ITAT Pune Deletes ₹8.22 Lakh Addition: Limited Scrutiny Scope Violated & Demonetization Cash Deposits Adequately Explained
Case Overview
Case: Rashmi Hitesh Anandani Vs ITO (ITAT Pune)
Assessment Year: 2017-18
Section Involved: Section 69 of the Income Tax Act, 1961
The Pune Bench of the Income Tax Appellate Tribunal delivered a significant ruling in favour of the assessee, setting aside an addition of ₹8,22,850/- that had been made under Section 69 of the Income Tax Act, 1961 on account of alleged unexplained cash deposits. The Tribunal's decision rested on two critical findings — first, that the Assessing Officer had overstepped the boundaries of Limited Scrutiny by examining deposits beyond the permitted scope, and second, that the assessee had furnished a credible and verifiable cash flow trail adequately explaining the source of all deposits, including those made during the demonetization period.
Background and Condonation of Delay
Before proceeding to the merits, the Tribunal was required to address a preliminary procedural issue. The Registry had flagged that the appeal was filed 13 days beyond the prescribed limitation period. The assessee submitted a condonation application citing two genuine reasons for the delay:
Reasons Cited for Delay
Bereavement of a close family member: The assessee's father was hospitalised in May 2025 owing to a serious illness. The assessee remained preoccupied with his medical care throughout that period. Tragically, the assessee's father passed away on 03/06/2025, and in the aftermath, the assessee was compelled to discharge various personal, familial, and ceremonial responsibilities, all of which contributed to the delay.
Transition to a new tax consultant: The process of transferring files, compiling requisite documents, and furnishing all relevant information to the newly appointed tax consultant consumed considerable time. By the time the compilation was complete and submitted, the limitation period had inadvertently lapsed by 13 days. The assessee categorically maintained that the delay was wholly unintentional.
Tribunal's Finding on Condonation
The Tribunal, after examining the circumstances, was satisfied that the delay was neither deliberate nor malicious. Placing reliance on the Hon'ble Supreme Court's rulings in Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382), the delay of 13 days was condoned and the appeal was admitted for adjudication on merits.
The Supreme Court in Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. (1987) 2 SCC 107 has consistently held that technical rules of limitation must not be applied so rigidly as to defeat substantial justice, particularly where the delay is minor and the cause is genuine.