Tribunal allows appeal, directs reassessment of cash deposits under Income Tax Act

The Tribunal condoned the delay in filing the appeal, attributing it to reasons beyond the assessee's control. Regarding the addition made under section 68 of the Income Tax Act, the Tribunal found merit in the appellant's arguments, directing a fresh examination by the Assessing Officer due to the failure to consider crucial evidence. The appeal was allowed for statistical purposes, emphasizing the necessity for a comprehensive reassessment of the source of cash deposits. The decision was rendered on February 10, 2021.

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Issues:
1. Condonation of delay in filing appeal.
2. Addition made under section 68 of the Income Tax Act.

Condonation of Delay in Filing Appeal:
The appeal was filed with a delay of 110 days, and the assessee submitted a petition for condonation of delay citing reasons for the delay. The Tribunal found that the delay was not due to any fault of the assessee and decided to condone the delay, allowing the appeal to be heard on its merits.

Addition Made Under Section 68 of the Income Tax Act:
The core issue revolved around the addition of Rs. 81,48,424 made by the Assessing Officer under section 68 of the Income Tax Act. The AO disallowed the explanation provided by the assessee regarding cash deposits in a savings bank account, stating that the deposits were made months after withdrawals, indicating an attempt to evade tax. The CIT(A) upheld the AO's decision, emphasizing that the appellant failed to substantiate the source of the deposits adequately.

The appellant contended that the CIT(A) overlooked crucial evidence, including Annexure-A detailing the sources of cash deposits. The appellant, a proprietor of a business, presented bank statements, balance sheets, and other financial documents to support the claim that the deposits were linked to legitimate business activities. The Departmental Representative argued against interference, highlighting the substantial time gap between cash withdrawals and deposits.

The Tribunal, after reviewing the submissions and records, found merit in the appellant's contentions. Noting that the CIT(A) failed to consider crucial evidence and explanations, the Tribunal ordered a de novo examination by the Assessing Officer. The matter was remanded for further investigation, directing the AO to provide a fair hearing to the assessee and pass an order in accordance with the law.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the need for a thorough reassessment of the source of cash deposits. The decision was pronounced on February 10, 2021, by the Tribunal.

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