Case Law Details
Surendra Ramdhar Yadav Vs ITO (ITAT Ahmedabad)
ITAT Condoned a 259-Day Delay in Filing Appeal Citing Medical Treatment
The case saw the Assessee, Surendra Ramdhar Yadav, appealing against an order passed under sections 144 and 147 of the Income Tax Act, 1961. However, there was a significant delay in filing the appeal, which the assessee explained was due to medical treatment. Despite opposition from the Departmental Representative (DR), the tribunal decided to condone the delay.
While the assessee failed to support his claim with medical documents, the tribunal noted that the DR did not refute the stated reason effectively. More significantly, the tribunal observed that the assessee had a fair chance of succeeding based on the merits of the case.
Addition for cash payment to builder in succeeding Assessment year (AY) cannot be made in Assessment year in dispute
The sole contention of Surendra Ramdhar Yadav, an individual with income primarily from salary pension, was the confirmed addition of Rs. 4,66,250/- attributed to cash payments to a builder, M/s. Karmveer Builders. The discrepancy arose from the disparity between the purchase value of the land, as stated by Yadav, and the value shown in the builder’s account books. The difference led to the addition as unexplained investment under section 69 of the Act.
However, Yadav contended that the majority of the payments were made in the subsequent financial year, and thus, no addition should be made in the year under dispute. The ITAT, upon reviewing the payment details, noted that only a payment of Rs. 24,000/- was made in the disputed year. Consequently, the ITAT allowed the appeal in part, confirming the addition of Rs. 24,000/- only and indicating that payments made in other years could be disputed in those respective years.
The Surendra Ramdhar Yadav Vs ITO case stands as a potent example of the complexities involved in tax law, particularly in instances of unexplained investment and payment scheduling. Although Yadav’s appeal was only partially allowed, the case emphasized the critical role accurate documentation and timing play in legal financial transactions. The decision reaffirms that income tax disputes are examined within the context of the respective financial year.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-7, dated 31.01.2019 Ahmedabad, arising in the matter of assessment order passed under s. 144 r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2011-2012.
2. At the outset, it was noticed that there was a delay in filing the appeal for 259 days. The affidavit was filed by the assessee explaining the reason of the delay by stating that due to medical treatment, the appeal was not filed within the specified time. Thus, it was prayed by the Ld. AR to condone the delay in filing the appeal by the assessee.
3. On the contrary, the Ld. DR opposed to condone the delay in filing the appeal by the assessee.
4. Heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee filed the affidavit explaining the reason for the delay in filing the appeal, but such affidavit was not supported by any medical documents. However, the Ld. DR at the time of hearing could not revert the reason filed by the assessee for delay in filing the appeal based on the documentary evidence. Be that as it may be, we note that the assessee has a good case on merit and has fair chance to succeed in the appeal filed by him.
4.1 We also note that the Hon’ble Gujarat High Court in the case of S.R. Koshti Vs. CIT reported in 276 ITR 165 has held as under:
20. A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of Vinay Chandulal Satia v. N.O. Parekh, CIT [Spl. Civil Application No. 622 of 1981 dated 20-8-1981], has laid down the approach that the authorities must adopt in such matters in the following terms:
“The Supreme Court has observed in numerous decisions, including Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361, State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749 and Babutmal Raichand Oswal v. Laxmibai R. Tarte AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt.”
4.2 From the above it is revealed that the income of the assessee should not be over assessed even there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. We also note that the Hon’ble Gujarat High Court in the case of Vareli textile industry versus CIT reported in 154 Taxman 33 wherein it was held as under:
It is equally well-settled that where a cause is consciously abandoned (as in the present case) the party seeking condonation has to show by cogent evidence sufficient cause in support of its claim of condonation. The onus is greater. One of the propositions of settled legal position is to ensure that a meritoñous case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, at least prima facie, whether the assessee has or has not a case on merits.
4.3 In view of the above and after considering the facts in totality, we are of the view that it is a fit case where the delay in filing the appeal by the assessee deserves to be condoned. Accordingly, we condone the delay and proceed to adjudicate the on merit of the case.
5. The assessee has raised the following grounds of appeal:
1. The Ld. CIT(A), has in so far as the addition made of Rs.4,66,250/- of the A.Y. 2012-13 in the current year, and even the Re-opening was further done for the A.Y. 2012-13, therefore the addition made is without proper justification which is totally bad in eyes of law.
