2019 (8) TMI 730 - AT - Income Tax

Condonation of delay of 655 days - negligence of an employee - HELD THAT - We have carefully considered reasons given for not filing appeal within the due date provided under the Act, and found that the reasons given by the assessee that he could not noticed service of order from the office of the CIT(A) due to mistake of assessee working at residence appears to be reasonable and comes within the meaning of reasonable cause, as provided u/s 273B. We further noted that ordinarily, a litigant does not stand to benefit by filing an appeal late, rather it creates undue hardship to the litigant, because of tax demand. Therefore, when the appellant gives reasons, for not filing the appeal within the due date prescribed under that and such reasons are supported by necessary sworn affidavit, then merely for the reason of no supporting evidences, the contents of affidavit cannot be ignored. We are of the considered view that there is a reasonable cause for not filing appeal within the time limit provided under the Act, and hence, the delay in filing of appeal is condoned and appeal filed by the assessee is admitted for hearing Addition of unaccounted money of the assessee u/s 69A - cash found during the course of search o/s 132 - assessee claims that cash found during the course of search belongs to his brother in law, who also confirmed this facts - HELD THAT - The assessee all along claims that said cash belongs to his brother in law Shri. Sanath kumar Shetty and this fact was even confirmed by his brother in law Mr. Sanath kumar Shetty. Therefore, we are of the considered view that merely for the reason that there is a difference in statement given at the time of search and statement given in sworn affidavit regarding source of cash in the hands of Mr. Sanath Kumar Shetty, no adverse inference could be drawn against the assessee that said cash belongs to the assessee and assessee is unable to explain source of cash found during the course of search. We further noted that it is not a case of the AO that there is a difference between statement given during the course of search and explanation furnished during the course of assessment proceedings. The assessee has right from the date of search to till date of assessment had taken one stand, in respect of cash found from his residence. Therefore, we are considered view that the Ld.AO, as well as Ld.CIT(A) erred in sustained additions towards cash found, during the course of search u/s 69A - appeal filed by the assesse is allowed

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition of ?18 lakhs as unexplained cash under Section 69A of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:

The assessee filed an appeal with a delay of 655 days. The assessee argued that the delay was due to the negligence of an employee who failed to notice the order served at the residence. Upon realizing the oversight, the assessee promptly obtained a copy of the appellate order and filed the appeal. The assessee relied on the Supreme Court decision in the case of Collector of Land Acquisition vs. Mst. Katiji & Ors. (167 ITR 471) and ITAT Mumbai's decision in M/s. Lahoti Overseas Ltd. vs. DCIT (ITA.No. 3786/Mum/2012) to support the condonation request.

The Revenue opposed the condonation, arguing that the reasons provided did not constitute a reasonable cause and lacked documentary evidence. They cited the ITAT Pune Bench decision in DCIT vs. Veena Industries Limited (120 ITD 481).

The Tribunal, after considering the reasons and legal precedents, found the reasons for delay reasonable and within the meaning of "reasonable cause" under Section 273B of the Income Tax Act, 1961. The Tribunal emphasized that refusing to condone the delay could result in a meritorious matter being dismissed at the threshold, defeating the cause of justice. Therefore, the delay was condoned, and the appeal was admitted for hearing.

2. Addition of ?18 Lakhs as Unexplained Cash under Section 69A:

During a search and seizure action under Section 132 at the assessee's residence, ?18 lakhs in cash was found. The assessee claimed that the cash belonged to his brother-in-law, Mr. Sanath Kumar Shetty, and provided an affidavit from Mr. Shetty confirming this. However, the Assessing Officer (AO) found discrepancies in the statements and concluded that the assessee failed to substantiate the claim with necessary evidence, leading to the addition of ?18 lakhs as unaccounted money under Section 69A.

The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's decision, citing the presumption under Section 132(4A) that the cash belonged to the person from whose custody it was seized unless rebutted with evidence. The CIT(A) noted contradictions in the assessee's statements and the affidavit and highlighted the lack of supporting evidence, such as travel details of the employee who allegedly brought the cash.

The Tribunal, after hearing both parties, noted that the assessee consistently claimed that the cash belonged to Mr. Sanath Kumar Shetty and provided supporting evidence, including an affidavit. The Tribunal found that the AO and CIT(A) erred in giving undue weight to minor discrepancies in the statements and ignoring the consistent explanation and supporting affidavit. The Tribunal emphasized that the assessee had substantiated the claim with necessary evidence and that the AO's basis for addition was weak.

The Tribunal concluded that the AO and CIT(A) erred in sustaining the addition under Section 69A and directed the AO to delete the addition of ?18 lakhs as unexplained money.

Conclusion:

The appeal was allowed, and the order of the CIT(A) was set aside. The AO was directed to delete the addition of ?18 lakhs made under Section 69A of the Income Tax Act, 1961. The Tribunal pronounced the order in the open court on 09/08/2019.