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Facts
The assessee advanced an unsecured cash loan of Rs. 16.50 lakhs and declared agricultural income for AY 2017-18. The Assessing Officer, after issuing a notice under Section 148, treated the loan as unexplained money under Section 69A and rejected the agricultural income claim due to lack of evidence, making an addition of Rs. 16.50 lakhs. The CIT(A) upheld the AO's order, as the assessee failed to provide satisfactory explanations or documentary evidence for both.
Held
The Income Tax Appellate Tribunal condoned the delay of 197 days in filing the appeal, adopting a liberal approach. However, on merits, the Tribunal found no justifiable reason to interfere with the lower authorities' findings and upheld the addition made under Section 69A for the unexplained cash loan and the rejection of the agricultural income claim, as the assessee failed to substantiate her claims.
Key Issues
Whether the source of the unsecured cash loan of Rs. 16.50 lakhs was adequately explained by the assessee and whether the claim of agricultural income was sufficiently substantiated with evidence.
Sections Cited
147, 144, 143(2), 148, 142(1), 69A, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ SMC ‘ Bench, Hyderabad
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 22/05/2024, which in turn arises from the order passed by the A.O under Section 147 r.w.s
Page 2 144 of the Income-tax Act, 1961 (in short ‘the Act’) dated 22/02/2022 for the assessment year 2017-18.
The assessee has assailed the impugned order on the following grounds of appeal before us:
“(i) The order of the Assessing Officer/CIT(A) is erroneous, is contrary to law, principles of natural justice and opposed to the facts and circumstances of the case. Unexplained Money u/s 69A – Loan advanced to Agriculturist – Rs. 15,50,000/- (ii). The Learned AO/CIT(A) ought to have appreciated the Appellant had already explained the sources for the income vide his letter dated 09/01/2022 and 27/01/2022 to the AO. (iii). The Learned AO/CIT(A) failed to recognize that the Appellant has been in farming business for decades and his accumulated savings and other receivables collected, is the source for the money advanced. No Addition u/s 69A when recorded in Books of Accounts (iv). The Learned AO/CIT(A) ought to have noted that the Appellant has duly reported all the transactions and monies advanced clearly in the books of accounts. (v). The Learned AO/CIT(A) ought to have noted that no addition can be made u/s 69A when the monies, jewellery or valuables have been properly recorded in the books of account. (vi). The Entire addition is void and ought to be quashed. (vii). Any other grounds as may be raised during the course of hearing.”
Succinctly stated, the A.O. based on information that the assessee had though during the subject year advanced an unsecured cash loan of Rs. 16.50 lacs to Smt. Sireesha Pachareddy but had not filed her return of income, issued notice under Section 148 of the Act, dated 30/03/2021. The assessee in compliance filed her return of income on 19.04.2021, declaring an income of Rs. 3,66,360/- a/w agricultural
Page 3 income of Rs. 1,25,000/-. Thereafter, the case of the assessee was selected for scrutiny assessment under Section 143(2) of the Act.
During the course of the assessment proceedings, the assessee claimed that she was deriving income from the money lending business and was also earning interest income. The A.O. called upon the assessee to explain the source of the unsecured cash loan of Rs. 16.50 lacs (supra) that was advanced by her during the year under consideration. As the assessee had failed to come forth with any explanation regarding the source of the cash loan of Rs. 16.50 lacs (supra), therefore, the A.O was constrained to treat the same as her unexplained money under Section 69A of the Act. Further, as the assessee during the assessment proceedings, despite specific directions had failed to lead any evidence as regards the crops grown, details of agricultural land under cultivation, mode of irrigation, etc., therefore, the AO held a conviction that she had not received any consideration from sale of crops/produce. Accordingly, the A.O vide his order passed under Section 147 r.w.s 144B of the Act, dated 22/02/2022 assessed the income of the assessee at Rs. 20,16,360/-.
5. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success. For the sake of clarity, the observations of the CIT(A) are culled out as under:
“4.1 Appeal Notices were issued to the assessee on 05.09.2022, 28.02.2024, 06.05.2024 fixing the case for 20.09.2022, 04.03.2024, 21.05.2024 respectively. The assessee has filed written submission on 10.09.2022. The appeal has been filed delayed as per column number 14 of Form 35. The reasons for this delay is that "It is humbly submitted that I was wrongly advised by the Accountant that no order has been passed. But subsequently, on reference to our Chartered Accountants, our professional advisors, the appeal has been immediately fied. This is due to me being under-educated in matters of using the online tax portal and non-receipt of any communication. I sincerely apologise for the delay and humbly request a condonation of the delay. However, in the interest of justice the appeal is admitted.
4.2 I have gone through the assessment order and record available Basically the facts are the assessee, Rajeswaramma Duvvuru, gave an unsecured loan of Rs. 16,50,000 in cash to Smt. Sireesha Pochareddy during the financial year (FY) 2016-17. The assessee did not file an income tax return (ITR) for the assessment year (AY) 2017-18. A notice under section 148 was issued on 30.03.2021 to reopen the assessment. The assessee filed the ITR for AY 2017-18 on 19.04.2021, declaring an income of Rs. 3,66,360 and agricultural income of Rs. 1.25.000. Notices under sections 143(2) and 142(1) along with a questionnaire were issued to the assessee to explain the source of the unsecured loan. The assessee responded on 31.12.2021 and 27.01.2022 but did not provide satisfactory explanations or adequate documentary evidence. The assessee failed to furnish evidence regarding the source of the loan, agricultural income, and details of transactions. The cash loan of Rs. 16,50,000 was treated by AO as unexplained money under section 69A and added to the total income.
