PINKAL SURESHKUMAR KOTHARI,AHMEDABAD V. THE ITO, WARD-5(2)(1), AHMEDABAD

ITA 1303/AHD/2025

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The case revolves around an appeal by Pinkal Sureshkumar Kothari against the order of the CIT(A), which confirmed an addition of Rs.6,39,000 to his income for the Assessment Year 2017-18, alleging unexplained investment in immovable property. The Tribunal examined the sources of funds used by the assessee to purchase a property worth Rs.62,94,000, which included loans and personal savings. The Tribunal found that the CIT(A) had misunderstood the assessee's explanation regarding the sources of the funds, particularly concerning the cash withdrawals and deposits. After reviewing the bank statements and other relevant documents, the Tribunal concluded that the assessee had adequately explained the source of the investment, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772247 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Collector Land Acquisition Vs. Mst. Katiji & Others, N. Balakrishnan Vs M Krishnamurthy
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NITIN KULKARNI
• Assessee Lawyers: PARTH MEHTA
• Keywords: Condonation of delay; Opportunity of being heard; Reasonable cause; Unexplained investment; Salary income; Principle of natural justice
• Section: 154

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1303/Ahd/2025 (िनधा[रण वष[ / Assessment Year : 2017-18) Pinkal Sureshkumar Kothari 4, Nemrajul Flat, Navavikas Gruh Road, Vasna, Ahmedabad, Gujarat – 380007 बनाम/ Vs. Income Tax Officer Ward-5(2)(1), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AMLPK3944L (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Parth Mehta, A.R. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Nitin Kulkarni, Sr. DR Date of Hearing 19/08/2025 Date of Pronouncement 27/08/2025 O R D E R The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 27.01.2025, passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2017-18. 2. The Registry has noted the appeal to be time barred by 70 days. The assessee has filed an application for seeking condonation of delay stating as under: Printed from counselvise.com ITA No.1303/Ahd/2025 [Pinkal Sureshkumar Kothari vs. ITO] A.Y. 2017-18 - 2 – “1. Appellant Assessee is a Salaried Individual who has filed his Income Tax Return for the year under consideration on 30th March, 2018 vide Acknowledgement Number: 556849120300318 declaring gross total income of Rs. 9,09,414/- Appellant's case was selected for Limited Scrutiny and notice u/s 143(2) of the Act was issued on 08/08/2018 for verification of Cash Deposits and Transaction in Property 2. During the relevant financial year, the Appellant had fulfilled his lifelong aspiration of purchasing a residential property for ₹60,00,000 in the course of assessment and appellate proceedings before the Ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre ['CIT(A)'), the Appellant had submitted documentary evidence explaining the sources of funds utilised for the said purchase 3. The Appellant had preferred his first appeal before the Ld. CIT(A) on 10.07.2019 and duly filed submissions in support of his grounds of appeal on 17.10.2019 However, the matter remained pending without adjudication for an inordinate period of over five and a half years. Eventually, the Ld. CIT(A) passed an appellate order under section 250 of the Act on 27.01.2025 without affording opportunity of being heard as is mandated u/s 250(2) of the Act. 4. Appellant was surprised to receive appellate order confirming part demand as the same was adjudicated without opportunity of being heard and with improper understanding of the submission 5. Appellant had explained source of Rs. 6,39,000 utilized for purchase of house to be Rs 3,60,000 out of salary income and Rs. 2,79,000 (Stamp Duty) out of Cash on hand balance However, Ld. CIT (A) erroneously comprehended our submission to mean that appellant is trying to prove entire source from cash balance. However, Appellant had clearly mentioned that \"So, the amount of cash deposited and used for purchase of property is as above is out of previous withdrawals and balance built up because of salary income during the year from the bank 6. Appellant was under the incorrect impression that since it is a mistake apparent from record capable of being rectified in terms of provisions of section 154 of the Act appellant had filed the rectification application on 28-01-2025 (within a day from Ld CIT(A) Order) through online Income Tax Portal. Annexure-1 It is only subsequently, upon obtaining professional legal advice, that the Appellant was made aware that the remedy of rectification under section 154 may not extend to matters Printed from counselvise.com ITA No.1303/Ahd/2025 [Pinkal Sureshkumar Kothari vs. ITO] A.Y. 2017-18 - 3 – involving incorrect appreciation of facts, non-verification of daywise cashbook and denial of natural justice, and that the appropriate remedy lies in preferring an appeal before the Hon'ble Tribunal 7. Appellant herewith approaches Hon'ble Tribunal to kindly condone the delay of 2 months in filing of appeal The delay in filing the present appeal is purely unintentional and occasioned solely due to the bonafide but mistaken belief in the availability of an alternate remedy. The Appellant has acted diligently and in good faith throughout, and the delay of approximately 2 months in filing the appeal is neither deliberate nor due to negligence. 8. Appellant has nothing to gain from delaying appellate proceedings. Moreover, Supreme Court has in catena of decisions held that Delay in filing appeal shall be condoned if there is a reasonable cause. Furthermore, Apex Court has in case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353 has elaborately held as under; 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. \"Every day's delay must be explained\" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other cause of substantial justice deserves to be preferred for the other side cannot claim to have vested night in injustice being done because of a non-deliberate delay 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence or on account of mala fides. A litigant does not stand to benefit by resorting to delay in fact he runs a serious risk e must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.” 