RUKMINIVENKATA MURARISETTY PADMAVATHI,NARASARAOPET vs. ITO, WARD-1, NARASARAOPET

The appellant filed a petition for condonation of delay along with an affidavit and submitted that she was suffering from acute febrile illness c-Jaundice for which she underwent medical treatment. The appellant filed a medical certificate in proof of the same and submitted that the delay in filing the appeal is for the reasons mentioned, which are neither deliberate nor intentional but beyond the control of the appellant. She, therefore, pleaded to condone the delay and admit the appeal for hearing.

After going through the petition filed along with medical certificate, we find there is a sufficient cause for the appellant to file the appeal belatedly. We, therefore, condone the delay and admit the appeal for adjudication in the interest of justice.

In the above cited appeal, the appellant was aggrieved because of addition made in her case u/s 68 of the Act. The Ld.AO made an addition of Rs.1.18 crore, stating that the appellant failed to prove the nature and source of cash deposits made into her bank account and hence the same was treated as unexplained cash credit u/s 68 of the Act. The appellant has stated that she is a share broker and accepting cash on behalf of buyer and giving it to Balaji Equities Limited and in that process, her bank account was used to receive and pay to and from the parties. The appellant has claimed that she gets a commission of 0.5% on sale value or purchase value of shares and her total earnings did not exceed Rs.70,000/- to Rs.80,000/- for the impugned A.Y.2015-16. Since there was no proof for the explanation given by the appellant, the Ld.AO treated the entire cash deposit as unexplained and an addition was made in terms of provisions of section 68 of the Act.

Aggrieved by the addition made by the Ld.AO, an appeal was filed before the Ld.CIT(A) and the main ground of appeal taken before the First Appellate A uthority is that the assessment order is invalid. The Ld.AO has not provided proper opportunity to explain her case. It was also mentioned before the Ld.CIT(A) that the Ld.AO erred in treating the cash deposit as her money. Before the Ld.CIT(A), the appellant has stated that the cash deposits made into her account were received from customers. It was claimed that her role was limited in executing the share transactions for a nominal commission. Since her income was below taxable limit, the appellant has not filed return of income originally and after receiving notice u/s 148, the appellant has filed Nil return of income. The Ld.CIT(A) has confirmed the addition made and dismissed the appeal of the appellant stating that, the appellant has not complied with the notices issued by the office of Ld.CIT(A) and the appellant has not provided a copy of income tax return, computation sheet, bank statement, source of cash transactions, evidence of her working as share broker, proof of receiving funds from clients and contract notes etc. Since none of the documents were filed before the First Appellate Authority, it was held that the claim of the appellant remained unsubstantiated. Mere assertions without any supporting evidence cannot be accepted, it was held. Accordingly, the addition made by the Ld.AO was sustained.

Aggrieved by the orders of the lower authorities, an appeal was filed before ITAT, stating that the reopening of assessment is incorrect and hence the assessment should be treated as invalid. Before ITAT also, the appellant has taken the same ground, stating that the appellant is in the business of purchase and sale of shares on behalf of various customers and the amounts were received from outsiders and hence cash deposit of Rs.1.18 crore cannot be treated as her money. Before ITAT, it was prayed that the Ld.CIT(A) erred in confirming the action of the AO and hence, the addition should be deleted. An additional ground of appeal was also filed by the Ld.AR of the appellant at the time of hearing. In this additional ground of appeal, it was stated that the total income was decided at Rs.1.18 core, whereas in the computation sheet, the income was adopted at Rs.2.37 crores and the tax was levied on Rs.2.37 crores and hence, the action of the Ld.AO is incorrect in the eyes of law. To sum up, the Ld.AR of the appellant has argued that the cash deposit in her bank account does not belong to her and hence section 68 is not applicable to her case.

Per contra, the Ld.DR has stated that there is no merit in the contentions of the appellant, because, the same were not corroborated with any documentary evidences. Since the assessee has not filed any evidences with regard to the claim that cash was received from various customers, the addition was rightly done by the Ld.AO, which was subsequently confirmed by the Ld.CIT(A). The request of the Ld.AR of the appellant to give one more opportunity to explain all the details along with documentary evidences was also opposed by the Ld.DR. No documentary evidences were filed before the Ld.AO, Ld.CIT(A) and even before the Bench to demonstrate that the cash, which was deposited in her bank account actually belongs to the customers and in fact, there is no proof that she is doing any share broking business. In the absence of contract notes being issued, names and addresses of the persons from whom the cash was received, section 68 comes into play and Ld.AO has correctly made the addition and the same should be confirmed.

After hearing both sides, the Bench decided to give one more opportunity to the appellant to explain the sources of cash deposited into her bank account of ICICI Narsaraopet branch, because, her claim of receiving cash from the customers of Balaji Equity Limited was not examined by the Department. The Department is directed to conduct enquiries with regard to the appellant’s claim that cash was received from the customers and the relation with Balaji Equity Limited may be examined. Similarly, the Ld.CIT(A) is directed to examine the claim of the appellant that the total deposits made into the bank account are Rs.1.18 cores, whereas the computation sheet enclosed to the assessment order shows that the income was computed at Rs.2.37 crores and tax was also levied on the amount of Rs.2.37 crores. In the process, the Ld.CIT(A) may call for remand report from the Ld.AO if required. Since the appellant has not filed the required details before the lower authorities and did not comply with the notices issued by the Revenue and also because of the delay in filing the appeal before the ITAT with 13 days which is being condoned, an amount of Rs.20,000/- is being imposed as cost, which should be paid to AP State Legal Services Authority and only after payment of this amount, the Ld.CIT(A) should entertain the appeal proceedings. The issue is remitted to the file of the Ld.CIT(A) with a direction to give one more opportunity to the appellant to explain the sources of cash deposit.

In the result, appeal of the assessee is allowed for statistical purpose.

The Principal Commissioner of Income Tax, Visakhapatnam नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, विशाखापट्नम / DR, ITAT, Visakhapatnam 4. 5. गधर्ाफ़धईल / Guard file