The court emphasized the importance of substantial justice over procedural technicalities, allowing the appeal to be reconsidered by the AO with the opportunity for the assessee to present evidence.

आदेश/ORDER

PER MAKARAND V. MAHADEOKAR, AM:

This appeal filed by the assessee is directed against the order dated 19.12.2023 passed by the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi [hereinafter referred to as “CIT(A)”] under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] for the Assessment Year 2017-18 arising out of the order dated 01.10.2019 of the Income Tax Officer, Ward 2, Gandhinagar [hereinafter referred to as “AO”] passed under section 144 of the Act.

Condonation of Delay

2. The appeal is delayed by 362 days. In support of the petition for condonation of delay, the assessee filed a duly notarized affidavit. It is stated therein that the assessee is a Sadhu (priest) of Ramji Mandir, Shertha, Gandhinagar, with limited education and no knowledge of tax procedures. It is submitted that the assessee was initially represented by an incompetent authorised representative, who was unaware of the procedure and timeline for filing appeals before the Hon’ble Tribunal. It is further stated that due to technical difficulties, the assessee was unable to download the order passed by the CIT(A) and a grievance was lodged for the same. On learning of the procedural default, the assessee appointed a new authorised representative and promptly filed the present appeal.

3. The Departmental Representative (DR) raised no objection in condoning the delay and left the decision to the wisdom of the bench.

4. Considering the explanations offered in the affidavit and having regard to the peculiar facts and background of the assessee, we are of the view that the delay was not deliberate or contumacious, but due to genuine hardship. It is a settled position in law that where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. Accordingly, in the interest of justice, and to ensure that a party is not denied an opportunity to contest on merits owing to procedural lapses beyond his control, the delay of 362 days is hereby condoned.

Facts of the Case

5. The assessee is an individual engaged in performing religious duties as a priest of Ramji Mandir, Shertha. The assessee did not file a return of income for A.Y. 2017-18. Based on information received, the AO noticed that the assessee had made cash deposits of Rs. 5,00,000/- each in two bank accounts with Dena Bank and Rs. 2,00,000/- in another account with Ahmedabad District Central Co-operative Bank during the demonetization period (08.11.2016 to 30.12.2016), aggregating to Rs. 12,00,000/-. In addition, there were credits other than cash deposits amounting to Rs. 81,763/-, resulting in a total credit of Rs. 12,81,763/-. Notices under section 142(1) were issued on multiple occasions—dated 08.03.2018, 11.06.2019, 02.08.2019, and 21.08.2019—and a final show cause notice dated 21.09.2019 was also issued with the prior approval of the JCIT under section 144A. Despite these, there was no substantive compliance from the assessee. Subsequently, the assessment was completed ex parte under section 144 r.w.s. 143(3) by making an addition of Rs. 12,81,763/- under section 69A of the Act. The AO also directed to charge tax at 60% under section 115BBE, along with interest under sections 234A/B/C and initiated penalty proceedings under sections 271AAC(1), 270A, and 272A(1)(d).

6. The assessee preferred appeal before the CIT(A). However, as noted in the appellate order, no compliance was made to multiple hearing notices issued on 29.12.2020, 16.03.2023, and 03.11.2023. Consequently, the appeal was dismissed both for non-prosecution and on merits. The CIT(A) confirmed the addition made by the AO, observing that the assessee had failed to substantiate the claim of the amount being accumulated past savings or offerings (Dakshina). The appellate authority held that no explanation or supporting material was placed on record and sustained the addition of Rs. 12,81,763/-