2023 (1) TMI 957 - AT - Income Tax

Addition u/s 68 - unexplained income in the nature of cash deposits in the bank accounts of the assessee - HELD THAT - At this stage, it was not possible for the assessee to obtain confirmation from the friends and relatives after such a long time gap when the assessee has retired from service. In this regard, the assessee also placed on record an affidavit of the assessee which was not controverted by the Department. Therefore, in the absence of any contrary material by the Department, the Bench is of the view from the contents of the affidavit of the assessee that the assessee being an army personnel would not take risk in filing the false affidavit. Hence, the Bench feels that the assessee had received Rs.2,18,100/- from the friends and relatives against repayment of earlier loans. Thus the assessee is entitled for deletion of Rs.2,18,100/- from the total addition of Rs.15,41,749/-. As far as remaining addition assessee in this regard has filed cash flow statement taking opening balance bearing corrections in the factual errors done by previous counsel which has been placed on record - The Bank statements of all the three banks accounts of the assessee for the relevant assessment are also placed on record. Since it was a peculiar case of the assessee that he had withdrawn amounts from his bank accounts, therefore, he has placed on record bank statements of three bank accounts which could be verified by the revenue authorities. Therefore, AO is directed to verify the cash flow statement as submitted by the assessee with transactions carried out in these bank accounts by accepting opening cash balance in the cash flow statement and thus pass afresh order. Assessee is directed to submit the relevant documents/ evidences concerning the issue before the AO. Hence, the issue is restored to the file of the AO for afresh consideration by providing adequate opportunity of being heard to the assessee. Thus the appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues Involved:
1. Jurisdiction and transfer of case records.
2. Sustaining addition of Rs.15,41,749/- as unexplained income.
3. Condonation of delay in filing the appeal.

Detailed Analysis:

1. Jurisdiction and Transfer of Case Records:
The appellant initially raised the issue that the order of the CIT(A) was without jurisdiction and did not consider the request to transfer the case records to the Jaipur office. However, during the hearing, the appellant did not press this ground. Consequently, this issue was dismissed as not pressed.

2. Sustaining Addition of Rs.15,41,749/- as Unexplained Income:
The primary issue in this appeal was the addition of Rs.15,41,749/- out of a total of Rs.20,41,749/- made by the AO on account of alleged unexplained income from cash deposits in the assessee's bank accounts.

Facts and Proceedings:
- The assessee, an army personnel, filed a return of income for the A.Y. 2009-10 declaring a net taxable income of Rs.8,68,646/-, later revised to Rs.7,78,370/-.
- The case was selected for scrutiny due to cash deposits of Rs.15,32,350/- in Axis Bank and Rs.5,09,399/- in ICICI Bank, which the assessee failed to explain satisfactorily.
- The AO added Rs.20,41,749/- as unexplained money due to the lack of correlation between withdrawals and deposits and the absence of substantive evidence.

First Appeal:
- The CIT(A) confirmed the addition of Rs.15,41,749/- while accepting the explanation for Rs.5,00,000/-.
- The CIT(A) found discrepancies in the explanations provided by the assessee during assessment and appellate proceedings, particularly regarding the amounts claimed to be received from relatives and cash withdrawals from bank accounts.

ITAT's Observations:
- The assessee's revised cash flow statement and affidavit were considered.
- The ITAT noted that the assessee, being an army personnel, had genuine difficulties in obtaining confirmations from friends and relatives for Rs.2,18,100/- received against earlier advances.
- The ITAT accepted the affidavit and the revised cash flow statement, directing the AO to verify the transactions and accept the opening cash balance of Rs.8,54,803/-.

Conclusion:
- The ITAT allowed the deletion of Rs.2,18,100/- from the total addition and restored the remaining issue to the AO for fresh consideration, directing the assessee to submit relevant documents.

3. Condonation of Delay in Filing the Appeal:
- The appeal was delayed by 453 days, which the assessee attributed to the Covid-19 pandemic and postal delays.
- The ITAT considered the Supreme Court's order extending the limitation period due to the pandemic and found sufficient cause for the delay.
- The application for condonation of delay was allowed, enabling the appeal to be heard on merits.

Conclusion:
The appeal was partly allowed for statistical purposes, with the ITAT directing the AO to verify the revised cash flow statement and pass a fresh order after providing an adequate opportunity to the assessee. The issue of jurisdiction was dismissed as not pressed, and the delay in filing the appeal was condoned.