2025 (7) TMI 1750 - AT - Income Tax

ITAT condones 743-day delay, deletes additions under Sections 68 and 69A for incorrect charging provision

Smt. Anshuka Taneja Versus The Income Tax Officer, Ward-3 (2), Raipur (C.G.)

The ITAT Raipur condoned a 743-day delay in filing the appeal, finding no deliberate or malafide conduct by the assessee and no evidence from the ... Delay of 743 days in filling before ITAT - HELD THAT:- Such delay cannot be attributed to any deliberate or malafide conduct of the assessee, if any. At the same time, the department could not place on record any material /evidence to demonstrate that such delay was caused due to deliberate or malafide act of the assessee. Since reasons are purely circumstancial beyond the control of the assessee, therefore, the said delay of 743 days is condoned - See VIDYA SHANKAR JAISWAL [2025 (1) TMI 1526 - SC ORDER] and INDER SINGH [2025 (3) TMI 1479 - SUPREME COURT] Addition u/s 68 or 69A - unexplained cash credit - incorrect and irrelevant charging section - HELD THAT:- Applying of wrong provision of the Act to the corresponding facts emanating in the case of the assessee itself is an example of non application of mind by the revenue authorities. The issue is no more res-integra. Any quasi-judicial authority needs to provide findings through independent application of mind. In the case of the assessee when the dispute was regarding the nature and source of the cash deposits, in such scenario, applying the provision of Section 68 of the Act which talks of unexplained cash credit itself goes to the root of the matter vitiates the assessment order as well as impugned order i.e. order of the Ld. CIT(Appeals)/NFAC. In a recent decision of Sanjeev Kumar c/o M/s Raj Kumar & Associates [2023 (10) TMI 1027 - ITAT DELHI] no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition - Assessee appeal allowed. ISSUES: Whether delay in filing appeal can be condoned when the delay is 743 days and is not attributable to deliberate or malafide conduct of the appellant.Whether addition under Section 68 of the Income Tax Act, 1961 is sustainable when the dispute relates to cash deposits whose nature and source are in question.Whether the Assessing Officer and appellate authority committed error by applying Section 68 instead of Section 69A of the Income Tax Act, 1961.Whether application of an incorrect charging provision by revenue authorities amounts to non-application of mind and vitiates the assessment and appellate orders.Whether a quasi-judicial authority can make additions beyond the scope of the appeal and the provisions under which the addition is made. RULINGS / HOLDINGS: The delay of 743 days in filing the appeal is condoned as the reasons for delay are 'purely circumstantial beyond the control' of the appellant and there is no evidence of deliberate or malafide conduct; condonation is granted taking guidance from relevant judicial pronouncements.The addition under Section 68 of the Act is unsustainable where the issue concerns explanation of cash deposits, as Section 69A is the relevant provision for unexplained cash deposits.The Assessing Officer and CIT(Appeals) erred by applying Section 68 instead of Section 69A, which constitutes 'non application of mind' and vitiates the assessment and appellate orders.The application of the wrong provision of law by the revenue authorities 'goes to the root of the matter' and renders the addition and related orders void ab initio.The Tribunal or appellate authority is not competent to make additions under provisions not invoked in the appeal, and doing so results in the order being 'vitiated in law.' RATIONALE: The court applied the principles governing condonation of delay, emphasizing absence of malafide or deliberate delay and reliance on recent Supreme Court and High Court decisions.The statutory framework distinguishes between Section 68 (unexplained cash credit) and Section 69A (unexplained cash deposits), requiring correct application based on factual matrix.Precedents from coordinate benches and the Hon'ble High Court of Allahabad were followed, which held that applying incorrect charging sections invalidates the additions and that appellate authorities must apply independent mind within the scope of the appeal.The ruling reiterates the doctrine that quasi-judicial authorities cannot exceed their jurisdiction or alter the charge under which an addition is made, as such acts are ultra vires and legally unsustainable.There is no dissent or doctrinal shift; the decision aligns with established jurisprudence ensuring proper statutory interpretation and procedural fairness.