2021 (2) TMI 470 - AT - Income Tax

Addition u/s 68 - No source of cash deposits in his savings bank account with Canara Bank - HELD THAT - The assessee has filed a letter in which the complete details of cash withdrawals and deposits from various banks were furnished. The assessee has also submitted the details of proprietary concern M/s. Voltron Power Systems, where turnover for the concerned assessment year was about ₹ 1,45,00,000, which was deposited in different bank accounts and periodical withdrawals were partly used for deposit in the saving bank account maintained by the assessee with Canara Bank. The assessee has also filed the above details before the CIT(A), but the same was neither examined nor considered. Consequently, the assessee had filed application u/s 154 but CIT(A) rejected the application u/s 154 on the ground that the detailed written submissions were filed on 23.01.2018, and therefore, not considered in the appellate order, which was passed on 17.01.2018. Admittedly, the assessee s books of account are audited and copies of the books of account audited are placed in the paper book filed by the assessee. In the interest of justice and equity, we are of the view that the matter needs to be examined de novo by the A.O - thus addition is restored to the files of the A.O - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Condonation of delay in filing appeal.
2. Addition made under section 68 of the Income Tax Act.

Condonation of Delay in Filing Appeal:
The appeal was filed with a delay of 110 days, and the assessee submitted a petition for condonation of delay citing reasons for the delay. The Tribunal found that the delay was not due to any fault of the assessee and decided to condone the delay, allowing the appeal to be heard on its merits.

Addition Made Under Section 68 of the Income Tax Act:
The core issue revolved around the addition of ?81,48,424 made by the Assessing Officer under section 68 of the Income Tax Act. The AO disallowed the explanation provided by the assessee regarding cash deposits in a savings bank account, stating that the deposits were made months after withdrawals, indicating an attempt to evade tax. The CIT(A) upheld the AO's decision, emphasizing that the appellant failed to substantiate the source of the deposits adequately.

The appellant contended that the CIT(A) overlooked crucial evidence, including Annexure-A detailing the sources of cash deposits. The appellant, a proprietor of a business, presented bank statements, balance sheets, and other financial documents to support the claim that the deposits were linked to legitimate business activities. The Departmental Representative argued against interference, highlighting the substantial time gap between cash withdrawals and deposits.

The Tribunal, after reviewing the submissions and records, found merit in the appellant's contentions. Noting that the CIT(A) failed to consider crucial evidence and explanations, the Tribunal ordered a de novo examination by the Assessing Officer. The matter was remanded for further investigation, directing the AO to provide a fair hearing to the assessee and pass an order in accordance with the law.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the need for a thorough reassessment of the source of cash deposits. The decision was pronounced on February 10, 2021, by the Tribunal.