2016 (11) TMI 1638 - AT - Income Tax

Tribunal allows appeal, limits cash deposit addition under Income Tax Act, stresses timely explanations.

Sri Lokesh Chandrappa Versus Income Tax Officer, Ward 3 (2) (4), Bangalore.

The Tribunal condoned the delay in filing the appeal, considering the assessee's lack of experience in tax matters and reliance on a tax consultant. ... Condonation of delay - delay of 169 days in filing the appeal - assessee has submitted that the appeal of the assessee was dismissed exparte because of the tax consultant of the assessee failed to appear and he was under bona fide belief that the representative of the assessee will take care of the tax matter - HELD THAT:- Assessee is an individual and it appears to be the first experience with the tax matter. The explanation of the assessee has to be analysed in the context whether the reasons for delay as explained by the assessee are bona fide or merely a device to take benefit or an attempt to take undue advantage of filing the appeal belatedly. We find that it does not emerge from the facts and circumstances of the case that by filing the appeal belatedly the assessee has made an attempt to take undue advantage or benefit. Accordingly, having regard to the facts and circumstances of the case, we condone the delay of 169 days in filing the appeal. Addition u/s 68 - unexplained cash deposits in Bank account - peak credit - HELD THAT:- AO on the basis of AIR information that the assessee has deposited cash in the Bank account during the financial year relevant to the assessment year under consideration. Thus addition has been made by the Assessing Officer as an unexplained cash credit under Section 68 of the Act. In the case of CIT Vs. Gandhi Bhaichand H Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT] has held that the passbook maintained by the Bank could not be regarded as books of account of the assessee much less book maintained by the assessee. Therefore the Hon'ble High Court has upheld the order of the Tribunal in deleting the addition made under Section 68 of the Act on account of deposits in Banks. We find force and substance in the alternate plea of the learned Authorised Representative of the assessee that even if an addition is to be made it cannot be more than the peak credit in the bank account. Further since the assessee's case has been decided by AO as well as the CIT (Appeals) without any representative therefore in the facts and circumstances of the case, we set aside this matter to the record of the Assessing Officer for granting one more opportunity to the assessee for explanation of the source of cash deposit and in any case the addition if any it should not be more than the peak credit in the bank account. - Appeal of the assessee is partly allowed. Issues involved:1. Condonation of delay in filing the appeal.2. Addition under Section 68 of the Income Tax Act for unexplained cash deposits.Condonation of Delay:The appeal was filed with a delay of 169 days, and the assessee sought condonation supported by an Affidavit. The assessee's explanation for the delay was due to lack of experience in tax matters and reliance on the tax consultant who failed to act. The assessee's representative failed to appear during the appeal process, resulting in dismissal. The Departmental Representative argued that the assessee failed to provide a reasonable cause for the delay. The Tribunal analyzed whether the reasons for delay were bona fide or an attempt to take undue advantage. Concluding that the delay was not intentional, the Tribunal condoned the delay, considering the assessee's lack of experience in tax matters.Addition under Section 68 - Unexplained Cash Deposits:The Assessing Officer made an addition under Section 68 of the Income Tax Act for unexplained cash deposits in the assessee's bank account. Despite multiple opportunities, the assessee failed to explain the source of the deposits. The assessee contended that the bank passbook maintained by the bank cannot be considered as the assessee's books of accounts. The Authorized Representative relied on a Bombay High Court decision and a Tribunal decision to support the argument that the addition was not sustainable. Alternatively, it was argued that withdrawals from the bank should be considered as a source of subsequent deposits. The Departmental Representative maintained that the deposits were unexplained and should be added under Section 69 if not 68 of the Act. The Tribunal noted that the bank passbook is not the assessee's books of accounts and relied on the Bombay High Court decision to limit the addition to the peak credit in the bank account. The case was remanded to the Assessing Officer for the assessee to explain the source of cash deposits, ensuring any addition does not exceed the peak credit in the bank account. Consequently, the appeal was partly allowed.This detailed analysis of the judgment from the Appellate Tribunal ITAT BANGALORE highlights the issues of condonation of delay in filing the appeal and the addition under Section 68 of the Income Tax Act for unexplained cash deposits. The Tribunal's decision considered the assessee's lack of experience in tax matters and the sustainability of the addition based on the bank passbook. The judgment provides a comprehensive overview of the legal proceedings and the reasoning behind the Tribunal's decision, ensuring a fair and thorough analysis of the case.