2018 (12) TMI 580 - AT - Income Tax

Tribunal Allows Appeal, Condoning Delay for Medical Reasons, Finds Cash Deposits Part of Business Turnover

Smt. Gangambike Versus The Income-tax Officer, Ward – 3 [2] [3], Bangalore

The Tribunal condoned the delay in filing the appeal due to medical reasons and admitted it for consideration. Regarding the addition of Rs. 11,87,500/- ... Unexplained investment u/s 69A - Cash deposits in the Bank account - Held that:- Cash deposits in the Bank account cannot be automatically construed to be income exigible to the tax from undisclosed sources or u/s 69A of the Act. The facts and circumstances on record, from an appraisal of the assessee’s ICICI Bank account in the case on hand, indicate that the said cash deposits of ₹ 15 lakhs apparently are made out of cash withdrawals of ₹ 29,94,500/- during the year under consideration, and re-deposited in the Bank account depending on the exigencies of assessee’s business. Before us, Revenue was not able to controvert this argument/contention of the assessee and therefore, of the view that in this factual matrix of the case, the addition of cash deposits of ₹ 11,87,500/- made by the AO as income from undisclosed sources and upheld by the CIT(A) as unexplained investment u/s 69A of the Act is factually unsustainable and therefore delete the same - Decided in favour of assessee. Issues Involved:1. Condonation of delay in filing the appeal.2. Addition of Rs. 11,87,500/- as income from undisclosed sources under Section 69A of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing the Appeal:The assessee filed an appeal against the CIT(A)-3, Bangalore's order dated 20.06.2018 for the Assessment Year 2015-16 with a delay of 24 days. The delay was attributed to the assessee's medical treatment for a gynecological issue, which required bed rest for three weeks. The assessee argued that the delay was neither deliberate nor intentional but due to bona fide health reasons. The assessee cited the decision of the Honourable Jurisdictional High Court in the case of ISRO Satellite Centre and the ITAT in the case of Glen Williams v/s. ACIT Circle-1(1) to support the condonation of delay.The Tribunal, after hearing the rival contentions and perusing the records, found that the reasons provided by the assessee constituted reasonable and sufficient cause. The Tribunal referred to the Hon’ble Apex Court's principles in the case of MST Katiji & Others, emphasizing that substantial justice should prevail over technical considerations. The Tribunal concluded that the delay was neither intentional nor deliberate and condoned the delay of 24 days, admitting the appeal for consideration and disposal.2. Addition of Rs. 11,87,500/- as Income from Undisclosed Sources under Section 69A:The assessee, engaged in the saree business, filed her return of income for Assessment Year 2015-16, declaring a total income of Rs. 3,12,500/-. The Assessing Officer (AO) determined the income at Rs. 15,00,000/-, adding Rs. 11,87,500/- due to cash deposits in the assessee’s bank account, which were not substantiated with evidence of being from the retail saree trade.The CIT(A) dismissed the assessee's appeal, stating that no evidence was produced to support the claim of carrying out the saree business. The assessee raised grounds challenging the CIT(A)'s order, arguing that the cash deposits were part of the business turnover and the return was filed under Section 44AD of the Act, which does not require regular books of accounts for turnover below the prescribed limit.The Tribunal examined the assessee's ICICI Bank account, noting cash withdrawals amounting to Rs. 29,94,500/- and cash deposits totaling Rs. 15,00,000/-. The Tribunal found that the cash deposits were less than the cash withdrawals and appeared to be redeposited based on business exigencies. The Tribunal held that cash deposits in the bank account could not automatically be construed as income from undisclosed sources or unexplained investments under Section 69A of the Act.The Tribunal concluded that the addition of Rs. 11,87,500/- made by the AO as income from undisclosed sources and upheld by the CIT(A) as unexplained investment under Section 69A was factually unsustainable. The Tribunal deleted the addition, allowing the assessee's appeal partly.Conclusion:The Tribunal condoned the delay in filing the appeal due to reasonable and sufficient cause and admitted the appeal for consideration. On merits, the Tribunal found that the cash deposits in the assessee’s bank account were part of the business turnover and not income from undisclosed sources or unexplained investments under Section 69A, and thus, the addition of Rs. 11,87,500/- was deleted. The assessee's appeal for the Assessment Year 2015-16 was partly allowed.