ITAT Sets Aside CIT(A) Orders in Unexplained Investment and Cash Deposit Cases, Imposes Costs

ITAT Sets Aside CIT(A) Orders in Unexplained Investment and Cash Deposit Cases, Imposes Costs

Two appeals were filed challenging separate CIT(A) orders concerning additions on account of unexplained investment and unexplained cash deposits under Sections 69 and 69A of the Income Tax Act, 1961. In one case, an addition of Rs. 40 lakh was made for an unexplained investment, and in the other, additions of Rs. 91.68 lakh and Rs. 91.80 lakh were made for cash deposits. Both appeals were filed belatedly, with a 187-day delay in one matter and a 401-day delay in the other.

The assessee sought condonation of delay, citing prolonged illness affecting herself and her husband and the deaths of her father and father-in-law. Supporting affidavits and medical records were produced, which were not disputed by the department.

Issue Raised: Whether the delays in filing appeals could be condoned on medical grounds, and whether the matters should be remanded to the CIT(A) for fresh adjudication after non-compliance with earlier notices.

Tribunal’s Ruling: The Appellant Tribunal held that there was “sufficient cause” to condone the delays, noting that the medical documents/records filed went unchallenged. On the merits, it was shown that the assessee failed to respond to CIT(A) notices issued over several months due to a change in authorised representatives and miscommunication regarding email addresses for notice service.

Given the nature of the issues and the assessee’s non-participation in earlier proceedings, both appeals are allowed for statistical purposes. The impugned orders of the Ld. CIT(A) for A.Ys. 2015-16 and 2017-18 are set aside, and the appeals are restored to their original numbers with a direction to the Learned CIT(A) to grant the appellant an opportunity of being heard and dispose of the matters afresh in accordance with law. The Tribunal, although it held that the assessee and her representatives were not diligent, the Bench imposed costs of Rs. 2,500 in each appeal, to be deposited in the Prime Minister’s National Relief Fund before recommencement of proceedings.

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