2023 (9) TMI 1025 - AT - Income Tax

Appeal delay excused due to Covid, challenge rejected under Section 148, unexplained money addition overturned.

The delay in filing the appeal was condoned due to the Covid Pandemic, reducing the effective delay to 42 days. The challenge against the reopening of the ... Reopening of assessment u/s 147 - reasons to believe - deposit of cash as unexplained money - validity of approval AR argued that the recorded reason of the ld. AO was mechanical manner and without application of mind and further placed that u/s 151, CIT had approved the recorded reason only to mention “Yes it is a fit case” - HELD THAT:- The approval by the CIT for reopening is not a mere mechanical manner. The judgments which are riled by the assessee are clearly distinguishable and are not in similar factual matrix. We respectfully relied on the case Rakesh Gupta (2018 (5) TMI 445 - PUNJAB AND HARYANA HIGH COURT). In our considered view the notice u/s 148 r.w.s. 151 is not illegal. We are not intervening in the order of the ld. CIT(A) in this ground. Addition based on statement of purchaser - As considering the fact of the case which is fully dependent on the circumstantial evidence created by the assessee related to cash receive from the purchaser. The entire evidence of the assessee clearly depicted that the agreement was duly executed by the purchaser and seller. Later the purchaser denied the agreement and rejected the argument for transfer of cash to the seller. During assessment, the ld. AO only relied on the statement of the purchaser Mr. Umed Singh Debas. No other circumstantial evidence is placed against the assessee by the revenue. AR fully relied on the order of Sh. Pappu Ram Saran, [2020 (9) TMI 228 - ITAT JAIPUR] and also relied on the order of Sh. Jagsir Singh[2022 (10) TMI 414 - ITAT AMRITSAR] - We also relied on the order of the same bench in case of Jagsir Singhand order of Coordinate Bench of ITAT, Jaipur. DR in argument was not able to adduce any contradictory fact against the submission of the ld. AR. In our considered view, the cash which was deposited in the bank account by the assessee was contemporaneous to sale of agricultural land and supported the agreement of sale. Accordingly, the addition amount is quashed. Assessee appeal allowed. Issues Involved:1. Condonation of Delay2. Validity of Reopening under Section 1483. Addition of Rs. 39,05,000/- as Unexplained MoneyCondonation of Delay:The appeal was filed with a delay of 128 days. The delay was condoned considering the Covid Pandemic as per the Hon'ble Supreme Court's order in Suo Motu Writ Petition (C) NO. 3 Of 2020 dated 10/01/2022, reducing the effective delay to 42 days. The ld. DR did not object to this, and hence, the delay was condoned.Validity of Reopening under Section 148:The assessee challenged the reopening of the case under Section 148 on grounds that the reasons recorded by the Assessing Officer (AO) were mechanical and without application of mind. The AR argued that the approval by the CIT was also mechanical, merely stating 'Yes it is a fit case.' The AR relied on the Supreme Court judgment in CIT, Jabalpur vs. S. Goyanka Lime & Chemical Ltd., where reopening was deemed invalid due to mechanical approval.The Tribunal, however, upheld the reopening, relying on the Punjab and Haryana High Court judgment in Rakesh Gupta vs. Commissioner of Income-tax, Panchkula, which distinguished the case from Goyanka Lime, stating that the reasons recorded by the AO were based on tangible material and justified the initiation of proceedings. Hence, Ground Nos. 1, 2, and 3 were dismissed.Addition of Rs. 39,05,000/- as Unexplained Money:The assessee argued that the cash deposits were from the sale of agricultural land, supported by an agreement. The AO treated the deposits as unexplained money under Section 69A after the purchaser denied the agreement. The AR presented additional evidence, including statements from witnesses and handwriting expert reports, which were not fully considered by the AO.The Tribunal noted that the AO relied solely on the purchaser's statement and did not cross-verify other evidence. The AR cited similar cases where the source of cash deposits was accepted based on circumstantial evidence. The Tribunal found that the cash deposits were contemporaneous with the sale of land and supported by the agreement, quashing the addition of Rs. 39,05,000/-.In conclusion, the appeal was allowed in favor of the assessee.