2018 (12) TMI 584 - HC - Income Tax

High Court grants delay condonation, remands deposit issue for re-examination. Additional evidence allowed.

Rajiv Jain Versus Income Tax Officer

The High Court allowed the applications for condonation of delay in filing and re-filing the appeal. The Court framed a substantial question of law and ... Addition u/s 68 - unexplained cash deposits in the Axis Bank account of the appellant-assessee - CIT-A upheld part addition observing that the assessee had not given any explanation for cash withdrawals of ₹ 5,10,550/- between the period 12th June, 2009 to 16th October, 2009 - Held that:- Commissioner of Income Tax (Appeals) had proceeded to give a different and new reasoning, which was not confronted for explanation before the first appellate order was passed. The appellant-assessee was taken by surprise. Reasoning in the form of additional ground, it is submitted, should not have been made the basis without asking and raising a specific query. It is also highlighted, with some merit, additions made include two small deposits of ₹ 3,250/- and ₹ 14,400/- made on 17th August, 2009 and 27th October, 2009. In the alternative, it was submitted that the addition should be partial. We find that the Tribunal in the impugned order has failed and not taken note of the aforesaid contentions raised in respect of the deposit of ₹ 4,92,900/-. The said issue has not been examined in the light of the pleas and aspects that arise for consideration. Accordingly, we feel that the matter should be re-examined by the Tribunal. Liberty is also given to the appellant-assessee to file an application for additional evidence to justify and explain the reason for substantial cash withdrawals made between 12th June, 2009 to 16th October, 2009. We clarify that we have only remanded the matter for fresh consideration and have not finally determined or decided the aspect and issue on merits. Question of law is accordingly answered, partly in favour of the appellant-assessee and against the Revenue with an order of remand to the Tribunal. We clarify that the remand is only restricted to the extent of the deposit of ₹ 4,92,900/-. We have not remanded the issue regarding sale of wearing apparel and silver utensils as appellant-assessee has not been able to justify and explain that cash deposits of more than five lacs were made out of sale proceeds of wearing apparel and silver utensils. There is no evidence and material to establish sale, inheritance etc.. Issues Involved:- Condonation of delay in filing appeal- Addition of cash deposits in Axis Bank account- Rejection of explanation for cash withdrawals and deposits- Assessment of undisclosed income and penalty proceedings- Appeal before Commissioner of Income Tax (Appeals)- Tribunal's decision on the addition of cash deposits- Grounds for remand to the TribunalCondonation of Delay in Filing Appeal:The applications for condonation of delay in filing and re-filing the appeal were allowed by the High Court as there was no opposition. The substantial question of law was framed on 5th December, 2017.Addition of Cash Deposits in Axis Bank Account:The appeal under Section 260A of the Income Tax Act, 1961, related to the addition of Rs. 10,17,650 on account of cash deposits in the appellant-assessee's Axis Bank account for the Assessment Year 2010-11. The appellant was engaged in a commission agency business with a life insurance company and had filed a return declaring income of Rs. 5,84,146.Rejection of Explanation for Cash Withdrawals and Deposits:The Assessing Officer rejected the appellant's explanation for the source of deposit of Rs. 10,17,650. The appellant claimed that the cash deposits were from the sale of inherited wearing apparel and silver utensils, but the Assessing Officer found the explanation unsubstantiated. The Commissioner of Income Tax (Appeals) upheld the addition, stating that the appellant failed to justify cash withdrawals and deposits.Assessment of Undisclosed Income and Penalty Proceedings:The Assessing Officer treated the cash deposit as undisclosed income and initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act. Additionally, penalty proceedings under Section 271B were initiated for not obtaining a tax audit report.Appeal Before Commissioner of Income Tax (Appeals):The Commissioner of Income Tax (Appeals) deleted the addition made on account of cash deposits in Standard Chartered Bank but upheld the addition of Rs. 10,17,650 for the Axis Bank account. The Commissioner found the appellant's explanation unsatisfactory regarding cash withdrawals and deposits.Tribunal's Decision on the Addition of Cash Deposits:The Tribunal affirmed the Commissioner's decision, stating that the appellant failed to provide evidence supporting the claim of selling personal effects to justify the cash deposits. The Tribunal upheld the addition based on the lack of substantiated evidence.Grounds for Remand to the Tribunal:The High Court remanded the matter to the Tribunal for re-examination regarding the deposit of Rs. 4,92,900. The Court directed the appellant to file an application for additional evidence to explain the substantial cash withdrawals. The remand was limited to the deposit issue, not the sale of wearing apparel and silver utensils.In conclusion, the High Court partly favored the appellant-assessee and remanded the matter to the Tribunal for further consideration, specifically focusing on the deposit issue. The Court clarified that the remand did not extend to the sale of wearing apparel and silver utensils.