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Facts
The assessee, a government contractor, faced additions to income for AY 2015-16, including Rs. 53,30,000/- for unexplained cash deposits, which the assessee claimed were from government contract receipts. The CIT(A) upheld the additions as proof was not furnished.
Held
The Tribunal condoned a 186-day delay in filing the appeal and remanded the matter to the Assessing Officer. The AO is directed to verify if the cash deposits originated from contract receipts received in cash from the government treasury; if confirmed, the deposits are to be treated as explained.
Key Issues
Condonation of delay in filing appeal; and whether cash deposits claimed to be from government contract receipts can be treated as explained income.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 06.11.2023 for Assessment Year (AY) 2015-16.
Brief facts of the case are that the appellant is an individual engaged in the business of executing government contracts. The return of income for AY 2015-16 was filed on 18.12.2015 disclosing income of Rs. 4,77,100/- . Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2, Thodupuzha (hereinafter called "the AO") vide order dated 02.11.2017 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 59,33,171/-.
Kizhakkekara Sivaraman Niar Unnikrishnan Nair While doing so, the AO brought to tax the interests earned from banks of Rs. 1,26,071/- and the AO also made addition of cash deposits in bank account of Rs. 53,30,000/- for the alleged failure of the appellant to explain the source of cash deposit.
Being aggrieved, an appeal was filed before the CIT(A) contending that the appellant received contract receipts from the government treasury in cash and deposited the same in the bank account. Since the amount deposited in the bank account is less than the gross receipt from the contract, no addition is required to be made. The CIT(A) confirmed the addition by holding that the appellant had not furnished proof of receipt of contract received in cash from treasury.
Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.
At the outset, I find that there is a delay of 186 days in filing the present appeal. The appellant had filed a petition seeking condonation of delay stating that the order of the CIT(A) was served through email ID of the erstwhile Accountant. Since the Accountant left the service of the appellant, the contact details of the appellant was updated on 07.11.2021 by changing the email ID. However, the order of the CIT(A) was served on the old email ID. It is only when the Tax Consultant searched the IT Portal, the appellant had come to know about the order passed by the CIT(A). Thus, he submitted that the delay in filing the appeal is not intentional but due to the reasons beyond the control of the appellant. Therefore, he prayed for condonation of the delay.
Having considered averments made in the petition for condonation of delay, in the absence of evidence to the contrary, I am of the Kizhakkekara Sivaraman Niar Unnikrishnan Nair considered opinion that it is a fit case for condonation of delay. Accordingly I condone the delay and admit the appeal for adjudication on merits.
The learned A.R. submits that the cash deposits were made out of the contracts receipts received in cash from the treasury. Since the appellant had no evidence of receipt of contract received in cash, the AO can call for evidence from the treasury to find out whether the appellant had received the contract receipts in cash. Therefore, the matter may be remitted back to the file of the AO for de novo assessment.
On the other hand, the learned Sr. DR has no serious objection for remanding the matter.
In view of the above, I remand the matter back to the file of the AO with direction to verify whether the appellant had received the contract receipts in cash from the treasury by exercise of such powers which are vested with him under the provisions of Income Tax Act. On verification, if it is found that the contract receipts were received from the treasury in cash, the cash deposits may be treated as explained and no addition is called for.
In the result, the appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 12th February, 2025. 11.
Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 12th February, 2025 n.p.