Chhattisgarh High Court Upholds ITAT Order, Rejects Condonation of 166-Day Delay in Section 69A Addition Case

The transition to digital and faceless tax administration has brought about significant changes in how communications are handled between the revenue department and the assessee. However, technical arguments regarding electronic service of notices cannot serve as a blanket shield for habitual non-compliance. In a recent judicial pronouncement, the Chhattisgarh High Court dismissed an appeal filed under Section 260A of the Income-tax Act, 1961, refusing to condone a 166-day delay in approaching the Income Tax Appellate Tribunal (ITAT).

The case, Vidya Shankar Jaiswal Bhagat Singh Vs ITO, underscores the judiciary's strict stance on the timely filing of appeals and the necessity for an assessee to actively participate in assessment and appellate proceedings. The High Court affirmed the ITAT's view that condoning substantial delays for an assessee who has consistently demonstrated a lackadaisical attitude would set an incorrect legal precedent.

Factual Matrix of the Dispute

The genesis of the dispute traces back to the Assessment Year (AY) 2014-15. The assessee had initially failed to file the requisite return of income for the said assessment year, attributing this failure to personal illness.

During the course of gathering intelligence, the Assessing Officer (AO) retrieved data from the Actionable Information Monitoring System of the Income Tax Business Application. The data revealed that the assessee had made cash deposits amounting to Rs. 34,67,700/- in a savings bank account during the relevant financial year. Consequently, the AO initiated proceedings to reopen the case under Section 147 of the Income-tax Act, 1961.

Despite the issuance of multiple notices during the reassessment proceedings, the assessee did not participate or offer any explanation regarding the source of the deposited funds. Left with no alternative, the AO proceeded to frame a best judgment assessment under Section 144 read with Section 147 of the Act.

As per the order dated 16.12.2018, the AO determined the total income at Rs. 34,67,700/-, treating the entire cash deposit as unexplained money under Section 69A of the Act. The AO also initiated penalty and interest proceedings for the failure to file the return within the statutory timeframe.

Interestingly, shortly after the assessment order was passed, the assessee filed a return of income on 27.12.2018, declaring a total income of Rs. 9,99,250/-.

Progression Through Appellate Forums

Proceedings Before the CIT(A)

Aggrieved by the AO's order, the assessee preferred a first appeal before the Commissioner of Income-Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi. The appellate authority issued four separate notices to the assessee, intimating the dates of hearing and providing ample opportunity to present documentary evidence or submissions to explain the nature and source of the Rs. 34,67,700/- cash deposits.