Loading judgment…
Facts
The assessee, a pensioner, filed his Return of Income for AY 2017-18. The AO made an addition of Rs. 31,21,000/- as unexplained cash deposits in Specified Bank Notes (SBN) during demonetisation, despite the assessee explaining the source from withdrawals and deceased son's hoarded cash. The CIT(A) dismissed the appeal for non-compliance, stating the explanation was implausible for an 83-year-old.
Held
The Tribunal observed that the AO and CIT(A) rejected the assessee's explanation based on presumptions without seeking further evidence or presenting material to controvert the explanation. The lower authorities' orders were found to be based on assumptions, and thus, the Tribunal set aside their orders and directed the AO to delete the addition of Rs. 31,21,000/-.
Key Issues
Whether the lower authorities were justified in confirming the addition of Rs. 31,21,000/- as unexplained cash deposits made during demonetization, when the assessee provided an explanation regarding the source, which was not rebutted by cogent material.
Sections Cited
143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 17.08.2023 for Assessment Year (AY) 2017-18. Appellant also filed a Stay Application for stay of collection of outstanding demand of Rs. 9,00,489/-
Brief facts of the case are that the appellant is an individual deriving pension. The return of income for AY 2017-18 was filed on 10.07.2017 declaring income of Rs. 11,33,422/- Against the said SA Philippose Varghese return of income, the assessment was completed by the ITO, Ward- 3, Alappuzha (hereinafter called "the AO") vide order dated 21.12.2019 passed u/s. 143(3) of the Act at a total income of Rs. 51,30,140/-. While doing so, the AO made addition of Rs. 31,21,000/- as unexplained money being cash deposits in Specified Bank Notes (SBN) during demonetisation period, rejecting the contention of the appellant that the cash deposits were made out of cash withdrawals from post office saving bank of Rs. 9,15,000/- and cash withdrawals from banks during the period January 2016 to October 2016 of Rs. 21.32 lakhs and also cash hoarded by his son in personal Almirah, who subsequently died of Rs. 121.25 lakhs. The AO made addition of Rs. 31,21,000/- by holding that the appellant could not prove the source of deposits.
Being aggrieved, an appeal was filed before the CIT(A),who dismissed the appeal for non-compliance by holding that a person of 83 years old could not have held so much of cash balance.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
At the outset, there is a delay in filing the appeal by 543 days. The appellant filed a petition seeking condonation of delay by claiming that the order passed by the NFAC on 17.08.2023 was not served on him either through physical mode or through email communication. He had come to know of the order passed by the NFAC only when the order giving effect to appellate order was SA Philippose Varghese passed by the AO. It is further submitted that the appellant had opted for physical service of notices, not through email. The email ID given in Form 35 belongs to the Tax Consultant. It is further submitted that the NFAC had initiated hearing proceedings during Covid-19 period and since all the hearing notices were sent to wrong email ID, notices cannot be complied with. Ultimately, when the matter was entrusted to another Tax Consultant, on the income tax portal the order passed by the NFAC was found and immediately steps were taken to file the appeal. He also pleaded that he is suffering from dementia. To this effect he submitted medical certificate.
Having considered the averments made in the affidavit, we are 6. of the considered opinion that in the absence of any material contrary it is a fit case to condone the delay. Accordingly, we condone the delay and admit the appeal for consideration.
When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR.
The learned Sr. DR vehemently argued that the order passed by the CIT(A) is a reasoned one and does not call for any interference by this Tribunal.
The short issue that arises for our consideration is whether the CIT(A) was justified in confirming the addition of Rs. 31,21,000/- SA Philippose Varghese being the cash deposits made in SBN during demonetisation period as unexplained money of the appellant. The appellant had offered explanation before the AO in support of the said cash deposits by stating that the cash deposits were made out of the money hoarded by his son, who died subsequently of Rs. 12,50,000/- and cash withdrawals from banks during the period January, 2016 to October, 2016. The explanation offered by the appellant was not rebutted by the AO by leading cogent material. If the AO doubts the veracity of the explanation he ought to have called for further evidences as he thinks fit but be cannot simply reject the explanation on presumptions and assumptions. Even the CIT(A) had simply confirmed the action of the AO in making the addition on assumptions without referring to the material controverting the explanation offered by the assessee. Thus, the orders of the learned lower authorities are hereby set aside and direct the AO to delete the addition.
In the result, the appeal filed by the assessee stands allowed.
Since the appeal of the assessee is allowed the stay application becomes infructuous, hence dismissed.
Order pronounced in the open court on 26th June, 2025.
Sd/- Sd/- (PRAKASH CHAND YADAV) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 26th June, 2025 n.p.