Supreme Court Condones 166-Day Delay In Income Tax Appeal And Revives ITAT Proceedings

1. Background of the Dispute

The matter in Vidya Shankar Jaiswal Vs ITO (Supreme Court of India) reached the Supreme Court after the assessee’s appeal before the Income Tax Appellate Tribunal, Raipur Bench, was rejected solely on the ground of delay. The subsequent appeal under Section 260A before the Chhattisgarh High Court also failed, again because the delay was not condoned.

The Supreme Court was therefore called upon to decide a narrow but significant procedural issue: whether a delay of 166 days in filing an appeal before the ITAT should be condoned, given the explanation and circumstances presented by the assessee.

Key features of the case context:

  • Assessment Year: 2014-15
  • Sections involved in assessment: Sections 144/147 of the Income Tax Act, 1961
  • Addition made by AO: Cash deposits of Rs. 34,67,700/- treated as unexplained money under Section 69A
  • Income determined by AO: Assessed income fixed at Rs. 34,67,700/- by order dated 16.12.2018
  • Return filed later by assessee: Declared income of Rs. 9,99,250/-

The factual controversy on merits, relating to the treatment of cash deposits in the assessee’s savings bank account and the validity of reassessment under Sections 144/147, was not decided by the Supreme Court. The Court limited itself to examining whether refusal to condone the delay was justified.

2. Chronology of Proceedings

2.1 Assessment Stage

  • The Assessing Officer (AO) passed an order on 16.12.2018 under Sections 144/147 of the Income Tax Act, 1961.
  • The AO treated cash deposits of Rs. 34,67,700/- in the assessee’s savings bank account as unexplained money in terms of Section 69A, thereby determining the total income at Rs. 34,67,700/-.
  • Subsequently, the assessee filed a return declaring total income of Rs. 9,99,250/-.

The record indicated that the assessee did not actively participate in the reassessment proceedings before the AO, which later became a factor considered by the High Court while dealing with the issue of delay.

2.2 First Appeal before CIT(A)

  • The assessee preferred a first appeal against the assessment order before the CIT(A).
  • The CIT(A), by order dated 29.03.2023, dismissed the appeal and upheld the assessment.

The assessee’s conduct at this stage was also commented upon by the High Court, as it found that the assessee had not effectively participated in the appellate process.

2.3 Appeal before ITAT and Delay

  • The assessee then sought to challenge the order of the CIT(A) before the Income Tax Appellate Tribunal, Raipur Bench.
  • The appeal, registered as ITA No.351/RPR/2023, was filed on 10.11.2023.
  • There was an acknowledged delay of 166 days in filing the appeal.

Along with the appeal, the assessee submitted:

  • An application for condonation of delay, and
  • An affidavit explaining the reasons that purportedly led to filing the appeal belatedly.

2.4 ITAT’s Order Refusing Condonation

  • The ITAT, by order dated 13.02.2024 in ITA No.351/RPR/2023, declined to condone the delay of 166 days.
  • As a result, the appeal was not admitted on merits and stood rejected at the threshold on limitation alone.

The Tribunal was not persuaded by the explanation offered in the condonation application and affidavit, and treated the delay as unexplained.

2.5 Appeal before Chhattisgarh High Court under Section 260A

Aggrieved by the ITAT’s refusal to condone the delay, the assessee invoked Section 260A of the Income Tax Act, 1961 and approached the Chhattisgarh High Court.

2.5.1 Assessee’s Contention Before High Court

Before the High Court, the assessee, inter alia, argued: