Sravan Kumar Neela Vs ACIT (Kerala High Court)
Conclusion: Since voluntarily filed returns could not be revised through additional evidence under Rule 29 of the ITAT Rules (Income Tax (Appellate Tribunal) Rules, 1963) and additional evidence was inadmissible and that the seized cash was rightly treated as unexplained income under Section 69A, taxable under Section 115BBE.
Held: Excise officials at Muthanaga Check Post seized Rs. 2,39,57,500 from three passengers travelling from Hyderabad to Kozhikode. The cash was taken over by the Income Tax Department under the provisions of the Income Tax Act, 1961. Subsequently, two passengers have declared Rs. 1,62,47,500 and Rs. 77,10,000, respectively, as “income from other sources” for FY 2016–17. These amounts were treated by AO as unexplained income under Section 69A, taxable under Section 115BBE, and demands were raised accordingly. Both assessees appealed before CIT (Appeals). One appellant passenger submitted additional documents, including bank statements and returns of family members, to explain the source of funds, but the authority rejected them as an impermissible revision of the voluntarily filed return. Both appellants filed fresh affidavits from third parties purporting to explain the source of the seized cash claiming, inter alia, that the money belonged to one D. Ramesh for the purchase of raw gold. Tribunal, however, refused to accept the additional evidence and dismissed the appeals. Hence, the assessees approached the High Court. Assessees’ contentions were that Tribunal erred in refusing to admit additional evidence in the form of affidavits and supporting documents, such evidence was admissible under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, as it was essential to explain the true source of the cash and the rejection of such evidence led to a miscarriage of justice. Revenue’s contentions was that appellants had taken inconsistent stands at different stages—first declaring the money as their own income and later claiming it belonged to another person, rule 29 could not be invoked to revise voluntarily filed returns or to introduce a new explanation after assessment and the affidavits produced were afterthoughts, lacking credibility or contemporaneous corroboration. High Court examined Rule 29 of the ITAT Rules, which permits additional evidence before the Tribunal only if: the evidence is necessary to enable the Tribunal to pass an order, or assessee was prevented from producing it earlier for sufficient cause. The Court held that the appellants failed both tests. The evidence now produced could and should have been presented before AO or the CIT(A). The later attempt to introduce affidavits explaining the seized cash would, in substance, revise the voluntarily filed returns, which was not permissible under the Income Tax Act. One of the appellants claimed the cash belonged to D. Ramesh, who never came forward to assert ownership. This confirmed that the belated evidence was merely an afterthought. Accordingly, the Tribunal was justified in refusing to admit the additional evidence, and no legal infirmity was found in its order.