4.3 In the present case, the assessee's failure to file the ITR voluntarily for AY 2017-18 was a significant lapse. This triggered the issuance of the notice under section 148 by AO. The assessee could not satisfactorily explain the source of the Rs. 16,50,000 loan during assessment proceedings. Given that substantial cash transactions were involved, it was crucial to provide robust evidence, such as bank statements, transaction records, or confirmation from debtors. The assessee's claim of Rs. 1,25,000 as agricultural income was not supported by adequate evidence such as records from revenue authorities or proof of sale of agricultural produce. The assessing officer had no option but to treat the loan amount as unexplained incoтия under section 69A due to the lack of satisfactory explanations and documentation from the assessee.
4.4 During appeal proceedings also the appellant has filed only one written submission stating that the amount of Rs. 16,50,000 and claim of Rs. 1,25,000 as agricultural income is fully explained. However, no documents or evidence regarding either of these has been submitted by appellant. The assessee has been given opportunities to provide explanations and evidence regarding the nature and source of the unexplained transactions and agricultural income. The assessee failed
Page 5 to provide any satisfactory explanation, no response is received. However, the cash deposits, which remained unexplained even after the sufficient opportunity. The appellant has not given copy of bank accounts of debtor to verify the claims taken ty appellant. Further no evidence of source of cash deposit has been submitte Without providing substantial evidence to support its claims and refute the AC findings, the assesses claims in appeal could not be verified to check the genuineness of the claim of the assessee. Since the assessee has not provided sufficient proof to verify its claims and demonstrate the legitimacy of the cash deposits and agricultural income, the action of the AO is confirmed and the grounds taken by assessee is dismissed.
As a result, the appeal is dismissed.”
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.
As the assessee despite being aware about the hearing of the appeal, has neither put up an appearance nor moved any application seeking adjournment, therefore, we are constrained to proceed as per Rule 24 of the Appellate Tribunal Rules, 1963, and dispose off the appeal after hearing the Ld. Departmental Representative (“DR”, for short) and perusing the orders of the lower authorities.
Shri. Ashish Kumar Shukla, Ld. D.R at the threshold of hearing of the appeal, submitted that the same involved a delay of 197 days. Apart from that, the Ld. D.R submitted that as the assessee had failed to come up with any plausible explanation as regards the source from where she had during the subject year advanced a cash loan of Rs. 16.50 lacs to Smt. Sireesha Pachareddy (supra), therefore, both the lower authorities have rightly held that the same was sourced out of her unexplained money under Section 69A of the Act.
We have thoughtfully considered the “affidavit” filed by the assessee wherein she had deposed the reasons that had resulted to a delay of 207 days (sic) involved in filing the present appeal. It is stated by her that the delay had occasioned because her Chartered Accountant who was earlier handling the case had left the job without handing over the papers to her. It is further stated by her that she had thereafter engaged a new counsel, viz. M/s Victor Grace & Co., and with the latter’s assistance filed the present appeal which by the time involved a delay.
We have thoughtfully considered the explanation advanced by the assessee vide her deposition in the “affidavit”, dated 08.02.2025, therein explaining the delay involved in filing of the present appeal. After giving a thoughtful consideration, we find, that as deposed by the assessee in her “affidavit”, the delay in filing the present appeal had occasioned because of the lapse on the part of her erstwhile chartered accountant who had earlier handled the case and had left the job without handing over the papers to her. Ostensibly, as the delay in filing of the appeal had crept in not because of any lackadaisical conduct or intentional lapse on the part of the assessee, but because of a lapse on the part of her earlier counsel, therefore, we are of the view that by adopting a liberal approach the same merits to be condoned. Our aforesaid view is fortified by the recent judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310-
Page 7 26311/2024, dated 31st January, 2025. The Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed, that a justice oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in the filing of the appeal. We, thus, in terms of our aforesaid deliberations condone the delay of 197 days involved in filing of the present appeal by the assessee appellant.
Apropos the merits of the case, it transpires that as the assessee had failed to come forth with any irrefutable explanation regarding the source from which she had during the subject year advanced a cash loan of Rs. 16.50 lacs to Smt. Sireesha Pachareddy (supra), therefore, the A.O. holding a conviction that the said cash loan was sourced from her unexplained money made an addition of the same under Sec. 69A of the Act. On appeal, as the assessee despite having been afforded sufficient opportunities had failed to come forth with a satisfactory explanation regarding the source of the subject cash loan, therefore, the CIT(A) was constrained to uphold the addition made by the AO under Section 69A of the Act. Apart from that, the CIT(A) observed that the assessee even in the proceedings before him had failed to substantiate based on irrefutable evidence the veracity of her claim of having earned agriculture income. Accordingly, the CIT(A) considering the totality of Page 8 the facts involved in the present case found no infirmity in the view taken by the AO and approved his order.
As the assessee had neither put up an appearance nor filed any written submissions that would substantiate the source of the subject cash loan of Rs. 16.50 lacs (supra) or point out any perversity in the view taken by the lower authorities, therefore, we find no infirmity in the view taken by the A.O who in the absence of any explanation forthcoming from the assessee, had based on his well-founded reasoning, observed that the cash loan of Rs. 16.50 lacs (supra) advanced by the assessee during the subject year was sourced from her unexplained money. Also, it transpires that as the assessee despite sufficient opportunities had failed to substantiate the source of the subject cash loan before the CIT(A), therefore, the latter in the absence of any infirmity in the view taken by the A.O had rightly sustained the addition of Rs. 16.50 lacs (supra) made by him under Section 69A of the Act. We, thus, find no justifiable reason to dislodge the well- reasoned order of the CIT(A) and uphold the same.
Resultantly, finding no merit in the assessee’s appeal, we dismiss the same.
24th मार्च, 2025 को खुली अदालत में सुनाया गया आदेश।