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2025 (5) TMI 335 - AT - Income TaxUnexplained cash deposits - as argued share transactions concluded through a SEBI-registered broker - HELD THAT - As assessee submitted that the earlier counsel who was dealing with the matter has wrongly reported before the AO at the time of remand proceedings by submitting that the assessee dealt with shares through registered broker of SEBI but the fact remains as has been disclosed in the sworn in affidavit filed by the assessee before the bench that the assessee has never ever made any transaction through any broker of SEBI. Assessee is only having agricultural income. These facts were also accepted by the Ld. Sr. DR. The Ld. Sr. DR could not provide any evidence refuting these facts or could not show that the assessee did transact in shares. Thus in the interest of justice the factual matrix needs to be revisited through proper verification at the level of the CIT(Appeals)/NFAC to understand what exactly is the source of income of the assessee. That as has been claimed in the affidavit that the assessee is only having income from agriculture proceeds these facts needs to be verified. Further as contented that the amount which was deposited in the account of the assessee was not a single transaction. Rather it is the culmination of small amounts which was regularly deposited in the bank account of the assessee. These are the essential facts whose examination goes to the root of the matter. Thus assessee deserves one final opportunity before the CIT(Appeals)/NFAC to properly represent the facts.Grounds of appeal raised by the assessee are allowed for statistical purposes.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Condonation of Delay in Filing the Appeal Relevant legal framework and precedents: The Tribunal referred to Section 5 of the Limitation Act, 1963, which empowers courts and tribunals to condone delay in filing appeals if sufficient cause is shown. The Tribunal relied on recent authoritative judgments, including:
Court's interpretation and reasoning: The Tribunal observed that the delay of 154 days was not due to any deliberate or mala fide conduct by the assessee. The assessee, aged 67 with a heart condition and limited knowledge of income tax laws, had circumstances beyond his control causing the delay. The revenue failed to demonstrate any intentional delay or misuse of the process by the assessee. Application of law to facts: Applying the liberal and justice-oriented approach mandated by the Supreme Court and High Court precedents, the Tribunal condoned the delay, emphasizing that the merits of the case should not be sacrificed on technical grounds of limitation. Conclusion: The delay in filing the appeal was condoned, allowing the appeal to be heard on merits. Issue 2: Justification of Addition of Cash Deposits as Income Relevant legal framework and precedents: Under the Income Tax Act, unexplained cash deposits in a taxpayer's bank account can be added to income if the assessee fails to satisfactorily explain the source. The burden lies on the assessee to prove the legitimacy of such deposits. Key evidence and findings: The assessee deposited Rs. 26,03,750/- in cash. The Assessing Officer (A.O.) added this amount to income because the assessee failed to file an original return or a return in response to notice under Section 148, thus preventing proper investigation of the source. The assessee claimed the deposits were from agricultural income but did not initially provide adequate proof. Court's interpretation and reasoning: The Tribunal noted that the assessee is an agriculturist and claimed agricultural income as the source. However, the lack of original or revised returns limited the department's ability to verify this. During appellate proceedings, a remand report introduced doubt by suggesting possible share transactions through a SEBI-registered broker, which the assessee later denied under oath. Application of law to facts: The Tribunal found that the initial addition was justified due to lack of explanation but also recognized the need for proper verification of the source of deposits, especially given the conflicting assertions regarding share transactions. Treatment of competing arguments: The revenue relied on the remand report's suggestion of share transactions, whereas the assessee's sworn affidavit denied any such dealings. The revenue could not produce evidence refuting the assessee's claim of exclusive agricultural income. Conclusion: The factual matrix concerning the source of the cash deposits required further scrutiny and verification. Issue 3: Verification of Source of Income and Need for Remand Court's interpretation and reasoning: The Tribunal emphasized the importance of examining whether the cash deposits were cumulative small amounts regularly deposited, consistent with agricultural income, rather than a single lump sum. It recognized that the previous appellate order did not adequately verify the source in light of the assessee's affidavit and submissions. Application of law to facts: The Tribunal concluded that to ensure substantial justice and adherence to natural justice principles, the matter should be remanded to the Ld. CIT (Appeals)/NFAC for fresh adjudication. The Ld. CIT (Appeals) was directed to call for a remand report if necessary and conduct ground verification after considering the proper facts presented by the assessee. Treatment of competing arguments: The Tribunal balanced the revenue's concerns about unexplained income with the assessee's right to present evidence and explanation. It found that the revenue's reliance on the earlier incorrect assertion of share transactions should not prejudice the assessee's case. Conclusion: The appeal was set aside and remanded for de novo adjudication, with directions to the assessee to cooperate and present his case fully. 3. SIGNIFICANT HOLDINGS The Tribunal made the following significant legal determinations:
The final determination was to allow the appeal for statistical purposes by setting aside the earlier appellate order and remanding the matter for fresh adjudication in accordance with the directions provided, thereby ensuring adherence to principles of natural justice and substantial justice.
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