9. Their Lordships of Hon'ble Supreme Court have in case of N. Balakrishnan Vs M Krishnamurthy ((1998) 7 SCC 123) promulgated that Printed from counselvise.com ITA No.1303/Ahd/2025 [Pinkal Sureshkumar Kothari vs. ITO] A.Y. 2017-18 - 4 – \"Rule of limitation are not meant to destroy the right of parties They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury Law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublica up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words \"sufficient cause\" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575) and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach. 10. It is under such circumstances, we request your goodself to kindly a) Condone the delay in filing the appeal under section 253(5) of the Act, and Printed from counselvise.com ITA No.1303/Ahd/2025 [Pinkal Sureshkumar Kothari vs. ITO] A.Y. 2017-18 - 5 – b) Admit the appeal for adjudication on merits, in the interest of justice, equity and fair play. The Appellant further undertakes to abide by any directions that this Hon'ble Tribunal may deem fit to pass in this regard.” 3. The Ld. DR object to the condonation of delay. 4. Considering the explanation of the assessee for delay of 70 days in filing of the appeal duly supported by an affidavit, I am of the view that the assessee has adduced sufficient cause for the delay in filing of the present appeal, which I, therefore, condone in the interest of justice. 5. Taking up the appeal of the assessee for adjudication, at the outset itself, Ld. Counsel for the assessee contended that the solitary issue in the present appeal relates to addition confirmed by the Ld. CIT(A) on account of investment made by the assessee in immovable property remaining unexplained to the extent of Rs.6,39,000/-. The orders of the authorities below reveal that the assessee was noted to have purchased immovable property, being Flat No.B-15 in Bhumika Apartment, as per conveyance deed on 09.09.2016 for a consideration of Rs.60 Lakhs which was paid from 07.05.2016 to 01.09.2016. The assessee also had paid stamp duty to Rs.2,94,000/-, resulting in total investment made by the assessee amounting to Rs.62,94,000/-. 6. The assessee explained the source of investment in the said property as under: i. Loan from Axis Bank Rs.35 Lakhs ii. Borrowing from wife Rs.10 Lakhs Printed from counselvise.com ITA No.1303/Ahd/2025 [Pinkal Sureshkumar Kothari vs. ITO] A.Y. 2017-18 - 6 – iii. Borrowing from Grandfather Rs.4 Lakhs iv. Borrowing from Mother Rs.2 Lakhs v. Balance Rs.11,69,000/- from his savings 7. The AO accepted assessee’s explanation of the source of the investment made to the tune of Rs.46,55,000/- and treated the balance as unexplained investment made by the assessee, making addition of the same to the income of the assessee. The Ld. CIT(A) accepted further explanation of source to the extent of Rs.10 Lakhs resulting in the investment of Rs.6,39,000/- remaining to be accepted by the authorities below as being from explained sources and which addition made to the income of the assessee, therefore, stood confirmed. 8. The Ld. Counsel for the assessee during the course of hearing before me, assisted by the assessee himself in the open Court, explained that out of the total investment made in the flat by the assessee of Rs.62.94 lacs, except for an amount of Rs.2.94 Lakhs for stamp duty purposes which was paid in cash, the entire remaining amount was paid through banking channels from his savings bank account. That even the cash paid was out of withdrawals from this bank account. That therefore the credits in the bank account itself explained the source of investment in the impugned property. The credits in the bank account, it was contended pertained to all borrowings from the assesee’s wife, Grandfather, mother and also salary earned by him during the year, which was returned to tax also by the assessee. The source of investment, it was contended, stood clearly explained and the authorities below having accepted source of investment from Printed from counselvise.com ITA No.1303/Ahd/2025 [Pinkal Sureshkumar Kothari vs. ITO] A.Y. 2017-18 - 7 – borrowings from the assesses family, the balance amount of Rs.6.39 Lakhs clearly was out of his own savings from the salary earned by him. There was no reason, therefore it was stated, for treating any amount of investment made as unexplained vis a vis source. 9. These facts were demonstrated to us from the documents on record before the AO and the Ld. CIT(A) which included the copy of bank statement of the assessee from where the entire investment was shown to have been made by the assessee. The Ld.DR was unable to controvert the said facts. The Ld. CIT(A), I have noted, completely misunderstood the pleadings of the assessee. He has noted that the balance amount of Rs.6.39 Lakhs as from the cash withdrawals made on different occasions and finding the AO to have already given a credit of Rs.11.50 Lakhs for cash deposits out of cash withdrawals, he rejected the assessee’s explanation. The records before us demonstrate that it was only investment to the tune of Rs.2.94 Lakhs on account of stamp duty paid for acquiring property, which was made in cash. Therefore, finding of the Ld.CIT(A) that investment to the extent of Rs.6.39 Lakhs was made from cash withdrawals is incorrect. Further, the cash paid for stamp duty purposes was the only component funded from cash withdrawals. Copy of cash book furnished by the assessee to the authorities below reveals that there was more than sufficient cash withdrawals made by the assessee for the said purposes, which, the Ld. Counsel for the assessee pointed out amounted in all to Rs.16.98 Lakhs, out of which, even after giving credit of Rs.11.50 Lakhs for cash deposited in bank, which credit was given by the AO, there Printed from counselvise.com ITA No.1303/Ahd/2025 [Pinkal Sureshkumar Kothari vs. ITO] A.Y. 2017-18 - 8 – remains sufficient amount available with the assessee for investment in purchase of impugned property on account of stamp duty paid thereon amounting to Rs.2.94 Lakhs. Therefore, I hold that the source of investment in the property purchased by the assessee during the impugned year to the tune of Rs.62.94 Lakhs stands fully explained and the addition, therefore, confirmed by the Ld. CIT(A) to the tune of Rs.6.39 Lakhs is not sustainable and is directed to be deleted. 10. In the result, the appeal filed by the assessee is allowed. This Order pronounced on 27/08/2025 Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 27/08/2025 S. K. SINHA True Copy आदेश कȧ Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंिधत आयकर आयुƠ / Concerned CIT 4. आयकर आयुƠ(अपील) / The CIT(A)- 5. ǒवभागीय Ĥितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "