2025 (7) TMI 19 - AT - Income Tax

Addition u/s 68 - cash deposited as unexplained credit - AO also denied the deduction claimed u/s 80C of the Act for want of evidences - HELD THAT - Admittedly the Assessee failed to prove the source of cash deposit and also failed to file the proof with regard to the deduction claimed u/s 80C of the Act and therefore is not entitled for any relief as claimed however considering the peculiar facts and circumstances in totality as the issues involved in the instant appeal remained to be adjudicated in its right perspective and proper manner in the absence of relevant documents/submissions which the Assessee failed to file hence for the proper and just decision of the case and substantial justice we are inclined to remand the instant case to the file of the Ld. Commissioner for decision afresh suffice to say by affording reasonable opportunity of being heard to the Assessee. We also direct the Assessee to file the relevant documents in order to substantiate his claim. We clarify that in case of subsequent default the Assessee shall not be entitled for any leniency. Thus the case is remanded to the file of the Ld. Commissioner accordingly. Appeal filed by the Assessee is allowed for statistical purposes.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the delay of 199 days in filing the appeal before the Appellate Tribunal is liable to be condoned in light of the reasons furnished by the Assessee.

- Whether the addition of Rs. 35,44,000/- made by the Assessing Officer (AO) under section 68 of the Income Tax Act, 1961, on account of unexplained cash credit, is justified.

- Whether the denial of deduction of Rs. 68,169/- claimed under section 80C of the Act due to lack of evidentiary proof is proper.

- Whether the matter requires remand to the Commissioner of Income Tax (Appeals) for fresh adjudication considering the absence of relevant documents and submissions from the Assessee.

2. ISSUE-WISE DETAILED ANALYSIS

Delay in Filing Appeal

Relevant Legal Framework and Precedents: The Income Tax Act, 1961, under section 250, prescribes the time limit for filing appeals before the Appellate Tribunal. The Tribunal has discretionary power to condone delay if sufficient cause is shown. Judicial precedents emphasize that delay caused by unavoidable circumstances and absence of mala fide intention may justify condonation.

Court's Interpretation and Reasoning: The Tribunal examined the Assessee's sworn affidavit explaining the delay due to involvement in a police investigation and consequent inability to file the appeal within time. The Assessee's chartered accountant was not in communication with him, further complicating the timely filing. The Tribunal found the explanation plausible but noted that after the police complaint was closed on 15.06.2024, the Assessee remained inactive, evidencing some degree of laches.

Key Evidence and Findings: The notice dated 01.02.2024 from the senior police inspector and the affidavit filed by the Assessee were critical in establishing the cause of delay. The absence of malafide intent and the fact that the Assessee did not benefit from the delay were also considered.

Application of Law to Facts: Balancing the unavoidable circumstances against the Assessee's subsequent inactivity, the Tribunal exercised discretion to condone the delay subject to a monetary deposit of Rs. 5,000/- within 15 days, thereby safeguarding the Revenue's interest while not prejudicing the Assessee.

Treatment of Competing Arguments: The Revenue's implicit contention that delay should not be condoned due to laches was weighed against the Assessee's bona fide reasons. The Tribunal adopted a balanced approach, condoning delay with conditions.

Conclusion: Delay of 199 days in filing the appeal was condoned subject to deposit of Rs. 5,000/- as a condition precedent.

Addition under Section 68 - Unexplained Cash Credit

Relevant Legal Framework and Precedents: Section 68 of the Income Tax Act mandates that any unexplained cash credit, where the Assessee fails to satisfactorily explain the nature and source of the credit, is liable to be added to income. Precedents require the Assessee to furnish credible evidence to discharge the burden of proof.

Court's Interpretation and Reasoning: The Tribunal noted that the AO made an addition of Rs. 35,44,000/- on the ground that the Assessee failed to prove the source of the cash deposit. The Commissioner of Income Tax (Appeals) affirmed this addition on similar reasoning.

Key Evidence and Findings: The Assessee did not produce relevant documents or evidence to substantiate the source of the cash deposit. The absence of such proof led to the addition under section 68.

Application of Law to Facts: The Tribunal acknowledged the failure of the Assessee to discharge the evidentiary burden. However, it observed that the issues had not been adjudicated in their right perspective due to non-filing of relevant documents, which could have aided proper adjudication.

Treatment of Competing Arguments: While the Revenue relied on the absence of explanation to justify the addition, the Assessee sought leniency on grounds of incomplete submissions. The Tribunal recognized the merit in both arguments but emphasized the need for proper opportunity to the Assessee.

Conclusion: The addition under section 68 stands, but the matter is remanded for fresh adjudication after allowing the Assessee to file relevant documents.

Denial of Deduction under Section 80C

Relevant Legal Framework and Precedents: Section 80C of the Income Tax Act allows specified deductions subject to production of proof. Failure to produce evidence leads to denial of the claim.

Court's Interpretation and Reasoning: The AO denied the deduction of Rs. 68,169/- claimed by the Assessee due to lack of supporting documents. The Commissioner upheld this denial.

Key Evidence and Findings: The Assessee failed to provide documentary proof to substantiate the deduction claim.

Application of Law to Facts: The Tribunal found no justification to overturn the denial but noted that the Assessee should be given a reasonable opportunity to produce evidence upon remand.

Treatment of Competing Arguments: The Revenue's stand on absence of proof was accepted, while the Assessee's plea for opportunity to file documents was considered.

Conclusion: Denial of deduction under section 80C is upheld subject to fresh consideration upon filing of documents.

Remand for Fresh Adjudication

Relevant Legal Framework and Precedents: Principles of natural justice and fair trial require that the Assessee be given a reasonable opportunity to present evidence before final adjudication. Remand is appropriate where adjudication is incomplete or unfair due to non-filing of documents.

Court's Interpretation and Reasoning: The Tribunal observed that the issues were not adjudicated in the right perspective due to absence of relevant submissions by the Assessee. To ensure substantial justice, remand to the Commissioner was warranted.

Key Evidence and Findings: The absence of critical documents and the Assessee's failure to file them initially were pivotal.

Application of Law to Facts: The Tribunal directed the Assessee to file relevant documents and cautioned that subsequent default would attract no leniency.

Treatment of Competing Arguments: The Tribunal balanced the Revenue's interest in finality against the Assessee's right to be heard.

Conclusion: The matter is remanded to the Commissioner of Income Tax (Appeals) for fresh adjudication after affording reasonable opportunity to the Assessee.

3. SIGNIFICANT HOLDINGS

- "Considering the peculiar facts and circumstances in totality and the reasons stated by the Assessee as bonafide and unintentional, we are inclined to condone the delay of 199 days in filing of the instant appeal, however, subject to deposit of Rs. 5,000/- in the Revenue Department under 'other heads' within 15 days from the date of receipt of this order."