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Facts
The assessee filed appeals against orders for AYs 2012-13 and 2014-15 with a significant delay. The assessee, a septuagenarian, attributed the delay to difficulties with the virtual regime and the COVID-19 lockdown. The appeals challenged additions made under Section 69 of the Income Tax Act for unexplained investments in term deposits.
Held
The Tribunal condoned the delay, finding it to be for reasonable cause. While the assessee established the source for a significant portion of the investments in term deposits from maturity values of previous deposits and bank balances, a portion of Rs. 6,27,514/- in AY 2014-15 could not be reconciled.
Key Issues
Whether the assessee sufficiently proved the source of investments made in term deposits to avoid additions under Section 69, and if the delay in filing appeals should be condoned.
Sections Cited
69, 147, 144, 139(1)
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, V.P. & SHRI NARENDRA KUMAR BILLAIYA, AM
O R D E R Per Saktijit Dey, VP: Aforesaid appeals by the assessee arise out of two separate orders, both dated 20.06.2023, passed by National Faceless Appeal Centre (NFAC), Delhi pertaining to Assessment Years (AYs) 2012-13 and 2014-15.
Before we proceed to deal with the appeals on merit, it is necessary to observe the appeals have been filed with delay of 505 days. Assessee has filed applications seeking condonation of delay.
It is the say of the assessee that he is a septuagenarian and not too familiar with the virtual regime. It is submitted, when the proceedings were taken up in the & 326/Mum/2025 Dharam Veer Ram Vs. ACIT, Mumbai virtual mode, the mail id. of is Authorized Representative, Shri S.K. Khanna was provided tin the Memorandum of Appeal. However, due to intervention of the CORONA lockdown , the assessee was mostly restricted to his home and also lost contact with his counsel. Only when the assessee received a notice through physical mode directions payment on tax demand, he became aware that appeals have been decided against him. Then only, he engaged a new counsel and necessary steps were taken for filing the appeals. Thus, he submitted, the delay in filing of the appeals is due to bonafide reasons and not on account of any deliberate negligence.
Having heard the parties on the issue of condonation of delay, we are of the view that the delay in filing the appeals was due to reasonable cause. Hence, we are inclined to condone the delay and admit the appeals for adjudication on merits.
At the outset, learned counsel appearing for the assessee, on instructions did not press Ground Nos.1 and 2 in both the appeals. Accordingly, these grounds are dismissed as not pressed.
In Ground Nos.3 and 4 of both the appeals, the assessee has challenged the additions made of Rs.24,00,000/- and Rs.46,27,514/- respectively for A.Ys. 2012- 13 and 2014-15 u/s. 69 of the Income Tax Act, 1961 (hereinafter called the ‘Act’).
Briefly the facts, common in both the assessment years are, the assessee is a resident individual. For the assessment years under dispute, the assessee had not filed any return of income u/s. 139(1) of the Act. Subsequently, based on the information available in the system of the Department, the Assessing Officer (AO)
& 326/Mum/2025 Dharam Veer Ram Vs. ACIT, Mumbai found that in A.Y. 2012-13, the assessee had invested an amount of Rs.24,00,000/- in term deposit. Whereas, in A.Y. 2014-15 an amount of Rs.46,27,514/- was deposited in term deposit. Since the assessee had not filed any return of income, the AO was of the view that income assessable to tax has escaped assessment. Accordingly, he reopened the assessment u/s. 147 of the Act. As alleged by the AO, the assessee did not comply with various statutory notices issued by him. Therefore, he proceeded to complete the assessments to the best of his judgment invoking the provisions of Section 144 of the Act. While doing so, he added back an amounts of Rs.24,00,000/- and Rs.46,27,514/- respectively u/s. 69 of the Act in the assessment years under dispute. Though, assessee contested the aforesaid additions before learned First Appellate Authority, however he sustained them.
We have considered rival submissions and perused the materials on record. It is the say of the assessee before us that the term deposits in both the assessment years were made out of the maturity value of earlier term deposits credited to the bank account of the assessee. In this context, learned counsel assessee drew our attention to the bank statements furnished in the paper book. However, he fairly conceded that the assessee is not in a position to reconcile the source of term deposits amounting to Rs.6,27,514/- in A.Y. 2014-15. Whereas learned Departmental Representative (DR) relied upon the observations of the AO and learned First Appellate Authority.
Having heard the parties and perused the materials on record, we find that the only reason on which the disputed additions have been made is due to alleged failure & 326/Mum/2025 Dharam Veer Ram Vs. ACIT, Mumbai on the part of the assessee to prove the source of investments made in the term deposits. However, it is observed, before learned First Appellate Authority, the assessee had not only furnished the bank statements but had specifically contended that the investments have been made out of maturity value of old term deposits and balance available in the bank account. On perusal of copies of bank statements of HDFC Bank account available in the paper book, it is observed that in A.Y. 2012- 13, the first term deposit of Rs.6,00,000/- was made on 13.08.2011. On the said date the assessee had a closing balance of Rs.7,10,505.52/-. The second term deposit of Rs.10,00,000/- was made on 11.10.2011. Whereas, on the said date, the assessee had closing balance of Rs.19,43,062.80/-, which included an amount of Rs.15,40,900/-, being the maturity value of earlier term deposit. Similarly on 12.10.2011, the assessee made a term deposit of Rs.8,00,000/-. On the said date, the assessee had a closing balance of Rs.942,742.80. These facts clearly establish that the term deposits were made out of the balance available in the bank account of the assessee. Thus, the source of investment in the term deposits clearly stand established.
Similarly, in so far as A.Y. 2014-15 is concerned, on perusal of bank statement it is observed that a term deposit of Rs.20,00,000/- was made on 18.11.2013. Whereas, on the said date, the assessee had closing balance of Rs.2,779,075.47/- comprising of maturity value of two term deposits aggregating to Rs.21,79,611.80. On 27.01.2014, the assessee made term deposits of Rs.8,00,000/- out of available closing balance of Rs.9,70,349.47. Finally, on 21.03.2014 the assessee invested an & 326/Mum/2025 Dharam Veer Ram Vs. ACIT, Mumbai amount of Rs.12,00,000/- in term deposit out of the available closing balance of Rs.14,21,956.72, which included an amount of Rs.108,9,847.97 credited to the bank account on maturity of earlier term deposit. Thus, as could be seen from the aforesaid facts, out of the total investment in term deposit of Rs. 46,27,514/- the assessee had clearly established the source of Rs.40,00,000/-. In so far as balance amount of Rs.6,27,514/- is concerned, undoubtedly, the assessee has failed to established the source. Thus, the addition to the extent of Rs.6,27,514/- has to be sustained. In view of the aforesaid, we direct the AO to delete the addition of Rs.24,00,000/- made in A.Y. 2012-13. Out of the addition of Rs.46,27,514/- made in A.Y. 2014-15, the AO is directed to delete addition of Rs.40,00,000/-.
In the result, both the appeals are partly allowed. Order pronounced in the open court on 28.05.2025 Sd/- Sd/- (N.K. BILLAIYA) (SAKTIJIT DEY) Accountant Member Vice President Mumbai: Dated : 28.05.2025 Aks/- Copy of the Order forwarded to : 1. The Applicant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,