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Facts
The assessee challenged a quantum addition of Rs.11,36,889/- (later reduced to Rs.10,94,725/- by CIT(A)) made u/s 69A and a consequential penalty. The addition stemmed from unexplained cash deposits in bank accounts and an unsubstantiated claim of car sale, which arose during a search assessment u/s 153A.
Held
The Tribunal condoned a significant delay of 1290 days in filing the appeal, citing financial distress. On merits, it restricted the quantum addition to Rs.2 Lacs, deleting the substantial part sustained by the CIT(A), and consequently, the penalty levied under Section 271(1)(c) was also deleted.
Key Issues
Condonation of delay; confirmation of quantum addition for unexplained cash deposits and unsubstantiated car sale; and validity of penalty under Section 271(1)(c).
Sections Cited
69A, 143(3), 153A, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. In these two appeals, the assessee challenges confirmation of quantum addition as well as consequential penalty. First, we take up quantum appeal Ld. Commissioner of Income Tax-5, Ludhiana [CIT(A)] dated 27-01-2022 confirming quantum addition of Rs.11,36,889/- as made by Ld. AO u/s 69A while framing an assessment u/s 143(3) r.w.s. 153A on 26-12-2019.
The registry has noted delay of 1290 days in the appeal, the condonation of which has been sought by the assessee on the strength of condonation petition which is accompanied by an affidavit of the assessee. The primary argument is that due to financial distress, the business operations were discontinued and the assessee’s family was rendered financially insolvent and bankrupt. Consequently, proceedings under SARFAESI Act were initiated by the lending institutions. Due to extreme hardship, the assessee was not in a position to pay the professional fees to the counsel and could not engage another counsel to prosecute the appeals. The Ld. Sr. DR has pleaded for dismissal of the appeal.
Upon perusal of assessment order, it could be seen that the impugned addition stem from search action by the department on assessee-group on 12-04-2017. Notice u/s 153A was issued to the assessee on 17-01-2018. In response, the assessee filed return of income declaring income of Rs.1,53,590/-. The assessee made cash gifts to various family members and also received similar gifts. However, the same was not accepted by Ld. AO. It also transpired that the assessee deposited cash of Rs.12,68,889/- in her various bank accounts as tabulated on para-5 of the assessment order. To substantiate the sources of the same, the assessee furnished cash flow statement from 28-05-2012 onwards showing opening cash-in- hand for Rs.6,10,164/-. However, the same was not accepted by Ld. AO. The cash flow statement for FY 2011-12 also stood rejected in AY 2012-13. The assessee reflected receipt of Rs.6.50 Lacs from sale of car for which no documentary evidences were furnished by the assessee. On these facts, Ld. AO made addition of Rs.11,36,889/- after allowing benefit of cash withdrawals for Rs.1.32 Lacs. Upon further appeal, the Ld. CIT(A) reduced the impugned addition to the extent of Rs.10,94,725/- considering revised cash flow statement as furnished by the assessee. The claim of sale of car for Rs.6.50 Lacs was not accepted. Aggrieved, the assessee is in further appeal before us.
So far as the delay is concerned, we find merit in condonation petition that the assessee was prevented by sufficient reasonable cause in filing the appeal since the assessee was undergoing financial distress and hardships at the relevant point of time. Therefore, keeping in mind the guiding principles laid down by Hon’ble Apex Court in the case of Collector, Land Acquisition vs. Mst. Katiji&Ors. (1987; (2) TMI 61 SC)on condonation, we condone the delay in the appeal and proceed for adjudication on merits.
On merits, we find that Ld. CIT(A) has adjudicated the appeal by considering revised cash flow statement wherein opening cash-in-hand has been taken to be Nil which is quite unjustified. Further, the claim of sale of car has been rejected for want of documentary evidences. The benefit of income accumulation over the years have not been granted to the assessee. Keeping in mind all these factors, we restrict the impugned addition to the extent of Rs.2 Lacs and delete the remaining addition as sustained by Ld. CIT(A). The Ld. AO is directed to re- compute the income of the assessee. No other ground has been urged in the appeal. The appeal stands partly allowed.
the assessee has challenged confirmation of penalty u/s 271(1)(c) for Rs.3,28,271/-. The same has been levied considering the quantum addition as sustained by Ld. CIT(A). Since we have granted substantial relief in quantum addition and estimated the quantum addition, the penalty thus imposed by lower authorities could not be sustained. The penalty stands deleted. This appeal stand allowed.