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2020 (3) TMI 539 - AT - Income TaxUnexplained cash Deposits - certain time gap between withdrawal and deposit - HELD THAT - Assessee has explained that withdrawal of ₹ 15.2 lacs was made out of maturity of fixed deposit receipt of ₹ 14.67 lacs which was credited in his bank account on 16.04.2009 and opening balance of ₹ 91,667 in his bank account. The assessee has further explained that fixed deposit was made out of compensation amount of ₹ 16,14,382/- received from RIICO, Bhiwadi (Alwar) being 5/8 share in the ancestral agricultural land which was acquired by RIICO in the preceding financial year i.e. 2008-09. These are undisputed facts which are emerging from records and we therefore, find that the assessee has reasonably explained the source of cash deposit in his bank account which is the amount of compensation received on sale of his agricultural land. Where the compensation on sale of agriculture land is not disputed, the amount deposited out of such compensation cannot be disputed. The assessee has further explained that it has deposited the amount finally with RHB. Therefore, where the source and even subsequent deposit is clearly established in the instant case, merely on account of fact that there was certain time gap between withdrawal and deposit cannot be held against the assessee and thus, we do not see any justifiable basis for holding that the amount so deposited remain unexplained. - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Sustenance of addition of ?9,00,000/- as unexplained income. Condonation of Delay in Filing the Appeal: The appeal was filed with a delay of 139 days. The assessee submitted a condonation application along with an affidavit explaining the delay. The delay was attributed to the appellant's bona-fide ignorance of the exact time limit for filing the second appeal, as well as the dependency on his Authorized Representative (AR) who had limited experience. The AR's ignorance of the procedural requirements and the appellant's reliance on the AR were presented as reasonable causes for the delay. The assessee filed an application under Section 154 of the Income Tax Act on 11.01.2019, which was disposed of on 30.04.2019. The present appeal was filed on 23.07.2019. The time taken between the filing and disposal of the application under Section 154 was reasonably excluded while computing the limitation period. Considering the facts and circumstances and in the interest of substantial justice, the delay was condoned, and the appeal was admitted for adjudication. Sustenance of Addition of ?9,00,000/- as Unexplained Income: The facts of the case revealed that the assessee had deposited ?9,00,000/- in his bank account. Since the assessee did not file any return of income, a notice under Section 148 was issued, but there was no compliance. Consequently, the Assessing Officer (AO) proceeded under Section 144 and treated the cash deposits as unexplained income, completing the assessment under Section 147 read with Section 144. The assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], explaining that the cash deposit was from earlier cash withdrawals of ?15,20,000/- on 16.04.2009 and 08.06.2009. The CIT(A) accepted the withdrawal but found the explanation of keeping the cash for 10 months unacceptable and confirmed the addition. During the hearing before the tribunal, the assessee's AR reiterated that the appellant, a small-timer with no regular source of income, had withdrawn the cash from his bank account to invest in the Rajasthan Housing Board. Due to procedural issues, the investment was delayed, and the cash was later deposited back. The AR argued that the CIT(A) misapplied the judgment in the case of Bhawani Singh vs. ITO, which had different facts. The AR cited the case of Smt. Manisha Gaba vs. ITO, where the tribunal differentiated the facts and allowed the appeal. The assessee also highlighted that he received compensation from RIICO for ancestral land, which was invested in Fixed Deposit Receipts (FDR). The funds from the matured FDR were withdrawn and later deposited back for investment purposes. The department did not provide any evidence of the funds being used elsewhere. The tribunal considered the explanations and found that the source of the cash deposit was reasonably explained as compensation received from RIICO. The tribunal noted that the compensation on the sale of agricultural land was not disputed, and therefore, the deposit from such compensation could not be disputed. The tribunal held that the time gap between withdrawal and deposit could not be held against the assessee. Consequently, the addition made by the AO was deleted, and the appeal was allowed. Conclusion: The tribunal allowed the appeal by condoning the delay and deleting the addition of ?9,00,000/- as unexplained income, finding the assessee's explanation reasonable and supported by evidence. The order was pronounced in the open court on 03/03/2020.
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