ELANGESWARAN,NEYVELI vs. AO, WARD - 2, CUDDLAORE

Discharge of Onus: The Appellant has discharged the initial lega clearly establishing the identity of the donor (Mr. Ramalinga ADUPR0135N) and the genuineness of the transaction. The transaction involved monthly payments of the car loan EMI Rs. 21,292/- for a c the Appellant on the occasion of his marriage (23-01-2011).

Creditworthiness: The CIT (A) erred in holding that the creditworthiness father-in-law was not proven. The father-in-law has since execute affidavit (additional evidence) confirming that the payments were made from his legitimate sources, thereby establishing his capacity to gift the amount.

Rejection as Afterthought: The AO and CIT (A) erred in dismissing the detailed explanation provided in the letter dated 21.11.2019, which specified 2, 99,000/- as 'Cash Deposits (Gift) from Relatives,' labeling it an "afterthought". An explanation provided during assessment proceedings is only a detailed breakdown and cannot be arbitrarily rejected if it is substantiated by available facts

Power of ITAT to Adjudicate: The Appellant's submissions explicitly stated that the undertaking "has been provided as an additional evidence in the appeal". The ITAT has the inherent power under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, to admit this critical additional evidence (the father-in-law's affidavit) when it is necessary for the proper disposal of the appeal and to secure the ends of justice.

Denial of Opportunity: The CIT (A) compounded the AO's original error of failing to provide a sufficient opportunity to explain the gift details by refusing to consider the evidence that resolves the addition, thereby violating the fundamental principles of natural justice.

Penalty Proceedings: The AO erred in initiating penalty proceeding: Section 271(1) (c) for concealment of income. Since the substantive addition of Rs. 2, 99,000/- is contested on justifiable legal and factual ground consequential penalty proceedings should be deleted upon the deletion addition.

The brief facts of the case are that the assessee is amongst the non-filer of the return u/s. 139 of the Act. The Revenue came across an information that during the year under consideration the assessee had deposited cash of Rs. 10, 04, 900/-. In view of this information a notice u/s. 148 of the Act was issued vide dated 28.03.2019. In response to the notice issued the assessee filed return belatedly on 04.10.2019 admitting total income of Rs. 2, 74, 760/-. The assessee also admitted agricultural income of Rs. 2 lakhs. Ultimately, the case of the assessee was assessed after making addition of Rs. 2.99 lakhs.

The assessee being aggrieved with the order of the AO preferred an appeal before the Ld. CIT (A), who in turn confirmed the order of the AO and dismissed the appeal of the assessee. The assessee being further aggrieved preferred the present appeal before us. We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee along with grounds taken. We have also gone through the application for admission of additional evidence under Rule 29 of the ITAT Rules 1963. As per this application, assessee filed an affidavit from his father- in-law confirming the gift of Rs. 2.99 lakhs in the form of EMI of Rs. 21, 292/- for a car loan in the name of the assessee.

This affidavit by the assessee never submitted before the authorities below. We admit the application of the assessee filed under Rule 29 of the ITAT Rules 1963 with a condition that the same must be verified by the AO concerned, as the contents of the affidavit are factual in nature and the assessee submitting that he is receiving cash amount of Rs. 21,292/- as EMI for car loan on regular basis. Based on these facts we restore the matter back to the AO and direct the assessee to establish this fact of receiving EMI from his father-in-law not only in this year but also in the previous year / succeeding year also. In our observation, it is a regular feature in the assessee’s life and the same can be verified by the AO as mentioned (supra). In the result, the grounds raised by the assessee are allowed for statistical purposes and the AO is directed to verify the contents of the affidavit filed by the assessee

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on the 19th day of June, 2026, in Chennai.