2024 (6) TMI 968 - AT - Income Tax

Society's 233-day delayed appeal condoned due to CA's gross negligence and villagers' unfamiliarity with tax provisions

The Mullana Agriculture Coop Society, Mullana, Ambala City (Haryana) Versus The ITO, Ward 5, Ambala

The Mullana Agriculture Coop Society, Mullana, Ambala City (Haryana) Versus The ITO, Ward 5, Ambala - TMI Issues:1. Condonation of delay in filing the appeal.2. Addition of Rs. 1,64,33,133 as unexplained cash credit under section 68 of the Income Tax Act.3. Failure to explain the nature and source of cash deposits during assessment year 2017-18.4. Dismissal of the appeal by the ld. CIT(A) and confirmation of the addition made by the Assessing Officer.5. Negligence of the previous Chartered Accountant and subsequent actions taken by the assessee.Detailed Analysis:1. The assessee filed an appeal with a delay of 233 days, attributing the delay to managerial changes and lack of awareness regarding income tax procedures. An affidavit was submitted explaining the circumstances leading to the delay. The Tribunal, after considering the application and affidavit, found the delay to be inadvertent and bonafide, thereby condoning the delay and allowing the appeal to proceed on merits.2. The Assessing Officer made an addition of Rs. 1,64,33,133 as unexplained cash credit under section 68 of the Income Tax Act. The assessee, a primary agriculture cooperative society, explained that the cash deposits were from members during the demonetization period. Despite providing details of the deposits and members, the Assessing Officer was not satisfied, leading to the addition. The ld. CIT(A) upheld the addition due to the assessee's failure to explain the nature and source of the cash deposits.3. The failure to explain the nature and source of cash deposits during the assessment year 2017-18 was a crucial issue. The society's explanation regarding members and the purpose of deposits was not considered sufficient by the authorities, resulting in the addition of the amount as unexplained cash credit under section 68 of the Act.4. The appeal before the ld. CIT(A) did not yield a favorable outcome for the assessee as no material facts were presented to counter the Assessing Officer's findings. The dismissal of the appeal and confirmation of the addition highlighted the lack of compliance and explanation on the part of the assessee, leading to the decision against them.5. The negligence of the previous Chartered Accountant in handling the tax matters of the assessee society was a significant factor in the case. The new Chartered Accountant highlighted the lack of timely actions, missed deadlines for appeals, and failure to attend hearings. The Tribunal acknowledged the hardships faced by the assessee due to the negligence of the previous counsel and restored the file to the ld. CIT(A) for a fresh decision, emphasizing the need for a fair opportunity for the assessee to present their case.