2. The Ld. CIT(A) Rejected the Claim of the Cash Payment made to the Builder by the Assesee is on account of the Internal Accrual of the Assesee and his family.
Additional ground of appeal
Ld. AO erred in law as well as on Facts in Making Addition of the Cash payment related to the A.Y 2012-13 in the A.Y.2011-12.
6. The only issue raised by the assessee is that the Ld.CIT(A), erred in confirming the addition of Rs. 4,66,250/- on account of cash payment to the Builder.
7. Briefly stated facts are that the assessee in the present case is an individual and deriving his income under the head “salary pension”. The assessee has shown purchase of land vide dated 21/08/2010, for Rs. 35,000/- from the Builder namely M/s. Karmveer Builders, Nadiad. As a result of search, in the premises of builder it was found that the sale value has been shown by the builder in his books of accounts to the assessee at Rs. 901250/- leading to the difference of Rs. 866250/- which was added u/s 69 of the Act as unexplained investment.
8. Aggrieved assessee preferred an appeal to the Ld.CIT(A), who has confirmed the order of the AO in part by observing as under”:
5.3 The appellant has stated that he working with railways and before 6th pay commission, he used to get salary in cash. The appellant has not claimed that balance installments paid in cash to builder was out of his own saving. Even on perusal of his bank account as submitted at paper book page no 21 to 24 of submission in rejoinder to remand report, it is found that appellant was ‘earning monthly salary income of around 10,000/- on September 2010 and looking to house hold expenditure and other expenditure, it cannot be believed that appellant has any saving available with him to make balance payment of Rs 4,66,100. The appellant has claimed that entire balance payment is Page 13 of 15 made out of saving of his father who was retired railway employee. However, this contention of appellant cannot be accepted as his father retired in 2005and no prudent person would keep such cash on hand and even his father has income from Railway in April 2010 at Rs 6700 which is evident from bank statement of SBI submitted in appellate proceedings and immediately after such receipts, amount are withdrawn which means that such amount received by him is used for house hold needs. Even on perusal of bank statement in 2011, it is found that there are credits of Rs 33,512 and Rs 76,684 in September 2011 in his father’s account and Rs 1,05,000 is immediately withdrawn on 15/09/2011 and Rs 1,00,000 is deposited once again on very same date out of which cheque of Rs 1,00,000 is given hence even appellant has no sufficient bank withdrawal in his father’s account to give payment to builder. The theory of having saving in his father’s account is not supported by any evidences and keeping huge cash for almost 5 to 6 years cannot be accepted hence explanation provided by appellant is not accepted.
5.4 It is also observed that AO has made entire addition in current year but as per receipts issued by builder, some payment are made in current year and balance payment is made in subsequent years. The AO has not doubted such receipts in Remand Report nor proved that entire cash payment of Rs 4,66,100/- is made in current year hence addition made by AO to the extent of payment in the year under consideration is confirmed. With regards to balance payment in subsequent years, the AO is directed to take appropriate action in the hands of appellant considering date of payment as mentioned in receipts issued by builder and appellant’s written submission dated 27/08/2018 subject to verification by the AO.
5.5 In view of these facts, addition made by AO for Rs.8,66,100/- is restricted by allowing loan of Rs.4,00,000/- from UBI and balance addition is confirmed subject to verification by AO. Subject to the above remarks, the ground of appeal is Partly Allowed.
9. Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.
10. The Ld. AR before us filed a paper book running from pages 1 to 92 and contended that majority payment of the purchase of house was made in subsequent Financial Year. Therefore, no addition can be made in the year under consideration. To this effect, the Ld. AR has drawn our attention on the receipt issued by the Builder which is explained in the Excel Sheet reproduced at page 8 of the Ld. CIT(A) order.
11. On the other hand, the Ld. DR before us vehemently supported the order of the authorities below.
12. We have heard the rival contentions of both the parties and perused the materials available on record. On perusal of the payment details by the assessee to the builder we note that only a payment of Rs. 24,000/- was made in the year under consideration and the balance payment was not made in the year in dispute. Therefore, we find force in the argument advanced by the Ld. AR for the assessee. The payment which has been made by the assessee in the other year, the same can be subject matter of dispute in other year and not in the year under consideration. Thus, we confirm an addition of Rs. 24,000/- only representing the payment to the builder in the year under consideration. Hence, the ground of appeal of the assessee is partly allowed.
13. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the Court on 23/06/ 2023 at Ahmedabad
