ELUMALAI SUMATHI,BAPATLA vs. INCOME TAX OFFICER, WARD-1, ONGOLE

This appeal filed by the Assessee is time barred by 7 days. The assessee filed a petition for condonation of delay and submitted that she could not file appeal in time due to lack of proper awareness and knowledge of ITAT proceedings and its timelines and also since she was staying almost 300 kms away from Hyderabad, it took time for her to approach suitable consultant to file appeal before the Tribunal. The assessee further submitted that the reasons for the delay in filing the appeal before the Tribunal were neither deliberate nor on account of any malafide intention. She, therefore, pleaded to condone the delay and admit the appeal for hearing.

The Ld.DR opposed petition filed for condonation of delay.

We have gone through the condonation petition filed by the assessee. In this case, the order of the Ld.CIT(A) was passed and served on the assessee on 09.08.2024 and as per the amended provisions of section 253(3) of the Act, the assessee ought to have filed appeal before the Tribunal within 60 days from the end of the month in which the order of the Ld.CIT(A) is communicated to the assessee, i.e., on or before 30.10.2024, but the assessee could file appeal before the Tribunal on 07.11.2024 with the delay of 07 days. We find that there is a reasonable cause for the assessee to file the appeal belatedly, therefore, we condone the delay and admit the appeal for hearing in the interest of justice.

The brief facts of the case are that the assessee, an individual, carrying on business in operating hydraulic mobile crane, filed return of income for the A.Y.2016-17 on 15.11.2017,

Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A) and before the Ld.CIT(A), the assessee has filed detailed written submission on the issue, which has been reproduced in para 4 from pages 3 to 7 of the Ld.CIT(A) order. The sum and substance of the arguments of the assessee are that the assessee hails from business family and has built up capital since inception of her business. Further, she has obtained

The Ld.CIT(A), after considering relevant submissions and also taking into account the facts gathered during the assessment proceedings observed that although the assessee has claimed that she built up capital to the tune of Rs.30,23,100/-, but no evidences have been filed to justify the source of income for the said capital. Further, the assessee has made cash deposit of Rs.20,00,000/- from 07.11.2015 to 07.12.2015 and failed to establish the source for the said cash deposit, therefore, observed that the assessee has only cooked up explanation for capital formation for previous years. Further, the assessee has not been able to demonstrate how the cash has been deposited in her bank account before making payment for purchase of the property. Therefore, considering the totality of facts and circumstances of the case, rejected the explanation of the assessee and sustained the additions made by the Assessing Officer towards investment in purchase of immovable property as unexplained investment u/s 69 of the Act.

Aggrieved by the Ld.CIT(A) order, the assessee is now in appeal before the Tribunal.

The learned Counsel for the assessee submitted that the Ld.CIT(A) erred in rejecting the claim of the assessee towards source of income for purchase of the property, even though the 5 assessee has filed relevant evidences including the returns filed for the A.Y.2011-12 to 2016-17 and also the details of nature of income earned before 01.04.2010. The learned Counsel for the assessee, further referring to opening capital as on 01.04.2010, submitted that the assessee derives income from her business, remuneration from partnership firm and also agricultural income. The assessee is in the business for many years and if we consider the nature of business carried out by the assessee and the income declared for the A.Y.2011-12 to 2016-17, the possibility of accruing cash and cash equivalent from her business for the previous years cannot be ruled out. Therefore, he submitted that considering the income declared by the assessee and nature of income, the additions made by the Assessing Officer should be deleted.

The Ld.DR on the other hand, supporting the order of the Ld.CIT(A) submitted that before the Assessing Officer, the assessee could not appear and file any details. Before the Ld.CIT(A), the assessee explained the source, out of opening capital as on 01.04.2010 and also out of income from subsequent years. Although, the assessee has claimed to have saved out of her own known sources of income, but, no evidences have been filed to justify the huge cash deposit within a period of one month before the purchase of the property. Further, the assessee claimed to have availed loan from her friends and relatives, but no details have been filed. The Ld.CIT(A), after considering relevant submissions of the assessee rightly rejected the arguments and rightly sustained the additions made by the Assessing Officer. Therefore, their order should be upheld.

We have heard both the parties, perused the material on record and gone through the orders of the authorities below. Admittedly, proceedings before the Assessing Officer are ex-parte. The assessee neither appeared nor furnished any details. Therefore, the Assessing Officer made addition of Rs.36,60,000/- towards investment in purchase of immovable property as unexplained investment u/s 69 of the Act. It was the argument of the assessee before the Ld.CIT(A) that, she has known sources of income, out of her business income and other receipts including agricultural income and as on 01.04.2010, she has accumulated cash and cash equivalent of Rs.30,23,100/-. The assessee had also furnished the returns of income filed for the A.Y.2011-12 to 2016-17 and declared total income of Rs.25,10,620/- for six assessment years upto A.Y.2016-17. The assessee claims that she hails from a business family and right from inception she was carrying on business and out of her business income, accumulated cash and cash equivalent to the extent of Rs.30,23,100/-. We find that the assessee has declared income from business and also remuneration from partnership firm and agricultural income from over a period of six assessment years. If we consider the nature of income declared by the assessee for the A.Y.2011-12 to 2016-17 amounting to Rs.25,10,620/-, the arguments of the assessee that she has savings out of her own source of income, which is the source for investment in purchase of property cannot be ruled out. Similarly, the assessee claims to have accumulated Rs.30,23,100/- as on 01.04.2010, out of her known source of income. Although there is no direct evidence for opening capital as on 01.04.2010, but going by the nature of 7 income and her status as business woman, the possibility of accumulating income out of her known source of income for the period prior to 01.04.2010 cannot be ruled out. Although the amount of opening capital claimed by the assessee seems to be on higher side, since the assessee is earning regular income from her business and other sources, income earned by the assessee cannot be treated as unexplained. We further note that the total income declared by the assessee including opening capital as on 01.04.2010 is amounting to Rs.55,33,720/-. If we allow 50% income for her personal drawings and other investments, the availability of 50% in the form of cash and cash equivalent cannot be ruled out. Therefore, we are of the considered view that the arguments of the assessee that out of her known sources of income, she has accumulated cash and cash equivalent, which is the source for purchase of the property for the A.Y.2016-17 needs to be accepted.

Therefore, considering the totality of the facts and circumstances of the case and also the evidences filed by the assessee to prove her source of income, we deem it appropriate to consider 50% of her income including opening capital as on 01.04.2010 is available as cash and cash equivalent to explain the source for investment in the purchase of property for Rs.36,60,000/-. Therefore, we are of the considered view that the assessee is able to explain the source to the extent of Rs.27,60,000/- out of total investment for purchase of property to the tune of Rs.36,60,000/-. In other words, since the assessee is able to explain the source, we direct the Assessing Officer to delete the addition made u/s 69 for Rs.27,60,000/- and the balance

In the result, appeal filed by the assessee is partly allowed.