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 case under Section 148 was rejected as the reasons recorded were deemed valid and based on tangible material. The addition of Rs. 39,05,000 as unexplained money was overturned in favor of the assessee, supported by evidence of the cash deposits being from the sale of agricultural land. The appeal was allowed in favor of the assessee.

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Issues Involved:
1. Condonation of Delay
2. Validity of Reopening under Section 148
3. Addition of Rs. 39,05,000/- as Unexplained Money

Condonation 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.

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