Covid-19 limitation exclusion and agricultural land sale proceeds led to condonation, deletion of cash-deposit addition, and penalty relief.

The appeal delay was condoned because it fell within the Covid-19 limitation relaxation period, and the earlier refusal to condone could not stand. The cash deposit addition was deleted because the deposits were traced to agricultural land sale proceeds received by the assessee's mother and were treated as not constituting unexplained income, with exempt treatment claimed under the Income-tax Act accepted. The penalty under section 271(1)(c) was also deleted because it was consequential to the quantum addition, and once the addition was removed, the penalty had no surviving .

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Issues: (i) Whether the delay in filing the quantum appeal deserved exclusion of the Covid-19 period and condonation; (ii) Whether the addition of Rs. 30 lakhs made on account of cash deposits was sustainable; (iii) Whether the penalty under section 271(1)(c) of the Income-tax Act, 1961 could survive.

Issue (i): Whether the delay in filing the quantum appeal deserved exclusion of the Covid-19 period and condonation.

Analysis: The appeal was filed within the period covered by the Covid-19 limitation relaxation. The delay had to be examined in the light of the exclusion directed for the pandemic period, and the lower appellate refusal to condone delay could not stand.

Conclusion: The delay was condoned and the objection to limitation was rejected in favour of the assessee.

Issue (ii): Whether the addition of Rs. 30 lakhs made on account of cash deposits was sustainable.

Analysis: The record showed that the assessee's mother had sold agricultural land for substantial consideration received in cash. On that footing, the impugned cash deposits were treated as part of the sale proceeds and not as unexplained income; the amount was thus held to fall within the exempt treatment claimed under section 56(2)(vi) of the Income-tax Act, 1961.

Conclusion: The addition of Rs. 30 lakhs was deleted in favour of the assessee.

Issue (iii): Whether the penalty under section 271(1)(c) of the Income-tax Act, 1961 could survive.

Analysis: The penalty proceedings were consequential to the quantum addition, and once the addition did not survive, the basis for penalty also disappeared.

Conclusion: The penalty was deleted in favour of the assessee.

Final Conclusion: The common order granted full relief by condoning the delay, deleting the quantum addition, and setting aside the consequential penalty.

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