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Facts
The assessee deposited Rs. 24,00,000/- in cash during the demonetisation period, which the Assessing Officer treated as unexplained cash credit under Section 68. The assessee contended this amount was a partial repayment of a Rs. 50,00,000/- investment made in M/s Nadia Healthcare (P) Ltd., supported by an MOU, a police complaint, and a certificate from the company.
Held
The ITAT, after reviewing the evidence, found the assessee's explanation regarding the source of funds credible and duly substantiated. It observed that the lower authorities failed to adequately investigate the facts despite clear evidence. Consequently, the tribunal directed the deletion of the Rs. 24,00,000/- addition.
Key Issues
Whether a cash deposit during demonetisation, claimed as repayment of a prior investment, constitutes unexplained cash credit under Section 68 of the Income Tax Act, and the condonation of delay in filing the appeal.
Sections Cited
68, 143(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH”, KOLKATA
Grant Martin Walsh, 6, West Range, Circus Avenue, Kolkata - 700017 [PAN: ADAPW2789B] ……..…...…………….... Appellant vs. Income Tax Officer, Ward 30(2), Kolkata, Aayakar Bhawan, Dakshin 2, Gariahat Road, Kolkata - 700031 ............................. Respondent Appearances by: Assessee represented by : Ankit Jalan, AR Department represented by : Monalisa Pal Mukherjee, JCIT, Sr. DR Date of concluding the hearing : 26.06.2025 Date of pronouncing the order : 03.07.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
In this case, the ITAT Registry has reported that there is a delay of 471 days in filing of the appeal. The assessee has filed an affidavit and requested for condonation of the said delay as under:
“1. I Grant Martin Walsh (PAN: ADAPW2789B) son of John Edward Walsh residing at 6, Circus Avenue, Kolkata 700017, am non resident as per the provision of Income Tax Act, 1961. I do hereby solemnly affirm and declare as follows: 2. That I have filed my Income Tax Return for the A.Y 2017-18 on 19.02.2018 and the case was selected for scrutiny.
3. That I have made compliances to the notices issued at the time of assessment and also at the time of appellate proceedings, However, both the authorities have not considered my submission and the addition made by the Income Tax Officer is sustained.
Grant Martin Walsh 4. That the last submission made by me to the Commissioner of Income Tax (Appeals) was on 25.11.2022 against his notice issued on 22.11.2022 fixing the date of hearing on 28.11.2022.
5. That after that neither any notice of hearing nor any order passed by the appellate authority was ever served to me.
That I am a non resident and I don't stay in India on regular basis. I come to India only for few days and my stay in India from April 2023 till date is as under:- July 17-25, 2023 September 27-Oct 1, 2023 February 17-21, 2024 May 17-21, 2024 September 28-Oct 2, 2024 January 1-9, 2025 7. That I was not aware of the last notice issued by the Commissioner of Income Tax (Appeals) on 18.07.2023 fixing the date on 24.07.2023 which remained non complied, otherwise all other compliances were made by me in time.
That I was also not aware of the fact that the order has been passed by Commissioner of Income Tax (Appeals) on 27.07.2023. I never received the appellate order at the registered address and was not at all aware of the disposal of the appeal. There was no communication by the department also about the disposal of appeal.
That on my visit India this new year I came to know about the disposal appeal by our chartered accountant as I enquired about my pending case.
That the delay of filing the appeal before the Hon'ble ITAT was beyond my control as I don't stay in India and I was never intimated or served with the copy of the order and there was complete miscommunication.
That I say that I am regular filer of return and have been complying to all notices. However, due to miscommunication, only one notice was not complied and the delay has happened.
That the delay is totally bona fide and unintentional.
That the delay of 473 days in filing the appeal before the Hon'ble ITAT is due to non-receipt of order regarding the disposal of the appeal and therefore was beyond the control of the appellant. That I beg to pray before the Hon'ble ITAT to kindly condone this delay in filing this appeal for the ends of natural justice and admit the appeal for hearing.
That I am swearing this affidavit to proof that no order was ever served to the appellant and the appellant was not at all aware of the disposal of appeal, therefore proper compliances could not be made in due time.
That I pray that, the delay may be condoned and the appeal may be decided on merits.
That the statements made above are true to the best of my knowledge and belief.”
