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Facts
The assessee filed an appeal against an order of the CIT(A) which dismissed their appeal against an assessment order. The appeal was filed with a significant delay, attributed to the assessee's tax consultant's illness and mismanagement. The original assessment concerned the purchase of an immovable property where a portion of the payment was made in cash.
Held
The Tribunal condoned the delay in filing the appeal due to sufficient reasons. The Tribunal found that certain amounts claimed by the assessee as income from accumulated savings, loan from a tenant, and loan from her son were not properly considered. The Tribunal directed the deletion of additions made on these grounds.
Key Issues
Whether the delay in filing the appeal can be condoned and if the additions made by the AO on account of unexplained cash used for property purchase were justified.
Sections Cited
143(3), 69, 115BBE, 143(2)
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Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI
This appeal is filed by Renukamba (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the Addl./JCIT(A)-12, Mumbai [ld. CIT(A)] dated 28.12.2023 wherein the appeal filed by the assessee against the assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [the Act] dated 04.12.2019 by the ITO, Ward 3(3)(5), Bangalore was dismissed. The assessee is aggrieved with the same and is in appeal before me.
At the time of filing of the appeal it was found that it is late by 541 days. The order of the ld. CIT(A) was passed on 28.12.2023 whereas the appeal is filed on 23.8.2025. The assessee has filed an application for condonation of delay along with Affidavit. It is stated that the assessee is aged about 64 years, deriving income from salary and house property. The assessee has one, Mr. K. Shivakumar, who is a tax consultant, who filed the appeal before the ld. CIT(A). He has also filed a response before the ld. CIT(A). The tax consultant was not a professionally qualified accountant and was not conversant with the appeal before the Tribunal. He was also suffering from prolonged illness. Therefore, delay is caused on account of Mr. Shivakumar, which is beyond the control of the assessee. Later on, the same tax consultant requested the assessee to approach some other CA or Advocate, who can file the appeal before the Tribunal. Later on, the assessee appointed Chandran & Raman, CAs, to file the appeal and same was filed on 23.8.2025 which has caused delay of 549 days.
The assessee has also supported the same by Affidavit dated 22.8.2025 of Mr. Kotagi Shivakumar, who is the tax consultant. According to that Affidavit, he categorically mentioned that delay in filing of the appeal has arisen because of his fault.
The ld. AR submitted that the delay is not on account of the assessee and therefore the same should be condoned.
The ld. DR vehemently opposed to the admission of the appeal and submitted that there is no sufficient cause shown by the assessee in filing the appeal late by 545 days and therefore same cannot be condoned.
I have carefully considered the rival contentions and perused the affidavit of the assessee along with the affidavit of the Consultant, Mr. K. Shivakumar and find that the delay in filing the appeal before the Tribunal is caused on account of Mr. K. Shivakumar because of his ill- health and his inability to handle the matters before the Tribunal. The assessee was fully dependent on him for filing of the appeal. Thus, the delay in filing of the appeal has been because of sufficient reasons and hence I condone the delay and admit the appeal of the assessee.
I find that the assessee is an individual, who filed his return of income on 29.3.2018 at a total income of Rs.3,92,450. The return was picked up for limited scrutiny for verifying the investment in immovable property and cash deposit during the demonetization period. Notice u/s. 143(2) of the Act was issued on 24.9.2018. It was found that vide Sale Deed dated 6.10.2016 assessee has purchased an immovable property for Rs. 69,03,000 out of which a sum of Rs.48,33,970 was paid in cash as mentioned in the Deed. Therefore assessee was asked to explain the source of cash deposit.
The assessee explained that she has an accumulated income of earlier years and further she has obtained loan from her relatives and therefore it was stated that she has adequate source of Rs.73,89,620 out of which the above cash was paid. The ld. AO did not agree with the explanation of the assessee and issued a show cause notice that why the sum of Rs.36,89,620 out of the above funding should not be added as income u/s. 69 of the Act. After considering the explanation of the assessee, the learned AO held that a sum of Rs. 12,13,000/– is an unexplained investment and the same is required to be taxed under section 115BBE of the act at the rate of 60%. Accordingly the assessment order was passed under section 143 (3) of the act on 4/12/2019 determining the total income of the assessee at ₹ 1,605,450/– against the returned income of ₹ 392,450/– wherein the addition of ₹ 1,213,000/– was made.
