Tribunal allows assessee's appeals for 2004-05 and 2005-06 due to lack of justification for additions made.

The tribunal allowed both appeals of the assessee for assessment years 2004-05 and 2005-06. The appeals were allowed based on the lack of justification for the addition made on account of unexplained investments, as there were no corresponding assets materialized from the alleged cash payments. The tribunal set aside the CIT(A)'s order and allowed the grounds raised by the assessee, ultimately allowing the appeal.

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Issues:
- Delay in filing appeal
- Addition made on account of unexplained investments

Analysis:
1. Delay in filing appeal:
The appeals were filed with a delay of 33 days. The tribunal, after perusing the affidavit and medical certificate provided by the assessee, condoned the delay. Despite the delay, no representation was made on behalf of the assessee, leading to the case being heard ex-parte.

2. Addition on account of unexplained investments:
The main issue revolved around the addition made by the Assessing Officer (AO) on account of unexplained investments. The assessee, engaged in the wholesale trading of sugar, was found to have made payments towards the purchase of an old house. The AO, after conducting assessment proceedings, added the amounts paid by the assessee to the total income, as the explanation provided was deemed unacceptable.

3. Assessment and Appeal Process:
The AO observed discrepancies in the explanation provided by the assessee regarding the payments made for the house purchase. The CIT(A) upheld the AO's decision, stating that the refusal to own the agreement to purchase was self-serving. However, the tribunal noted that the payments reflected in the agreement were not materialized into a final transaction, and the money must have been returned to the assessee, as corroborated by the affidavit submitted.

4. Judicial Analysis:
The tribunal found that the authorities below did not examine whether the alleged payments were returned to the assessee. The tribunal highlighted that no investment was shown to have materialized from the alleged cash payments, and the addition made by the CIT(A) was not justified. The tribunal set aside the CIT(A)'s order and allowed the grounds raised by the assessee, ultimately allowing the appeal.

5. Final Decision:
The tribunal allowed both appeals of the assessee for assessment years 2004-05 and 2005-06, as the issues and findings were deemed similar. The appeals were allowed based on the lack of justification for the addition made on account of unexplained investments, highlighting the absence of corresponding assets materialized from the alleged cash payments. The order in favor of the assessee was pronounced on 23rd November 2022.

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