2022 (10) TMI 625 - AT - Income Tax

Reopening of assessment u/s 147 - unexplained money u/s.69A - HELD THAT - Although, the assessee claims to have made each deposit out of rental income from property, but could not file any evidence from which property so called rent is derived, from whom said rental income is received. Therefore, in absence of details regarding rental receipt from property, the explanation of the assessee is that cash deposits into bank account is out of rental income, cannot be accepted. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to sustain the addition made towards cash deposits into bank account. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the assessee.

Issues:
1. Condonation of delay in filing appeal.
2. Addition of unexplained cash deposits in bank account.
3. Rejection of explanation for cash deposits.
4. Sustainment of additions made by the AO.
5. Dismissal of the appeal by the assessee.

Condonation of Delay in Filing Appeal:
The appeal filed by the assessee was initially barred by limitation. However, a petition for condonation of delay was submitted, explaining the reasons for the delay. The counsel argued that the delay should be condoned as the appeal could not be filed within the prescribed time under the Act. After considering the petition, it was concluded that the reasons provided by the assessee constituted a reasonable cause for the delay, as allowed under the Act. Consequently, the delay in filing the appeal was condoned, and the appeal was accepted for adjudication.

Addition of Unexplained Cash Deposits in Bank Account:
During the relevant financial year, a significant sum was deposited in the assessee's savings bank account. As the assessee did not file an income tax return for that assessment year, the assessment was reopened under section 147 of the Act. Despite being asked to provide details regarding the cash deposits and property ownership, the assessee failed to furnish the necessary information. The Assessing Officer (AO) then proposed to treat the cash deposits as the assessee's income for that year. The AO allowed a portion of the deposits based on withdrawals made earlier but treated the remaining amount as unexplained money under section 69A of the Act. The First Appellate Authority upheld these additions.

Rejection of Explanation for Cash Deposits:
The assessee claimed that the cash deposits were made from rental income but failed to provide evidence regarding the source of this rental income or the details of the property generating such income. As a result, the explanation that the deposits were from rental income could not be accepted. The lack of details regarding the rental receipts led to the rejection of the assessee's explanation by the authorities.

Sustainment of Additions Made by the AO:
Upon review of the materials and orders from the authorities below, it was determined that the explanation provided by the assessee regarding the cash deposits was insufficient. The absence of evidence supporting the source of the rental income led to the conclusion that the additions made by the AO towards unexplained cash deposits were justified. Consequently, the findings of the First Appellate Authority were upheld, and the appeal filed by the assessee was dismissed.

Dismissal of the Appeal by the Assessee:
After considering the arguments from both parties and examining the available records, it was concluded that the explanation provided by the assessee for the cash deposits was inadequate. As a result, the appeal filed by the assessee was dismissed, affirming the decision to treat the cash deposits as unexplained income.

This detailed analysis of the judgment highlights the key issues addressed in the case, including the condonation of delay, addition of unexplained cash deposits, rejection of explanations, sustainment of additions, and the final dismissal of the appeal by the assessee.

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