Loading judgment…
Facts
The assessee's appeal concerns an addition of Rs. 2,42,000 made by the AO for cash deposits during the demonetization period for AY 2017-18, which the AO treated as unexplained money. The assessee contended the deposit was from a prior cash withdrawal of Rs. 3,03,000, but the AO rejected this due to a time gap. The CIT(A) dismissed the assessee's appeal ex parte, leading to an appeal before the Tribunal with a delay of 267 days.
Held
The Tribunal condoned the delay in filing the appeal. On merits, it held that the addition of Rs. 2,42,000 was unwarranted, noting that the earlier withdrawal of Rs. 3,03,000 was undisputed and a mere time gap isn't sufficient to reject the explanation without evidence of alternative utilization. It also referred to CBDT Circular No. 3 of 2017, which states deposits below Rs. 2,50,000 during demonetization require no further verification.
Key Issues
The key issues were the condonation of a 267-day delay in filing the appeal before the Tribunal and the justification of an addition for cash deposits during demonetization, considering prior withdrawals and a time gap.
Sections Cited
143(3), 250, 271AAC(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, COCHIN
Before: Shri Inturi Rama Rao
Asst.Year 2017-2018 Ullattil Sillu The Income Tax Officer 1245/19 Pillakkatu House v. Ward 1(4) Chalappuram PO Kozhikode. Calicut – 673 002. PAN : BQYPS2276M. (Appellant) (Respondent) Appellant by : Sri.P.Raghunathan, Advocate Respondent by : Smt.Leena Lal, Senior AR Date of Date of Hearing : 13.03.2025 Pronouncement :27.03.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Assessment Centre / Commissioner of Income- tax (Appeals) [“CIT(A)” for short] dated 18.03.2024 for the assessment years 2017-2018.
Briefly the facts of the case are that the appellant is an individual. The return of income for the assessment year 2017-2018 was filed on 28th February, 2018 disclosing an income of Rs.2,83,130. Against the said return of income, the assessment was completed by the Assessing Officer (“the AO” hereinafter) vide order dated 25.11.2019 passed u/s.143(3) of the Income-tax Act, 1961 (“the Act” hereinafter). While doing so, the AO made an addition of Rs.2,42,000 being cash deposits made during the demonetization period as unexplained money. Without accepting the explanation of the appellant that the said cash deposit was . Ullattil Sillu. made out of amount withdrawn on 5th August, 2016 amounting to Rs.3,03,000. The A.O. was of the opinion that the amount was deposited after a gap of 106 days and therefore it cannot be accepted. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order, dismissed the appeal ex parte.
Being aggrieved, the appellant is in appeal before me in the present appeal. At the outset, there is a delay of 267 days in filing the present appeal before the Tribunal. The appellant had filed an affidavit seeking condonation of delay, stating therein that the delay occurred as no order was served physical on the appellant nor the order was served through email address given in Form 35 nor any alert was received on the mobile regarding the notice u/s.250 of the Act. It is only when the appellant was served the show cause notice u/s.271AAC(1) on 28.01.2025 on checking the website of the Income Tax Portal the appellant had noticed the order was passed by the CIT(A) on 18th March, 2024. Thus, it is submitted that the delay is occurred which is neither intentional nor deliberate. Therefore, it is submitted that the delay may be condoned.
On the other hand, the learned Sr.DR vehemently opposed the condonation of delay and submits that there is no sufficient cause exists.
Having heard the rival submissions and in the absence of material on record contrary to the averments made in the affidavit seeking the condonation of delay, I am of the considered view that it is a fit case to condone the delay. Accordingly, I condone the delay and admit the appeal for adjudication on merits.
I heard the rival submissions and perused the material available on record. The only issue that arises for my consideration is whether there was justification to sustain the addition of Rs.2,42,000 being the cash deposit made during the demonetization period as unexplained money of the appellant. On mere perusal of the assessment order, it would be clear that the appellant had tendered an explanation that the cash deposits were made out of the earlier withdrawal made from bank account on 5th August, 2016 of Rs.3,03,000. This fact was not disputed by the AO. The A.O. merely rejected the explanation by holding that there was a time gap between the cash withdrawal from the bank and its deposit in the bank account. It is settled position of law that in the absence of evidence to show that the amount withdrawn was utilized somewhere else, the amount withdrawn should be deemed to be available for subsequent deposit in bank account. Moreover, in view of the CBDT Circular No.3 of 2017 dated 20th January, 2017, the cash deposit is below 2,50,000 during the demonetization period need no further verification. Hence, I am of the considered opinion that no addition is warranted in the present case.
In the result, the appeal filed by the assessee is allowed. Order pronounced on this 27th day of March, 2025.