The Income Tax Appellate Tribunal’s Nagpur bench struck down a Rs 10 lakh addition and a Rs 2.11 lakh penalty imposed on a taxpayer who had invested in a wealth‑management firm. The case stemmed from the assessing officer’s view that the bulk of the investment came from an unexplained source.
The taxpayer first claimed the money was a cash loan secured against property, a stance that the officer found lacking in detail. Consequently, the officer treated the Rs 10 lakh as an addition under the head of unexplained income.
In the appeal before the Commissioner of Income Tax (Appeals) the taxpayer offered a different narrative: that he withdrew Rs 8 lakh from one bank and Rs 3.75 lakh from another, using the cash for the investment. The appellate authority rejected this version, upholding the addition.
The taxpayer then approached the tribunal, submitting detailed bank statements that recorded the withdrawals and a balance of Rs 9.70 lakh in one account as of 1 April 2012. The tribunal also noted that the appeal had been filed 606 days late, a delay the court deemed neither intentional nor deliberate.
After considering the evidence and the condonation of delay, the tribunal found the revised explanation credible, deleted the addition, and consequently revoked the penalty. The ruling marks a rare instance where a taxpayer’s change in narrative, backed by banking records, altered the outcome of a tax dispute. The decision allows the taxpayer to reclaim the Rs 10 lakh and ends the penalty that had tied up his finances for years.