PRUTHVI RAJ GUMMAN,HYDERABAD vs. ITO, WARD-7(1), HYDERABAD

The assessee further submitted that, he had taken a gold loan during the financial year 2015–16 for purchase of property, which was subsequently sold on 01.11.2016 for a consideration of Rs.21,00,000/-, out of which Rs.16,13,500/- was deposited during the demonetization period, and the same was duly explained before the Assessing Officer. However, the assessment under section 143(3) was completed by making an addition of Rs.15,88,500/-, determining the total income at Rs.17,28,500/-. Subsequently, a rectification order under section 154 dated 13.09.2022 was passed, wherein tax was recomputed under section 115BBE, resulting in enhanced tax liability. Being aggrieved, he preferred appeals before the Commissioner of Income Tax (Appeals), NFAC. The assessee submitted that in Form No. 35, no email address was mentioned in Column No. 17 for service of notices, though an email ID (prgumman@gmail.com) was auto-populated in the personal information column, and neither notices nor orders were received thereon. He submitted that the appellate orders dated 30.07.2024 were sent to a different email ID (gpruthviraj@yahoo.co.in), which was not in use, and therefore he remained unaware of the disposal of the appeals. The assessee submitted that only upon verification by his Chartered Accountant, he came to know about the dismissal of the appeals and immediately took steps to file the present appeals before the Tribunal. He further submitted that he has been suffering from health issues, including hypertension, severe back pain and obesity, and has placed medical records in support thereof. Due to these circumstances, there occurred a delay of 300 days in the appeal relating to the order under section 143(3) of the Act, and 423 days in the appeal relating to the order under section 154 of the Act.

The learned Senior A.R. for the Revenue, Ms. Helen Ruby Jesindha, on the other hand, opposed the condonation of delay and submitted that the assessee has failed to establish ‘sufficient cause’ for such inordinate delays and therefore, the same should not be condoned.

I have heard both the parties, perused the material available on record, including the affidavit filed by the assessee and the medical certificate placed on record explaining the reasons for delay. I find that, the reasons advanced by the assessee, particularly the non-receipt of appellate orders due to incorrect email communication, coupled with the health condition of the assessee as evidenced by the medical certificate and lack of reasonable and bona fide cause for the delay. I further note that the Hon’ble Supreme Court in the case of Collector, Land I am inclined to condone the delay of 300 days in the appeal relating to the order under section 143(3) of the Act, and 423 days in the appeal relating to the order under section 154 of the Act, subject to payment of costs of Rs.2,000/- (Rupees Two Thousand only) for each appeal to the Prime Minister National Relief Fund. The assessee is directed to furnish proof of such payment either before the Registry or the Assessing Officer within 15 days from the date of this order. Subject to the above condition, the delays caused in filing the appeals are condoned and the appeals are admitted for adjudication.

The brief facts of the case are that, the assessee is an individual and has filed return of income for the assessment year under consideration declaring total income of Rs. 1,40,000/-. The case was selected for limited scrutiny under CASS for the purpose of verifying large cash deposits made during the demonetisation period. Notices under Sections 143(2) and 142(1) of the Income- tax Act, 1961 were issued and served on the assessee. During the course of assessment proceedings, on verification of information available on record, the A.O. noticed that the assessee had made cash deposits aggregating to Rs. 15,88,500/- in his HDFC Bank account during the demonetisation period. The A.O. called upon the assessee to furnish details and explanation regarding the nature and source of such deposits. However, the assessee failed to comply with the statutory notices and did not furnish any explanation or supporting evidence in respect of the cash deposits.

The A.O., after considering the material available on record, observed that the assessee has not furnished any information or documentary evidence to explain the source of cash deposits made during the demonetisation period. In the absence of any satisfactory explanation, the A.O. treated the cash deposits of Rs. 15,88,500/- as unexplained money under Section 69A of the Act and brought the same to tax in accordance with the provisions of Section 115BBE of the Act. Accordingly, the said amount was added to the total income of the assessee. Thus, the A.O. completed the assessment under Section 143(3) of the Act, by determining total income at Rs. 17,28,500/- as against returned income of Rs. 1,40,000/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee was provided with opportunities to furnish submissions and evidences in support of the grounds of appeal. The assessee contended that the addition made by the A.O. is unjustified and further claimed that the cash deposits represented sale consideration from a property transaction. The assessee also raised legal grounds challenging the validity of assessment proceedings. However, no documentary evidence such as sale deed or supporting material was furnished to substantiate the claim regarding source of cash deposits.

