Tribunal directs deletion of unexplained income, citing intra-day trades & lack of proper consideration.

The Tribunal directed the Assessing Officer to delete the addition of Rs.2,57,370 as unexplained income, allowing the assessee's appeal. The Tribunal found that the transactions were intra-day trades resulting in a profit of Rs.1,655, and that the AO and NFAC/CIT(A) did not properly consider the evidence presented. The issue of the validity of the notice under Section 148 became academic as the appeal was decided on merits. The Tribunal also noted that a cash deposit of Rs.67,500 did not impact the decision on the main issues.

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Issues Involved:
1. Validity of notice under Section 148 of the Income Tax Act.
2. Sustaining addition of Rs.2,57,370/- as unexplained income.
3. Procedural fairness and opportunity to the assessee.
4. Condonation of delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Validity of notice under Section 148 of the Income Tax Act:
The assessee challenged the validity of the notice issued under Section 148, arguing that the Assessing Officer (AO) did not have a valid reason to believe that income chargeable to tax had escaped assessment. The AO had reopened the assessment based on information from the Joint Director of Income-tax (Investigation), which indicated that the assessee had sold penny stock scrips of Scan Steels Ltd. for Rs.2,57,370/-. The assessee contended that the AO reopened the case on borrowed satisfaction without independent investigation.

2. Sustaining addition of Rs.2,57,370/- as unexplained income:
The AO treated the transaction amount of Rs.2,57,370/- as unexplained income due to the absence of details or explanation from the assessee. The assessee argued that the transaction was an intra-day trade through the Bombay Stock Exchange, resulting in a profit of only Rs.1,655/-. The NFAC/CIT(A) upheld the AO's addition, stating that the trading in penny stocks was manipulated to generate bogus long-term capital gains for tax evasion. However, the Tribunal found that the assessee had provided sufficient evidence showing that the transactions were intra-day and that only the profit of Rs.1,655/- should be considered.

3. Procedural fairness and opportunity to the assessee:
The assessee argued that the AO did not provide a fair opportunity to present his case. The AO issued a show cause notice with a short compliance period, and despite the assessee's request for adjournment, the AO passed the assessment order without considering the adjournment application. The Tribunal noted that the AO did not verify the details provided by the assessee, including bank statements and transaction records, and that the NFAC/CIT(A) failed to consider these details properly.

4. Condonation of delay in filing the appeal:
The appeal was filed with an eight-day delay due to the assessee being quarantined for Covid-19. The Tribunal accepted the assessee's explanation and condoned the delay, allowing the appeal to be heard on merits.

Conclusion:
The Tribunal found that the AO and NFAC/CIT(A) did not adequately consider the evidence provided by the assessee, which demonstrated that the transactions were intra-day trades resulting in a profit of Rs.1,655/-. The Tribunal directed the AO to delete the addition of Rs.2,57,370/- and allowed the assessee's appeal. The issue of the validity of reopening became academic as the appeal was decided on merits. The Tribunal also noted that the cash deposit of Rs.67,500/- was shown as "income from other sources" and did not affect the decision on the main issues.

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