C JAYASINGH,CHENNAI vs. ITO, NON CORP WARD -1(2), CHENNAI

PER G.MANJUNATHA, AM: This appeal filed by the assessee is directed against

order of the learned Commissioner of Income Tax (Appeals)-2,

Chennai, dated 29.11.2018 and pertains to assessment year

2011-12.

that the appeal filed by the assessee is time barred by 35 days

for which necessary petition for condonation of delay along

with affidavit explaining the reasons for the delay has been

filed. The AR further submitted that the assessee could not

file appeal within the time allowed under the Act, due to the fact

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that the assessee fell sick due to enteric fever and Doctor

advised to take rest for 6 weeks, which caused delay of 35

days. The delay in filing appeal is neither intentional nor

willful, but for the unavoidable reasons, therefore, delay may be

condoned in the interest of advancement of substantial

justice.

condonation of delay petition filed by the assessee submitted

that the reasons given by the assessee do not come within the

ambit of reasonable and bonafide reasons, which can be

considered for condonation of delay and hence, appeal filed

by the assessee may be dismissed as not maintainable.

by the assessee for condonation of delay, we are of the

considered view that reasons given by the assessee for not

filing the appeal within the time allowed under the Act comes

under reasonable cause as provided under the Act for

condonation of delay and hence, delay in filing of appeal is

condoned and appeal filed by the assessee is admitted for

adjudication.

3 ITA No. 608/Chny/2019

“1. The Commissioner of Income Tax (Appeals) went wrong in confirming the addition of Rs.52,07,880/- made by the Assessing Officer invoking the provisions of Section 68 of the Income Tax Act.

bakery, besides he is also engaged in the business of purchase

& sale of used cars. The assessee filed his return of income for

the assessment year 2011-12 on 12.02.2013 declaring total

income of Rs.1,74,230/-. During the course of assessment

proceedings, the Assessing Officer noticed that the assessee

has made huge cash deposits in Tamil Nadu Mercantile Bank Ltd., Mount Road Branch, Chennai and Axis Bank, Velachery

branch. The assessee was asked to explain source for cash

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deposits in bank account. In response, the assessee has

claimed that source for cash deposits was out of loans received

from friends & relatives. The Assessing Officer, however, was

not convinced with explanation furnished by the assessee and

according to him, the assessee could not explain source of

cash deposits with necessary evidences and thus, made

addition of Rs.52,07,880/- towards cash deposits found in bank

account as unexplained credit u/s.68 of the Income Tax Act,

1961. The Assessing Officer had also made addition of

Rs.22,30,115/- towards net profit admitted by the assessee

from the business of purchase and sale of used cars.

preferred an appeal before the learned CIT(A). Before the

learned CIT(A), the assessee took different stand and argued

that cash deposits found in the bank account is not out of loan

received from friends & relatives, but advance received from

buyers of used cars. The assessee had also made an argument

that if at all, cash deposits found in bank account is treated as

unexplained, then additions made by the Assessing Officer

towards net profit from very same business should be deleted

5 ITA No. 608/Chny/2019

otherwise, it amounts to double deduction. The learned CIT(A),

after considering relevant facts and also taken note of various

facts sustained additions made by the Assessing Officer

towards cash deposits found in bank accounts, however,

directed the Assessing Officer to set off income of

Rs.22,30,115/- offered by the assessee, out of very same cash

credits found in bank accounts as his business receipts.

Aggrieved by the learned CIT(A) order, the assessee is in

appeal before us.

learned CIT(A) erred in confirming addition of Rs.52,07,880/-

made by the Assessing Officer invoking provisions of section 68

of the Income Tax Act, 1961, without appreciating fact that the

assessee has explained cash deposits found in bank accounts.

The learned A.R for the assessee further referring to the

assessment order for assessment year 2010-11 submitted that

the Assessing Officer has completed assessment for the

assessment year 2010-11 u/s.143(3) r.w.s. 147 of the Act,

where on very same nature of cash deposits, in bank accounts

has been accepted by the Assessing Officer and has estimated

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net profit of 15% on total cash deposits, therefore, a similar

direction may be given to the Assessing Officer to estimate net

profit from business.

the learned CIT(A) submitted that the assessee could not

adduce any evidence to justify its stand that he was into used

car business and cash deposits found in bank accounts are out

of his business receipts. Therefore, the learned CIT(A) has

rightly sustained additions made by the Assessing Officer and

his order should be upheld.

available on record and gone through orders of the authorities

below. We find from orders of the lower authorities that the

Assessing Officer as well as the learned CIT(A) have accepted

fact that the assessee is into the business of purchase and sale

of used cars. Once, the authorities have accepted fact that the

assessee is into business of purchase and sale of used cars,

then they must have examined claim of the assessee that cash

deposits found in bank account is out of advance received from

customers for sale of used cars. No doubt, the assessee has

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taken a different stand at different levels, but learned A.R for

the assessee has explained reasons for taking different stand

as per which, the assessee’s father was ill during the relevant

time and the assessee could not explain his case before the

Assessing Officer with necessary evidences. Therefore, the

learned A.R for the assessee has requested to give one more

opportunity of hearing to explain his case before the Assessing

Officer. We find that when the authorities below does not

disbelieve claim of the assessee that he was into business of

purchase & sale of used cars, then they must have examined

claim of the assessee that cash deposits found in bank

accounts is out of advance received from customers. Since,

both the authorities have failed to examine claim of the

assessee, we are of the considered view that the issue needs

to go back to the file of the Assessing Officer to give one more

opportunity of hearing to the assessee to justify his case.

Hence, we set aside order of the learned CIT(A) and restore the

issue back to the file of the Assessing Officer and direct the

Assessing Officer to re-examine claim of the assessee de novo

in accordance with law, after affording opportunity of hearing to

the assessee.

8 ITA No. 608/Chny/2019

allowed for statistical purposes. Order pronounced in the open court on 11th April , 2022

Sd/- Sd/- (वी. दुगा� राव) (जी. मंजुनाथ) (V. Durga Rao) (G.Manjunatha) $या�यक सद&य /Judicial Member लेखा सद&य / Accountant Member

चे$नई/Chennai, )दनांक/Dated 11th April, 2022 DS आदेश क� ��त+ल,प अ-े,षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आयु.त (अपील)/CIT(A) 4. आयकर आयु.त/CIT 5. ,वभागीय ��त�न2ध/DR 6. गाड� फाईल/GF.