The Ld. CIT(A), after considering the material available on record, observed that the assessee failed to furnish any evidence either during assessment proceedings or appellate proceedings to establish the source of cash deposits. It was further observed that the assessee did not substantiate the claim that the deposits were out of sale proceeds of property with any credible evidence. In the absence of satisfactory explanation and supporting documents, the Ld. CIT(A) held that the A.O. was justified in treating the cash deposits as unexplained money under Section 69A of the Act, and accordingly upheld the addition. Thus, the appeal filed by the assessee was dismissed.

Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.

The learned counsel for the assessee, Shri Mohd. Afzal, Advocate, submitted that the Ld. CIT(A) erred in confirming the addition made by the A.O. without properly appreciating the facts of the case. The learned counsel for the assessee explained that the cash deposits made during the demonetisation period were out of cash receipts received on sale of immovable property. He further explained that though the assessee had taken a stand before the at the relevant point of time. The learned counsel for the assessee further submitted that, the assessee has now furnished necessary evidences, including details of sale of property and cash receipts received therefrom, which are placed in the paper book filed before the Tribunal. Therefore, the learned counsel pleaded that, the matter may be restored to the file of the A.O. for fresh adjudication after considering the evidences filed by the assessee.

The learned Sr. A.R. for the Revenue, Ms. Helen Ruby Jesindha, on the other hand, supporting the orders of the lower authorities submitted that, the assessee has failed to comply with statutory notices issued during the course of assessment proceedings and did not furnish any explanation or supporting evidence to explain the source of cash deposits made during the demonetisation period. The learned Sr. A.R. further submitted that even before the Ld. CIT(A), the assessee failed to substantiate the claim that the cash deposits were out of sale proceeds of property with any documentary evidence. Therefore, the A.O. has rightly of the Act, and the Ld. CIT(A) was justified in upholding the addition.

I have heard both parties, perused the material available on record and had gone through the orders of the authorities below. The A.O. made an addition of Rs. 15,88,500/- towards cash deposits into the bank account under Section 69 of the Income-tax Act, 1961 as an unexplained money and brought it to tax under Section 115BBE of the Income-tax Act, 1961, on the ground that the assessee could not explain the source for such cash deposits. Before the Ld. CIT(A), although the assessee explained the source for the cash deposits as being out of cash receipts from sale of property, but the Ld. CIT(A) did not consider the explanation of the assessee and dismissed the appeal of the assessee on the ground that the arguments of the assessee were not supported by relevant evidence. The learned counsel for the assessee has filed a paper book which contains the details of sale of property and cash receipts received against such sale. However, these additional evidences filed by the assessee were not made available to the A.O. at the time of assessment proceedings. Since the assessee claims to have opinion, the issue needs to be set aside to the file of the A.O. for further verification. Thus, I set aside the order of the Ld. CIT(A) and restore the issue back to the file of the A.O. for de novo consideration. The A.O. is directed to examine the issue of cash deposits in light of evidences that may be filed by the assessee to substantiate the source of such deposits.

Insofar as the appeal filed by the assessee against the order passed by the A.O. under Section 154 of the Act, is concerned, the A.O. had passed the order under Section 154 of the Act, and invoked the provisions of Section 115BBE of the Income-tax Act, 1961 to compute tax liability on addition made towards cash deposits into the bank account. Since the issue of cash deposits into the bank account has already been set aside to the file of the A.O. for verification of the source of such deposits in light of the additional evidences filed by the assessee, in my considered view, the consequential order passed under Section 154 of the Income-tax Act, needs to be set aside to the file of the A.O. Thus, I set aside the order passed by the Ld. CIT(A) and restore the issue back to the file of the A.O. with a direction to reconsider the issue of levy of tax under Section 115BBE of the Income-tax Act, 1961 after considering the explanation of the assessee with regard to the source for cash deposits.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.

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