNEGOWDA SUBBEGOWDA,CHIKMAGALUR V. INCOME TAX OFFICER, WARD-2, CHICKMAGALUR

ITA 2352/BANG/2024

AI Insights

The case involves Mr. Madeneralu Annegowda Subbegowda, an individual engaged in agricultural activities, who faced scrutiny from the Income Tax Department due to substantial cash deposits during the demonetization period in India. The assessee did not file a return for the assessment year 2017-18, leading to an assessment order that treated the unexplained deposits as income from other sources under section 69 of the Income Tax Act, taxable under section 115BBE. The assessee's appeal to the CIT(A)/NFAC was dismissed as time-barred, which was contested before the Income Tax Appellate Tribunal. The Tribunal found procedural errors in the dismissal and restored the case for a fresh examination on its merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126102 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R GALE; STANDING COUNSEL DEPT
• Assessee Lawyers: N RAMARAJU; C.A
• Keywords: Set aside; Unexplained investment; Period of limitation; Time period of passing order
• Section: 142(1); 250; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No. 2352/Bang/2024 Assessment Year: 2017-18 Mr. Madeneralu Annegowda Subbegowda, S/o Annegowda Madeneralu, Kelgur Post, Chikmagalur – 577 111. PAN – EKGPS 9532 F Vs. The Income Tax Officer, Ward – 2, Chikmagalur. . APPELLANT RESPONDENT Assessee by : Shri N Ramaraju, C.A Revenue by : Shri Ganesh R Gale, Standing Counsel for Dept. (DR) Date of hearing : 06.02.2025 Date of Pronouncement : 21.04.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the Revenue against the order passed by the NFAC, Delhi dated 06/11/2024 in ITA No. ITBA/NFAC/S/250/ 2024-54/1070153289(1) for the assessment year 2017-18. 2. The facts in brief are that the assessee is individual and claimed to be engaged in agricultural activity. In the case of the assessee, information was received regarding substantial cash deposits made ITA No.2352/Bang/2024 Page 2 of 5 . during the demonetization period. The assessee did not file a return of income for the year under dispute. 3. Consequently, notices under section 142(1) of the Act were issued, calling for details, including the return of income and proof for the source of cash deposits. The assessee responded by stating that he was an agriculturist and not engaged in any business activity, hence did not have taxable income. Nevertheless, during assessment proceedings, it was found that the assessee had deposited Rs. 15,28,500 in his bank account during the demonetization period and maintained term deposits. Despite claiming the cash was from the sale of agricultural produce, the assessee failed to submit supporting documents like sale bills, expenditure records, or names of buyers. An analysis of his bank account indicated abnormal deposits during the relevant period. Further, the amount was mostly deposited on 21/11/2016 and 22/11/2016, shortly before being transferred into fixed deposits. Due to the absence of evidence proving the genuineness of the claimed agricultural income, the AO concluded that the entire deposit of Rs. 15,28,500 was unexplained investment. Accordingly, it was brought to tax under section 69 of the Act as income from other sources and made taxable under section 115BBE of the Act. 4. The aggrieved assessee preferred an appeal before the learned CIT(A)/NFAC. 5. The learned CIT(A)/NFAC found that the assessment order was passed on 24th September 2019 and the impugned assessment order and demand notice was served on 25th September 2019. Therefore, the ITA No.2352/Bang/2024 Page 3 of 5 . assessee was required to file appeal within 30 days from the date of service of order which was expiring on 25th October 2019. However, the appeal was filed on 22nd November 2019 which was delayed by 28 days. But no such delay in appeal filing was acknowledged by the assessee in Form-35. The assessee further failed to make reply to the notice issued in this regard. Hence, the learned CIT(A) after making reference to various case laws dismissed the appeal of the assessee as not maintainable. 6. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before the tribunal. 7. The Learned AR of the assessee submitted before me that the learned CIT(A)-NFAC erroneously dismissed the appeal on the sole ground that the order of assessment was served on the assessee on 25/09/2019, based on the date and time stamp on the assessment order itself. Consequently, the CIT(A)-NFAC held that the appeal ought to have been filed on or before 25/10/2019. However, the AR contends that the said order was not served on the assessee through any online mode but rather via postal correspondence, which was received only on 23/10/2019. Thus, the claim regarding service on 23/10/2019 is substantiated by fact on record. The ld. AR emphasizes that the appeal was filed on 22/11/2019, which is well within the 30-days statutory period from the actual date of service of the order. It is further submitted that the learned CIT(A)-NFAC failed to consider this factual aspect and unjustly concluded the appeal to be time-barred without due consideration of the facts. ITA No.2352/Bang/2024 Page 4 of 5 . 8. The ld. AR further submits that, throughout the appellate proceedings, the CIT(A)-NFAC issued notices under section 250 of the Income Tax Act on several occasions. The assessee’s brother, Mr. Nagaraja, ensured that all such notices were properly responded to, and comprehensive submissions along with supporting documents were duly filed. However, the final mobile intimation calling for an explanation regarding the alleged delay in filing the appeal was unfortunately overlooked by Mr. Nagaraja. The ld. AR accordingly contends that this oversight was unintentional and should not be held against the assessee, especially given that the appeal was filed within the prescribed limitation period reckoned from the actual date of service of the assessment order. 9. On the other hand, the learned DR before me submitted that the assessee is negligent in pursuing the income tax litigation and therefore the assessee should be imposed some cost for his carelessness behaviour/ approach. The ld. DR vehemently supported the order of the authorities below. 10. I have heard the rival contentions of both the parties and perused the materials available on record. After considering the submissions of the learned AR and the materials placed on record, I find merit in the contention of the assessee that the service of the assessment order was effected only on 23/10/2019 through postal correspondence and not on 25/09/2019 as assumed by the CIT(A)-NFAC. the relevant evidence of delivery of assessment order is placed on pages 24 of the paper book. In view of this, the appeal filed before the CIT(A)/NFAC on 22/11/2019 falls well within the statutory period of 30 days as provided under the Act from the actual date of service of the order. ITA No.2352/Bang/2024 Page 5 of 5 . 10.1 I also observe that the learned CIT(A)-NFAC erred in computing the limitation period from the date of the order or from an unsupported assumption of service date, without verifying the actual mode and date of service. Consequently, the dismissal of the appeal on the ground of limitation without granting a proper opportunity or considering the explanation offered by the assessee amounts to denial of justice. 10.2 Accordingly, I set aside the impugned order of the learned CIT(A)-NFAC and restores the matter to the file of the ld. CIT(A) for fresh adjudication on merits after affording due opportunity to the assessee. The appeal is treated as maintainable. 11. In the result appeal of the assessee is allowed for statistical purposes. Order pronounced in court on 21st day of April, 2025 Sd/- (WASEEM AHMED) Accountant Member Bangalore Dated, 21st April, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "