ARUMUGAM DHANDAPANI,TIRUVANNAMALAI V. ITO, WARD-1, TIRUVANNAMALAI

ITA 2964/CHNY/2024

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The case involves Arumugam Dhandapani, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the additions made by the Assessing Officer. The additions were related to cash deposits made during the demonetization period, which were treated as unexplained and unaccounted income under section 69A of the Income Tax Act, 1961. The Assessing Officer had initially found that Dhandapani made cash deposits totaling \\u20b911,52,260 during the demonetization period and did not file a return of income for the assessment year 2017-18. The Tribunal noted that the Assessing Officer did not verify the details available in Form 26AS or obtain the necessary bank statements to ascertain the quantum of deposits made during the demonetization period.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107353 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N. MADAN KUMAR
• Assessee Lawyers: ANANDD BABUNATH
• Keywords: Set aside; Income from undisclosed sources; FORM 26AS
• Section: 144; 142(1); 133(6); 44AD; 69A

Judgement Text

"आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी जगदीश, लेखा सद˟ क े समƗ । Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Jagadish, Accountant Member आयकर अपील सं./I.T.A. No.2964/Chny/2024 िनधाŊरण वषŊ/Assessment Year: 2017-18 Arumugam Dhandapani, No. 25, Velananthal Main Road, Velananthal, Rajapalayam Post, Tiruvannamalai 606 755. [PAN:BVWPD5386C] Vs. The Income Tax Officer, Ward 1, Tiruvannamalai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri Anandd Babunath, CA ŮȑथŎ की ओर से/Respondent by : Shri N. Madan Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 03.04.2025 घोषणा की तारीख /Date of Pronouncement : 09.04.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 08.11.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2017-18. 2. The assessee raised 6 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the additions made by the Assessing Officer on account of treating cash deposits during demonetization period as I.T.A. No.2964/Chny/24 2 unexplained and unaccounted income under section 69A of the Income Tax Act, 1961 [“Act” in short]. 3. We note that the Assessing Officer found the assessee made cash deposits during demonetization period to an extent of ₹.11,52,260/-, which is evident from para 1 of the assessment order and no return of income filed for AY 2017-18. Against the notice issued under section 142(1) of the Act requiring the assessee to file the return of income, the assessee filed his return of income of ₹.1,54,750/- on 14.09.2019. It was explained that the assessee was carrying on dealership with Bharti Airtel in the name and style of M/s. Durga Communications and cash deposits made during the demonetization period were out of sales proceeds. According to the Assessing Officer that the assessee has shown ₹.1,52,16,944/- in the sales for the FY 2016-17 and show-caused the assessee to explain the source of cash deposits made and requested to furnish the bills/vouchers of the purchase and sales made during the demonetization period. However, there was no response from the assessee. Since no explanation offered to establish the source and nature of the cash deposits of ₹.11,52,260/-, the Assessing Officer treated the same as unexplained money of the assessee under section 69A of the Act and brought to tax. On appeal, the ld. CIT(A) confirmed the addition made by the Assessing Officer. I.T.A. No.2964/Chny/24 3 4. The ld. AR Shri Anandd Babunath, CA drew our attention to page 11 of the impugned order, wherein, the screenshot of abstract of Form 26AS affixed, clearly indicates that the assessee is in the business of reselling the recharge coupons for telecom companies. He further submits that though the assessee filed return of income against notice under section 142(1) of the Act, it is a valid return and moreover, the assessee has already filed audit report under section 44AD of the Act. He vehemently contended that without verifying the details already available with the Assessing Officer, completing the assessment under section 144 of the Act is bad in law. He also contended that the Assessing Officer failed to obtain bank statement to ascertain the quantum of deposits made during demonetization period and prayed to set aside the impugned order. 5. The ld. DR Shri N. Madan Kumar, JCIT, besides relying upon the orders of authorities below, fairly conceded that the matter may be remanded to the file of the Assessing Officer for fresh consideration. 6. Having heard both the parties and on perusal of the assessment order, we noted that the assessee made cash deposits during demonetization period and not filed the return of income for AY 2017-18. However, against notice under section 142(1) of the Act, the assessee I.T.A. No.2964/Chny/24 4 filed his return of income on 14.09.2019 along with audit report under section 44AD of the Act, which was not objected by the Assessing Officer. We find that when the Assessing Officer noted that the assessee made cash deposits, the Assessing Officer should have obtained bank statement under section 133(6) of the Act, which was not done so in this case. We also noted that the Assessing Officer did not verify Form 26AS which is available in the ITBA of the assessee. Under the above facts and circumstances, we set aside the order of the ld. CIT(A) and remand the matter to the file of the Assessing Officer to decide the matter afresh and pass order in accordance with law after considering the explanation with documentary evidences, if any, as may be filed by the assessee. Thus, the grounds raised by the assessee are allowed for statistical purposes. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 09th April, 2025 at Chennai. Sd/- Sd/- (JAGADISH) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 09.04.2025 Vm/- I.T.A. No.2964/Chny/24 5 आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "