Madan Singh vs Income Tax Officer, Ward-29(1), Delhi

PER MANISH AGARWAL, AM:

These two appeals are filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [ld. CIT(A)] dated 27.09.2025 u/s 250 of the Income Tax Act, 1961 (“the Act” in short) arising out of the order dated 30.12.2021 u/s 271B of the Act and order dated 15.12.2019 u/s 144 of the Act for Assessment Year 2017-18.

First we take up the appeal in ITA No.7825/Del/2025 for adjudication.

Brief facts of the case are that assessee is an individual and has not filed the return of income for the year under appeal. It was observed that huge cash was deposited in the bank account in Specified Bank Notes (SBN) during the demonetization period and, therefore, the case of the assessee was taken up for scrutiny. Thereafter, notice u/s 143(2) was issued followed by the notices u/s 142(1) of the Act from time to time alongwith questionnaires. The assessee finally filed the return of income on 30.07.2019 declaring total income at Rs.5,30,100/- as income from dairy business. It was the claim of the assessee that he is a retired army man and was allotted Dairy booth by Mother Dairy and the cash deposited was out of the sales made at the booth. The AO has not accepted the contention of the assessee and estimated the income by applying the profit rate of 1.5% of total cash deposited at Rs.2,56,64,748/- which comes to Rs.3,84,972/-. However, the income declared by the assessee was higher than the income estimated, the assessment was completed at the income declared by the assessee on 5,30,100/-. However, as per ITNS 150, tax was charged at the higher rates as prescribed u/s 115BBE of the Act. The AO further invoked the penalty proceedings u/s 271A of the Act for non-maintenance of books of accounts and also initiated the penalty proceedings u/s 271B for failure the get the account audited as per section 44AB of the Act.

Against the said order, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal of the assessee as there was a delay of 1551 days.

Aggrieved by the said order, assessee is filed appeal before the Tribunal by taking various grounds of appeal:

With regard to the ground of appeal No.1 regarding dismissal of appeal without condoning the delay by ld. CIT(A), the Ld. AR submits that assessee is ex-service man and was allotted Mother Dairy Booth. The assessment order was passed on 15.12.2019, however, due to the Covid Pandemic and further due to natural calamity and flood in the assessee’s native place in Himachal Pradesh in the year 2022. The assessee get stuck up and could not file the appeal within the prescribed time. He, therefore, prayed for the condonation of delay and requested that the appeal of the assessee be admitted for adjuration. An affidavit of the assessee reaffirming these facts is also filed and further reliance is placed on the judgment of the Supreme Court in the case of N. Balakrishnan v. M. Krishnamurthy, AIR 1998 SC 3222 and Collector, Land Acquisition v. Mst. Katiji (1987) 2 SCC 107..

On the other hand, Ld. Sr. DR vehemently supported the order of Ld. CIT(A) and submits that there was an inordinate delay of 1551 days and assessee has failed to give any reasonable explanation, therefore, the delay should not be condoned and appeal be dismissed.

Heard the parties and perused the materials available on record. It is observed that Ld. CIT(A) has not admitted the appeal of the assessee on the ground of delay of 1551 days in filing the appeal before him for which explanation was given by the assessee of Covid Pandemic and, thereafter due to natural calamity of flood in his e village where his house was got damaged. However, the ld. CIT(A) has not treated it as a reasonable and sufficient cause and dismissed the appeal as not admissible. The Hon’ble Supreme Court vide its order in Suo Moto Writ Petition in SMW(C) No. 03/2022 has extended the period of limitation falling under Covid-19 period, till 31.05.2022 due to Covid pandemic. Further it was stated by the assessee that his entire family was effected by the Covid and was in serious mental trauma. Thereafter, due to natural calamity of flood in his native village where his house was swept away in August 2022. All these circumstance which are beyond the control of the assessee and resulted into the delay in filing the appeal. After considering the overall facts and the reasons for delay as stated by the assessee, if the period of COVID-19 pandemic is excluded as per the order of hon’ble Supreme court and further the delay due to natural calamity of flood is considered, in our opinion there is a reasonable and sufficient cause with the assessee in filing the appeal delayed by 1551 days before the ld. CIT(A). It must be remembered that in every case of delay, there can be some lapses on the part of the litigant concerned however, that alone is not enough to turn down the plea of assessee and to shut the doors against him. When the explanation does not smack of mala fide or it is not putforth as a part of dilatory strategy, the Courts must give utmost consideration to such litigant and its right of hearing of appeal on merit ought not to be rejected. Considering the overall facts and circumstances of the case and in the larger interest of justice, we condoned the delay in filing the appeal before the Ld. CIT(A). It is observed that Ld. CIT(A) has not decided the appeal of the assessee on merits. However, from the perusal of the assessment order, it is observed that even though the income of the assessee was estimated by the Assessing Officer yet such estimation was less than the income declared by the assessee therefore no addition was made. However, while computing the tax liability of the assessee, tax at the special rate as provided u/s 115BBE of the Act was charged. From the assessment order, it is observed that nowhere in the order any satisfaction was recorded that the income was assessed by taking recourse of section 68 or 69 and thus provisions of section 115BB cannot be invoked. Moreover, the Hon’ble Madras High Court in the case of SMILE Microfinance Ltd. v. ACIT in WP(MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled this issue and held that Section 115BBE applies from AY 2018-19 and onwards. Recently the Hon’ble Rajasthan High Court in the case of Deepak Maratha Vs. Union of India in DB CWP No. 3625/2020 vide order dt. 27.05.2026 has held as under:

