ITAT Chennai Allows Delayed Appeal And Sends Reassessment Back To CIT(A) For Fresh Decision
Background Of The Appeal
The case of Mayandi Thevar Muniraj Vs ITO came up before the Income Tax Appellate Tribunal, Chennai Bench, arising out of an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for Assessment Year 2018-19.
At the threshold, the Tribunal had to consider whether a delay of 311 days in filing the appeal could be excused. The assessee moved a formal application for condonation, supported by an affidavit narrating the circumstances that led to the belated filing.
After examining the reasons put forward and the supporting documents, the Tribunal concluded that the assessee had demonstrated “sufficient cause” for not approaching the Tribunal within the statutory limitation period. On that basis, the delay of 311 days was condoned and the appeal was admitted for adjudication on merits.
Facts Of The Case
Business profile and banking transactions
The assessee was engaged in trading of coconuts at Cumbum in Theni District. For the relevant previous year corresponding to Assessment Year 2018-19, there were cash deposits made in the assessee’s bank account maintained with Axis Bank.
The information available in Form 26AS showed that cash deposits of Rs.14,84,800 had been made. However, the actual aggregate cash deposits in the Axis Bank account for that year were higher, at Rs.18,08,700.
Non-filing of return and subsequent filing
The assessee did not file the original return of income within the prescribed time limit. The stated reason was that he believed, in good faith, that his income was below the basic exemption limit and therefore not liable to tax.
Later, on a detailed review of his books and bank statements, the assessee realized that the volume of cash deposits and corresponding business receipts warranted filing of a return. A return of income was then furnished, in which the assessee disclosed the cash deposits in the Axis Bank account.
Reopening Of Assessment Under Section 147
Initiation of reassessment proceedings
Based on the information regarding cash deposits, the Assessing Officer invoked the provisions of Section 147 of the Income Tax Act 1961 and reopened the assessment. Notice under the relevant reassessment provisions was issued, and the proceedings were carried forward on that basis.
Explanation sought for cash deposits
During the reassessment proceedings, the Assessing Officer called upon the assessee to:
- Explain the nature and source of the total cash deposits of Rs.18,08,700 in the Axis Bank account, and
- Furnish documentary evidence to support the explanation, such as books of account, sale bills, cash book, confirmations, or any other records.
According to the Assessing Officer, the assessee did not produce cogent evidence or satisfactory explanation to correlate the deposits with declared business activity.
Addition under Section 68 and determination of income
In the absence of what was considered acceptable supporting material, the Assessing Officer treated the entire amount of Rs.18,08,700 as unexplained cash credit under Section 68 of the Income Tax Act 1961.
This amount was added to the assessee’s total income. After making this and other related computations, the Assessing Officer determined the total income at Rs.20,34,730 for Assessment Year 2018-19.