2023 (3) TMI 210 - AT - Income Tax

Addition on account of cash deposits - HELD THAT - We had carefully gone through the explanation tendered by the appellant during the course of proceedings before the CIT(A), which is extracted by the CIT(A). We also find that the ld. CIT(A) also extracted the entries in the bank statement of father of the appellant, wherein, cash withdrawals of Rs.18,00,000/- were shown. The appellant also filed the confirmation letter from his father stating that he had given cash of Rs.15,00,000/- out of withdrawals made by him. It is evident there is no material to disbelieve the explanation given by the assessee and, therefore, the explanation tendered by the assessee cannot be said to be unreasonable and is a plausible explanation. We do not see any reason to reject the explanation of the assessee. In the circumstances, we are of the considered opinion that the CIT(A) ought not to have rejected the explanation of the assessee. We direct the AO to delete the addition made on account of cash deposits. Thus, the ground of appeal no.1 stands allowed. Addition on account of cost of improvement - HELD THAT - We find that the appellant had failed to produce any evidence in support of the cost of improvement. Accordingly, we confirmed the addition. Thus, the ground of appeal no.2 stands dismissed.

Summary

Issues:
1. Delay in filing the appeal
2. Addition on account of cash deposits
3. Addition on account of cost of improvement

Delay in filing the appeal:
The appeal was filed with a delay of 1058 days, which was attributed to wrong advice from the counsel. The appellant relied on judicial precedents to support the claim that wrong advice can be considered a reasonable cause for delay. The Tribunal, considering the explanation provided, condoned the delay and proceeded to dispose of the appeal.

Addition on account of cash deposits:
The appellant's income tax assessment for the year 2014-15 was completed ex-parte, with additions made on account of unexplained cash deposits and capital gains. The appellant explained that the cash deposits were from withdrawals made by his father, supported by bank statements and a confirmation letter. The CIT(A) rejected the explanation regarding cash from the father but accepted the explanation for other amounts. The Tribunal, after reviewing the evidence, found the explanation plausible and directed the Assessing Officer to delete the addition of Rs.15,00,000 made on account of cash deposits.

Addition on account of cost of improvement:
Regarding the addition on account of cost of improvement, the appellant failed to produce evidence supporting the claimed amount. Consequently, the Tribunal confirmed the addition of Rs.4,12,000. Therefore, the ground of appeal related to the cost of improvement was dismissed.

In conclusion, the Tribunal partly allowed the appeal, directing the deletion of the addition on account of cash deposits while confirming the addition on account of the cost of improvement. The delay in filing the appeal was condoned, and the decision was pronounced on March 1, 2023.