9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (5) TMI 742 - AT - Income TaxUndisclosed cash deposits - AO made the addition at the rate of 10% of the deposited amount - HELD THAT - Admittedly there is negligible difference between the amounts determined by the AO and as declared by the Assessee. Though the Assessee has filed her return belatedly however it is not the case of the department that the same is rejected and therefore considering the peculiar facts and circumstance in totality and negligible difference between the amounts determined by the Assessing Officer and as declared by the Assessee this court is inclined not to interfere in the decision of the AO in making the addition of Rs. 5, 16, 063/- as the same is below then the amount of Rs. 5, 77, 166/- as voluntarily shown by the assessee. Coming to the deposit of Rs. 15, 92, 500/- it is observed that the Assessee has shown the total amount of income/gross receipt of Rs. 68, 80, 000/- which includes the amount of Rs. 15, 92, 500/-. Even the Assessee has already paid requisite tax amount of Rs. 26, 580/- as it clearly appears from the challan dated 25.10.2019 Union Bank of India which also supports the case of the Assessee. DR though supported the impugned order but not the factual aspect demonstrated above and it is also not the case of the department that the Assessee is doing any other business. There is no justification for making the addition separately thus the addition in hand is deleted.
1. ISSUES PRESENTED and CONSIDERED
- Whether the delay of 257 days in filing the appeal should be condoned on medical grounds. - Whether the cash deposit of Rs. 15,92,500/- made during the demonetization period is liable to be treated as unexplained income and added to the assessee's taxable income. - Whether the net profit addition of 10% on the balance amount of Rs. 51,60,634/- deposited in the bank accounts is justified. - Whether the assessee's belated filing of return of income and the declaration therein can be accepted to negate or reduce the additions made by the Assessing Officer (AO). - Whether the impugned ex-parte order passed by the Commissioner of Income Tax (Appeals) (CIT(A)) should be set aside and the matter remanded or decided on merits. 2. ISSUE-WISE DETAILED ANALYSIS Delay in Filing Appeal The legal framework governing the condonation of delay in filing appeals under the Income Tax Act mandates that the delay must be shown to be bona fide and unintentional. The assessee submitted medical certificates evidencing prolonged illness from March 2023 to October 2023, including female-specific ailments, to justify the delay of 257 days in filing the appeal. The Revenue disputed these grounds factually. The Tribunal accepted the medical certificates as sufficient proof of bona fide cause and unintentional delay, thereby condoning the delay. This approach aligns with established precedents where genuine health issues have been recognized as valid grounds for condonation of delay. Treatment of Cash Deposit of Rs. 15,92,500/- During Demonetization Period The Assessing Officer treated the cash deposit of Rs. 15,92,500/- made during the demonetization period (9.11.2016 to 30.12.2016) as unexplained income and added it to the assessee's taxable income. The AO's reasoning was based on the assessee's failure to file a return of income initially and non-compliance with notices under section 142(1) of the Income Tax Act, 1961. The assessee's counsel contended that these deposits related to a business activity wherein the assessee acted as a conduit between customers and motor vehicle dealers, collecting deposits for bike bookings and remitting them to dealers, earning commission income. The business was newly commenced during the relevant assessment year but was discontinued due to the assessee's health issues. The assessee filed a belated return declaring gross receipts of Rs. 68,80,000/- including the disputed deposit amount and paid tax accordingly. The Tribunal noted that the assessee had already paid tax on the total declared income, including the Rs. 15,92,500/-, as evidenced by the challan dated 25.10.2019. The Revenue did not dispute the nature of the business or allege any other undisclosed business activity. Given these facts, the Tribunal concluded that there was no justification for treating the amount as unexplained and making a separate addition. The Tribunal emphasized that this conclusion was based on the peculiar facts and circumstances of the case and should not be treated as a precedent. Computation of Net Profit Addition @ 10% on Rs. 51,60,634/- The AO computed net profit at 10% on the balance amount of Rs. 51,60,634/- (deposits excluding the demonetization period deposit) and added this to the income. The assessee declared commission income of Rs. 26,766 and profit under presumptive taxation provisions (section 44AD) at 8% of gross receipts amounting to Rs. 5,50,400/- totaling Rs. 5,77,166/-. The Tribunal observed that the difference between the AO's addition (Rs. 5,16,063/-) and the assessee's declared income (Rs. 5,77,166/-) was negligible. Since the assessee had voluntarily declared income exceeding the AO's addition and there was no dispute regarding the business or its income, the Tribunal declined to interfere with the AO's addition. This approach reflects the principle that minor differences in computation, especially when the assessee has voluntarily disclosed income exceeding the addition, do not warrant interference. Filing of Belated Return and Acceptance Thereof The assessee filed a belated return on 25.11.2019, which was not rejected by the department. The Tribunal noted that the return declared the entire gross receipts including the disputed deposits and paid tax accordingly. The Revenue did not challenge the validity or acceptance of the return. Given the acceptance of the return and payment of tax, the Tribunal treated the belated filing as mitigating the initial non-compliance and supported the assessee's claim that the deposits were explained and accounted for. Ex-parte Order by Commissioner of Income Tax (Appeals) The CIT(A) passed the impugned order ex-parte due to the assessee's failure to appear, attributed to medical reasons. The Tribunal expressed inclination to remand the matter to the CIT(A) for fresh adjudication. However, considering the peculiar facts, including the medical condition and the fact that the CIT(A) had decided the appeal on merits, the Tribunal exercised discretion to decide the appeal on merits itself as an exceptional case. 3. SIGNIFICANT HOLDINGS - "Considering the delay based on the medical grounds, as bonafide and unintentional, this court is inclined to condone the delay." - "There is no justification for making the addition of Rs. 15,92,500/- separately, thus, the addition in hand is deleted." - "Though the Assessee has filed her return belatedly, however, it is not the case of the department that the same is rejected and therefore, considering the peculiar facts and circumstance in totality and negligible difference between the amounts determined by the Assessing Officer and as declared by the Assessee, this court is inclined not to interfere in the decision of the AO in making the addition of Rs. 5,16,063/-." - The Tribunal established the principle that medical grounds constitute sufficient cause for condonation of delay in filing appeals. - The Tribunal recognized that a belated return, if accepted and not rejected by the department, can be considered for assessing the correctness of income declarations. - The Tribunal emphasized that additions must be justified by the facts and that unexplained deposits should not be mechanically added when the assessee has accounted for them and paid tax accordingly. - The Tribunal clarified that the judgment is rendered under peculiar facts and circumstances and is not to be treated as a precedent.
|
