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Facts
The assessee challenged the CIT(A)'s order for AY 2010-11, which upheld the AO's additions under Section 69 for unexplained investment in property, under Section 68 for unexplained cash deposit, and disallowance under Chapter VI-A/Section 80C. The appeal to ITAT was filed with a delay of 1 year and 63 days, for which condonation was sought.
Held
The ITAT condoned the delay. It deleted the addition under Section 69, finding the property and investment belonged to the assessee's wife. The addition under Section 68 was also deleted, accepting the assessee's explanation of business receipts during peak Diwali season. The ground for disallowance under Chapter VI-A/Section 80C was dismissed as non-pleaded.
Key Issues
Whether the delay in filing the appeal should be condoned; whether additions for unexplained investment in property and unexplained cash deposit were justified; and whether the disallowance of deduction under Chapter VI-A was valid.
Sections Cited
143(3), 69, 68, 80C, 143(2), 142(1), 253(5), 147, 44AD, Chapter VI-A
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI B.M. BIYANI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 03.12.2021 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 12.02.2013 passed by learned ITO-2(1), Bhopal [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2010-11, the assessee has filed this appeal on following effective grounds:
Page 1 of 10 AY 2010-11 1. That the order of the NFAC/Ld.CIT(A) is bad and erroneous in law and against the principles of natural justice and equity and therefore the assessment order deserves to be quashed.
That on the facts & circumstances of this present case as well as law on the subject. the NFAC/Ld.CIT(A) has erred in passing of Ex-Parte order without giving proper opportunity of being heard to the Appellant.
That on the facts and in the circumstances of the case as well as law on the subject, the NFAC/Ld.CIT(A) has erred in confirming the action of Assessing Officer in making addition of Rs.7,60,800/- u/s 69 of the Act on account of unexplained investment which was not pertained to the appellant and is therefore unjust, illogical and arbitrary and deserves to be quashed.
That on the facts and in the circumstances of the case as well as law on the subject, the NFAC/Ld.CIT(A) has erred in confirming the action of Assessing officer in making addition of Rs.4,46,000/- u/s 68 of the Act on account of unexplained cash deposit in his Savings bank account and therefore it is unjust, illogical and arbitrary and deserves to be quashed.
That on the facts and in the circumstances of the case as well as law on the subject, the NFAC/Ld.CIT(A) has erred in confirming the action of Assessing officer in not allowing the deduction available u/s 80C of the Act, amounting to Rs.45,271/-.
The registry has informed that the present appeal is delayed by 1 year and 63 days and therefore time-barred. Ld. AR for assessee submitted that the assessee has filed an application for condonation of delay supported by assessee’s affidavit on stamp. Referring to contents of same, Ld. AR narrated that the impugned order was passed ex-parte by CIT(A) on 03.12.2021 and as per prescribed time-limit this appeal ought to have been filed by 02.02.2022 but the appeal could not be filed in time due to negligence of previous counsel, Shri Radhe Shyam Chouhan, Advocate, who was entrusted with the work of filing of this appeal before ITAT. The assessee has also filed a duly solemnized affidavit of previous counsel. In Para 2 to 6 of same, the previous counsel has made averments that (i) the delay in filing present appeal before ITAT was due to his inability to take up assessee’s
Page 2 of 10 able to focus on his professional duties due to his father’s illness who was suffering from Vericon disease and had to be admitted in hospital at Mumbai and there were back-to-back travels for check-ups, follow-ups, etc. and even his father could not survive despite all care and treatment and ultimately expired also, and (iii) that his inability should not cause hardship to assessee. Ld. AR thus submitted that that the delay is attributable solely to counsel and there is no role of assessee. He submitted that the assessee has entrusted work of filing appeal to the counsel in time and there is no lethargy, negligence, mala fide intention or ulterior motive of assessee in making delay and the assessee does not stand to derive any benefit because of delay. He submitted that the delay caused by counsel’s mistake, better to say counsel’s own compulsion caused by illness of his father, is a “sufficient cause” for condonation as per decided cases. He prayed that the delay must be condoned therefore. Ld. DR for Revenue left the matter to the wisdom of Bench while admitting that he does not have any objection if the delay is condoned considering the situation. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst.
Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever
Page 3 of 10 the cause of substantial justice must be preferred by adopting a justice- oriented approach. Thus, taking into account the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.
The background facts leading to present appeal are such that the assessee-individual filed return declaring a Gross Total Income of Rs.
2,97,706/-, Deduction of Rs. 45,271/- under Chapter VI-A and Total Income of Rs. 2,52,440/-. The case was selected for scrutiny assessment and the AO issued notices u/s 143(2)/142(1) which were partly complied. Ultimately, the AO passed assessment-order after making three additions/ disallowances, namely (i) addition of Rs. 7,60,800/- on account of unexplained investment in a property situated at Gram – Bawadia Laka, Patwari Halka No. 42, Tahsil Hujur, Bhopal; (ii) addition of Rs. 4,46,000/- on account of unexplained deposit in a bank a/c; and (iii) disallowance of deduction of Rs. 45,271/- under Chapter VI-A. Aggrieved, the assessee carried matter in first-appeal but could not participate in the hearings fixed by CIT(A). Ultimately, the CIT(A) passed order on the basis of available material and upheld the additions/disallowances made by AO. Now, the assessee has come in next appeal before us assailing the orders of lower- authorities.
Ground No. 1 to 2:
Page 4 of 10 the assessee is a person of small means and activities and the additions made by AO are also small. Therefore, the specific grounds of assessee viz.
Ground No. 3 to 5 be heard and finally decided on merit after considering evidences. The request of Ld. AR is not objected by Ld. DR for revenue.
Hence, the request is accepted and hearing is accordingly proceeded to decide the issues on merit on the basis of evidences.
Ground No. 3:
In this ground, the assessee challenges the addition of Rs. 7,60,800/- made by AO u/s 69 on account of unexplained investment in immovable property.
The AO has made this addition vide para 4 of assessment-order. The AO has noted that when he called assessee, vide letter dated 19.12.2022, to furnish the details of immovable properties purchased and sold, the assessee filed reply dated 07.01.2013 stating that he relinquished a property without consideration and furnished copy of relinquishment-deed. Further, vide letter 09.01.2013, the assessee replied that no other property was sold or purchased by him. Then, the AO called information directly from the office of sub-registrar and from examination of one purchase-deed, the AO observed that the assessee purchased a property situated at Gram-Bawadia Kala, Patwari Halka No. 42, Tahsil Hujur, Bhopal, from Shri Dwarka Prasad Khandelwal, measuring 0.150 hectare during the financial year 2009-10 relevant to AY 2010-11 and the total investment was Rs. 7,60,800/- on Page 5 of 10 issued notice dated 04.03.2013 to assessee to explain this purchase transaction but finding no further response from assessee, treated the same as unexplained and made addition. During first-appeal, the CIT(A) upheld AO’s order.
Apropos to this issue, Ld. AR for assessee carried us to certain documents filed in Paper-Book. The first document at Page 9-16 is a registered-deed of impugned property. Referring to this deed, Ld. AR firstly demonstrated that all details of property, namely situated at Gram-Bawadia Kala, Patwari Halka No. 42, Tahsil Hujur, Bhopal, seller Shri Dwarka Prasad Khandelwal and measurement of 0.150 hectare, as mentioned by AO in assessment-order are duly matched in the registered-deed, therefore it is a registered-deed of very same property as considered by AO for making addition. Thereafter, he demonstrated that the said property was purchased singly by Smt. Sudha Sahu, wife of assessee and the assessee is not even a joint purchaser in the deed. Then, Ld. AR carried us to Pages 25-27 where the assessment-order dated 27.11.2017 of Smt. Sudha Sahu for the very same AY 2010-11 is placed. Referring to same, Ld. AR explained that the case of assessee’s wife of very same AY 2010-11 was completed by same office of AO u/s 147 r.w.s. 143(3) and while conducting proceeding, the AO made a specific query from assessee’s wife qua the purchase of very same property and source of investment made therein through a notice dated 18.10.2017 u/s 142(1) (copy at Paper-Book Page 23) and assessee’s wife
Page 6 of 10 the impugned property and also made investment therein. After considering such submission of assessee’s wife, the assessing authority was satisfied and did not make any addition while completing her assessment through aforesaid assessment-order dated 27.11.2017. Therefore, it is clearly established that the impugned property belonged to assessee’s wife and the investment therein was also made by asessee’s wife. Therefore, the AO has wrongly made addition in the hands of assessee. Ld. DR for revenue, although dutifully relied upon AO’s order, but could not controvert these facts successfully demonstrated by Ld. DR. After due consideration, we find that the AO has himself noted that in reply dated 09.01.2013, the assessee stated that he had not purchased any property. However, the AO made addition on the basis of purchase-deed received directly by him from the office of sub-registrar. But the purchase-deed, as successfully demonstrated by Ld. AR, is in the name of assessee’s wife as purchaser and the assessee’s name is not mentioned even as joint purchaser. Further, during assessment-proceeding of assessee’s wife, the assessing authority has categorically enquired from assessee’s wife regarding purchase of very same property as also the source of investment and assessee’s wife filed a reply admitting her ownership and her investment which stands accepted by assessing authority. Thus, from these facts/evidences, it is manifest that the assessee is neither purchaser/owner of impugned property nor made any investment therein. Faced with situation, we agree that the addition made
Page 7 of 10 deleted. The assessee succeeds in this ground.