The assessee preferred an appeal before the learned CIT – A wherein the addition was confirmed and therefore the assessee is in appeal before me.
The learned authorised representative and the departmental representative were heard and the paper book filed by the learned authorised representative is perused.
I have carefully considered the rival contention and find that the issue involved in this appeal that assessee has purchased an immovable property for ₹ 6,903,000/– on examination of the sale deed, a sum of ₹ 4,833,970/– was found to have been paid in cash by the assessee on different dates. The assessee was asked to explain the sources of the funds for purchase of property. It was found that cash amount of ₹ 3,689,620/– was paid by her towards the purchase of property, assessee explained sources of the same. On consideration of explanation of the assessee, ld AO accepted part of sources of funds. The learned assessing officer did not accept ₹ 1,099,000/- out of accumulated income of the previous year and a further sum of ₹ 3 lakhs received from the tenant was also not accepted. Accordingly a sum of ₹ 13,99,000 was not accepted. However the learned assessing officer made the addition of only ₹ 1,213,000 under section 69 of the act.
I find that out of the sum of ₹ 1,099,000/– a sum of ₹ 373,620/– were considered by the assessee as accumulated income during the earlier years. The assessee has claimed that a sum of ₹ 373,620/– is available to her. The assessee has also submitted the income tax returns of her husband for two years. He has shown income of Rs 3,92,450/- and Rs 314,000/- I find that in absence of any evidence that all the sum of ₹ 700,000 has been spent or invested by the assessee somewhere else, the explanation of the assessee could not be rejected that at least Rs 373,200/- is available with the assessee. Therefore, the assessee deserves the credit of ₹ 373,620/– as opening source of funds available with her out of accumulated savings.
Further, assessee has claimed that she has received ₹ 3 lakhs from her tenant for converting her tenanted property from monthly rent payment to lump-sum lease amount returnable after 10 years. To support this the assessee has produced the rent agreement wherein the sum of ₹ 3 lakhs paid by the tenant is also disclosed. Therefore, according to us the assessee has produced the evidence of receipt of the above sum which without examination was rejected by the learned lower authorities. The assessee has given a complete address, as well as stated that the above sum is paid by the party, which is mentioned in the lease rent agreement, same cannot be denied. Accordingly, I also direct the learned assessing officer to delete the addition to the extent of ₹ 3 lakhs also.
The learned AO further disbelieved a sum of ₹ 3 lakhs received from the son of the assessee Mr Basavaraj for purchase of the above property. To support this claim, assessee submitted the return of income filed by the son of the assessee for assessment year 2016 – 17 where he has declared total income of ₹ 307,740 and for assessment year 2017 – 18 ₹ 374,400. The assessee has also submitted the confirmation, as well as the copies of the above return of income. As the assessee has discharged the identity, creditworthiness, and the genuineness of the receipt of the above sum as a loan from her son, same could not have been added in the hands of the assessee as unexplained income. Accordingly, I direct the ld AO to delete this addition of Rs. 3 lakhs.
With respect to rental income received by the assessee in AY 2015-16 and 2016-17 of Rs 540000/- and Rs 186000/- respectively, is already shown in the return of income, which is also available as sources of funds to the assessee for purchase of property. It is the claim of the assessee that it is received in cash which is not denied by the ld AO.
Therefore, part of the same is also available as sources to the assessee to acquire this property.
Accordingly, I direct the learned assessing officer to delete the addition made of ₹ 12,13,000/– made u/s 69 of the Act.
Further it is contested before us that the learned that assessing officer for assessment year 2017 – 18 has invoked the provisions of section 115BBE of the act which is inserted only with effect from 1/4/2017 and therefore for assessment year 2017 – 18 same could not have been invoked as it applies effectively from assessment year 2018 – 19. I reject this contention because Section 115BBE were amended by the Taxation Laws (Second Amendment) Act, 2016, to increase the tax rate on such income to 60% (plus a 25% surcharge and 4% cess,). This higher tax rate is applicable from Assessment Year 2017-18 onwards, for transactions that occurred during the Financial Year 2016-17.
In the result, the appeal by the assessee is partly allowed.
Pronounced in the open court on this 30th day of October, 2025.