2019 (5) TMI 1060 - AT - Income Tax

Tribunal allows appeal, questions natural justice, and deletes cash deposit addition under Income Tax Act

Smt. Kakul Yadav Versus Deputy Commissioner of Income Tax -1 (Central), Bhopal

The Tribunal allowed the appeal after condoning the delay in filing due to the assessee's chikungunya illness. The addition of an undisclosed cash deposit ... Addition of unexplained cash - assessee was searched u/s 132 being part of the “Regal Group” in which assessee’s husband was one of the partner - HELD THAT:- Out of cash balance of ₹ 9,51,605/- as on 31.1.2014, a sum of ₹ 6,86,000/- is claimed to have been deposited which in our view was sufficient enough to cover up the alleged cash deposits. Revenue authorities has not doubted the genuineness of the cash in hand as on 1.4.2012 as well as 1.8.2012 as no addition have been made during the assessment year 2013-14. Cash has been withdrawn from the bank account. There is no finding of revenue authorities for any allegation for the genuineness of the amount credited in the bank accounts other than cash. Keeping the cash in hand idle for almost a year ranging from ₹ 4,91,005/- from February, 2013 to ₹ 9,51,605/- at the end of January, 2014 cannot be a basis to reject the claim of the assessee. There is no bar under the Income Tax Act which restricts a person from keeping cash in hand idle for a certain period. Cash flow statement clearly depicts that the assessee was having sufficient cash in hand from genuine sources which was used to make deposits totaling to ₹ 6,86,000/- during February, 2014 and March, 2014. As the assessee has been successful to explain the source of cash deposit in the bank account no addition was called for unexplained cash deposit. We accordingly delete the addition - Decided in favour of assessee. Issues:1. Condonation of delay in filing appeal.2. Addition of undisclosed cash deposit in bank account.3. Violation of principles of natural justice by lower authorities.4. Assessment u/s 153A read with section 143(3) of the Income Tax Act.5. Adequacy of explanation for cash deposits.Issue 1: Condonation of delay in filing appealThe appeal was filed 18 days beyond the due date. The assessee cited suffering from chikungunya as the reason for the delay. The Tribunal, after perusing the record, found the reason reasonable and condoned the delay in filing the appeal, admitting it for adjudication.Issue 2: Addition of undisclosed cash deposit in bank accountThe assessee, a partner in a real estate business, faced a search under section 132 of the Income Tax Act. The assessing officer added Rs. 7,00,000 for an alleged undisclosed cash deposit in the bank account. The CIT(A) partly allowed the appeal, deleting Rs. 14,000 but confirming Rs. 6,86,000 as an addition. The Tribunal noted the cash flow statements and found the explanation for the cash deposits satisfactory. As the assessee had sufficient cash in hand from genuine sources, the addition of Rs. 6,86,000 was deleted, and the appeal was allowed.Issue 3: Violation of principles of natural justice by lower authoritiesThe assessee contended that the lower authorities violated the principles of natural justice by not providing a hearing opportunity. The Tribunal observed that the CIT(A) had dismissed the appeal without proper justification, raising concerns about the violation of natural justice. However, the Tribunal primarily focused on the adequacy of explanation for the cash deposits while deciding the appeal.Issue 4: Assessment u/s 153A read with section 143(3) of the Income Tax ActThe assessment for the year in question was conducted under section 153A read with section 143(3) of the Income Tax Act. The Tribunal considered this aspect while reviewing the additions made by the lower authorities and assessing the adequacy of the explanation provided by the assessee for the cash deposits.Issue 5: Adequacy of explanation for cash depositsThe Tribunal analyzed the cash flow statements and the source of cash deposits. It noted that the assessee had sufficient cash in hand from genuine sources to cover the alleged cash deposits. The Tribunal found no restriction under the Income Tax Act for keeping cash idle for a certain period. As the explanation for the cash deposits was deemed adequate, the addition of Rs. 6,86,000 was deleted, and the appeal was allowed.This comprehensive analysis covers the key issues addressed in the legal judgment, detailing the Tribunal's assessment and decision-making process for each issue involved.