Ground No. 4:
In this ground, the assessee challenges the addition of Rs. 4,46,000/- made by AO u/s 68 on account of unexplained cash deposit in bank a/c.
The AO has made this addition vide para 5 of assessment-order. The AO observed that the assessee made a cash deposit of Rs. 4,46,000/- in a/c with M.P. Rajya Sahakari Bank on 09.11.2009. The AO treated the same as unexplained in absence of response from assessee. During first-appeal, the CIT(A) upheld AO’s action.
Ld. AR for assessee submitted that the assessee was engaged in a small business of tent house and light decorator in the name and style of “M/s Munna Decorators” since the year 2008. He carried us to a copy of Establishment Registration Certificate dated 26.04.2008 issued by Municipal Corporation of Bhopal filed at Page 38 of Paper-Book to show the existence of assessee’s business. Then, Ld. AR carried us to the copy of Computation of Total Income of assessee at Page No. 6-8 of Paper-Book to show that the assessee declared business income of Rs. 2,63,456/-. He submitted that this income is declared by assessee u/s 44AD on business turnover of Rs. 5,60,000/-. Finally, he carried us to the pass-book of impugned bank a/c at Page 40 of Paper-Book to show that the assessee deposited a cash sum of Rs. 4,60,000/- on 09.11.2009 (the AO has wrongly
Page 8 of 10 these documents, Ld. AR submitted that the assessee is engaged in tent and light decoration business and derived receipts from business in the peak season of Diwali which were accumulated and ultimately deposited in Bank A/c. Ld. AR submitted that the assessee is making a very honest submission that the impugned deposit was made only from business turnover and hence the assessee’s submission must be given credence and accepted. He submitted that the assessee is a small person and does not have any further documentation except to make this honest submission. He submitted that the business of assessee is clearly established by registration-certificate and business income stands offered by assessee in the return of income filed to department. He prayed that a judicious view be taken and the source of bank deposit be accepted. Ld. DR for revenue left this issue to the wisdom of Bench. After a careful consideration, we find that the assessee is in the business of tent and light decorator and has declared net profit of Rs. 2,63,456/- and turnover of Rs. 5,60,000/- from such business. It is also an acceptable point that the business of assessee would be in peak season on the occasion of Diwali and thereafter the assessee has made deposit of business receipts in bank a/c. Taking a holistic view of the submission of assessee, the source of impugned deposit from business turnover is accepted. Accordingly, the addition made by AO on account of unexplained bank deposit is deleted.
Page 9 of 10 Ground No. 5:
In this ground, the assessee challenges the deduction of Rs. 45,271/- claimed under Chapter VI-A but disallowed by AO and upheld by CIT(A).
The AO has made this disallowance vide Para 6 of assessment-order for the reason of non-filing of any evidence by assessee and the CIT(A) has also upheld disallowance for the very same reason. Before us, Ld. AR for assessee has not made any oral submission qua this ground nor filed any submission in the Written-Submission. Therefore, this ground is taken as non-pleaded and dismissed.
Resultantly, this appeal is partly allowed.
Order pronounced by putting on notice board as per Rule 34 of ITAT Rules, 1963 on 21/02/2025
Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 21/02/2025 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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