Thus, by following the aforesaid judgements of hon’ble high courts, considering the fact that the year under appeal before us is AY 2017-18 thus, we are of the view that the provision of section 115BBE of the Act are not applicable for AY 2017-18 and are applicable from AY 2018-19 and onwards. Therefore, we direct the AO to charge the tax at normal rate of tax. The ground of appeal No. 3 of the assessee is thus allowed.

Ground No.4 with respect to initiation of penalty proceedings u/s 271A and 271B which is premature in nature thus, dismissed.

In the result, the appeal in ITA No.7824/De/2025 is partly allowed.

The brief facts of the case are that AO has levied the penalty u/s 271B of the Act of Rs.1,28,323/- by holding that the assessee has turnover of the Rs.2,56,64,748/- and had not get his account audited as provided u/s 44AB of the Act, thus, is liable for penalty u/s 271B of the Act.

Against the said order, an appeal was preferred before the Ld. CIT(A), and since, the same was filed delayed by 958 days, the Ld. CIT(A) dismissed the appeal of the assessee by not condoning the delay. Aggrieved by the said order of ld. CIT(A), the assessee is in appeal before the Tribunal wherein the grounds of appeal No.1 & 2 are with respect to dismissal of appeal without condoning the delay in filing the appeal before the Ld. CIT(A). The grounds of appeal No.3 is with respect to the levy of penalty u/s 271B of the Act.

Heard both the parties and perused the materials available on record. It is observed that the assessee has filed appeal against the penalty order passed u/s 271B of the Act dated 29.12.2021 on 16.09.2024 before the Ld. CIT(A). regarding the delay, it was stated by the assessee that the penalty order was passed during the Covid-19 Pandemic period during which assessee and his family were got effected very badly and were under metal trauma. Thereafter due to natural calamity of flood at the native place of the assessee resulting into the damage of his house and due to these circumstances which are beyond the control of the assessee. the appeal could not be filed within prescribed time. However, the Ld. CIT(A) has failed to appreciate the circumstances as stated above and hold that the assessee has not made out of a case of reasonable cause and thus not condoned the delay and dismissed the appeal of the assessee. Looking to the entirety of the facts, we are of the view that the assessee has been able to successfully demonstrated that he has sufficient and reasonable cause for delay in filing the appeal before the Ld. CIT(A) by 958 days. Further if the period of Covid-19 Pandamic as has been directed by the Hon’ble Supreme Court in Suo Moto Writ Petition in SMW(C) No. 03/2022 is excluded, and further the period covered due to the natural calamity of the flood in the native village of the assessee is considered, the remaining period of delay could be condoned. Accordingly, we condone the delay in filing the appeal of the assessee before the Ld. CIT(A).

It is further observed that the AO has levied penalty by observing that the assessee has turnover of Rs. 2,56,64,748/-, however, he has failed to get his books of accounts audited in accordance with the provision of section 44AB of the Act and, therefore, levied the penalty u/s 271B of the Act at Rs.1,28,323/-. The assessee is running a Dairy Booth allotted by Mother Dairy where products sold by the assessee are supplied by the Mother Dairy and assessee got the commission from the sales made, therefore, the receipts for the purpose of section 44AB of the Act is the commission receipts on such sales, and the entire sales made on behalf of the principal cannot treated as a real turnover of the assessee. Under identical facts in the case of Shri Dharam Singh in ITA No.472/Del/2024, the Co-ordinate Bench of Delhi Tribunal vide its order dated 11.09.2024 has deleted the penalty levied u/s 271B of the Act. The facts being identical in the instant case, therefore, by respectfully following the order of the Co-ordinate Bench in the case of Shri Dharam Singh (supra) we hold that the assessee being the commissions agent, selling products of Mother Dairy on commission basis, therefore, the turnover of the assesse should be the commission income which is very less than the limits prescribed for getting the accounts audited u/s 44AB and accordingly, the penalty levied u/s 271B of Rs.2,56,64,748/-, /- is hereby deleted. The grounds of appeal No.1 to 4 of the assessee are thus allowed.

In the result appeal of the assessee is allowed.

In the final result, the appeal in ITA No.7824/Del/2025 is partly allowed and Appeal No.7825/Del/2025 is allowed.