2. The present appeal arises from order dated 27.07.2023 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”).
2.1 In this case, the single impugned issue arises from an addition of Rs. 24,00,000/- deposited in cash in the bank account of the assessee during the demonetisation period. It has also been recorded as a fact by the Ld. AO that this amount comprises of old currency notes of Rs. 500/- and 1000/- notes. Thereafter, the Ld. AO added this amount u/s 68 of the Act.
2.2 Before the Ld. CIT(A) also, the assessee could not succeed mainly on the ground that the Ld. CIT(A) felt that the onus cast on him to explain the source of the funds was not discharged by the assessee.
2.3 Aggrieved with this action of Ld. CIT(A), the assessee is in appeal before the ITAT with the following grounds:
“1. For that delay in filing of the instant appeal may be condoned.
For that the order passed under section 143(3) of the Act on 27.12.2019 by the Ld. Assessing Officer is wrong, unjustified, invalid, bad in law and therefore requires to be quashed.
For that the Ld. CIT(A) and the Ld. Assessing Officer failed to appreciate the facts of the case and the submission adduced before them about source of cash deposited in bank accounts in proper perspective and erred in making addition of Rs.24,00,000/- as unexplained cash credit under section 68 of the Act.
4. For that the Ld. CIT(A) and the Ld. Assessing Officer erred in law as well as on facts in making addition of Rs.24,00,000/- as unexplained cash credit by invoking the provision of section 68 of the Act.
Without prejudice to above, for that the Ld. Assessing Officer should not have acted arbitrarily and capriciously in making addition of Rs.24,00,000/- as unexplained cash credit under section 68 of the Act without taking consideration of facts of the case and documents adduced before him.
6. The appellant craves leave to add, alter, delete or amend any of the grounds before or at the time of hearing of the appeal.”
Grant Martin Walsh 3. Before us, the Ld. AR presented the facts of the case with the help of a paper book. It has been mentioned that it was duly brought to the notice of the Ld. CIT(A) that the assessee had invested Rs. 50,00,000/- as share application money in one M/s Nadia Healthcare (P) Ltd., Kolkata. This investment was made in August, 2014, thereafter, the assessee realised that his investment was being mis-utilised by the said company and thereafter he desired that his investment amount should be returned back to him. For this purpose, apparently an MOU was signed in August 2015 and it was decided that Rs. 44,00,000/- will be repaid in equal monthly instalments over 11 months. Thereafter, M/s Nadia Healthcare (P) Ltd. did not honour this agreement, forcing the assessee to lodge a complaint with Bidhannagar City Police. A copy of the said complaint has been filed in the paper book and was also placed before the Ld. CIT(A). Thereafter, Rs. 24,00,000/- (impugned amount) was returned in cash to the assessee, for which a certificate has also been given (dated 03.11.2016) by M/s Nadia Healthcare Pvt. Ltd. This certificate too was placed before the Ld. CIT(A) and is also before us in the paper book. The Ld. AR thereafter pointed out that there was no question that this was an unexplained amount since the trail of transactions was duly brought to the notice of the authorities below. The Ld. AR also stated that while the assessee has been subjected to the rigours of Section 68 of the Act, but the authorities below have not cared to enquire from M/s Nadia Healthcare (P) Ltd. about the said transaction.
3.1 The Ld. DR relied on the orders of authorities below.
We have carefully considered the rival submissions and have also gone through the orders of authorities below and also the documents placed before us in the paper book. In this case, it is obvious that the assessee invested Rs. 50,00,000/- in M/s Nadia Healthcare (P) Ltd. and thereafter, on the basis of differences between them the assessee desired that his investment be returned. It is seen that the amount of investment was not returned even in spite of an MOU between the assessee and M/s Nadia Healthcare (P) Ltd. Thereafter, it appears that once the assessee Grant Martin Walsh approached the police authorities then only a part of the investment was returned in demonetised currency. The entire conspectus of facts makes it clear that the source of Rs. 24,00,000/- was duly explained by the assessee and it is unfortunate that in spite of such clear evidences an adverse view has been taken through the impugned order. Considering the facts of this case as discussed above, we direct that the impugned amount should be deleted altogether.
5. In result, this appeal is allowed.
Order pronounced on 03.07.2025