ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, TRICHY, TRICHY V. SUBRAMANIAN PARAMASIVAM, KARUR

MA 145/CHNY/2025

AI Insights

The case revolves around a dispute concerning the addition of Rs. 86,75,000 as unexplained money under Section 69A of the Income Tax Act, 1961, during the assessment year 2018-19. The assessee, Shri Subramanian Paramasivam, a partner in M/s Cholan Auto Finance, was implicated following two searches conducted on the firm's premises in 2010 and 2017. The Assessing Officer initially added this amount protectively in the hands of the firm and substantively in the hands of the partners, including Paramasivam. However, both the CIT(A) and the ITAT overturned this addition, citing that the balances and receivables from borrowers were carried forward from preceding financial years and thus should not be added as income of the current year. The Revenue's Miscellaneous Application sought to challenge this decision, arguing that the Tribunal's earlier decision was based on a misinterpretation of the seized material and improper admission of fresh evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786534 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 06-10-2025
• Other Referred Cases: Shri Bhagwandas Narayanadas v. Commissioner of Income Tax, Ahmedabad, M/s: D.N.Singh Through Partner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C.P. SOLOMON
• Keywords: Principle of natural justice
• Section: 143(3); 132

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी मनु क ुमार िग र, ाियक सद\u0011 एवं एवं एवं एवं \u0001ी जगदीश, लेखा सद क े सम\u0014 BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER Miscellaneous Application No.145/Chny/2025 (in ITA No.2348/Chny/2024) िनधा\u000eरणवष\u000e/Assessment Year: 2018-19 The ACIT, Central Circle-2, Trichy v. Shri Subramanian Paramasivam, New No.3, Gowripuram West Street, Karur-639 001. [PAN: APQPP 2506 P] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) Department by : Mr.C.P. Solomon, JCIT Assessee by : None सुनवाईक तारीख/Date of Hearing : 24.10.2025 घोषणाक तारीख /Date of Pronouncement : 18.11.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: By way of present Miscellaneous Application under section 254(2) of the Income Tax Act, 1961 (in short “the Act”) the Revenue seeks to rectify the order of the Tribunal in ITA Nos.2348/Chny/2024 dated 08.04.2025 for the Assessment Year 2018-19. 2. The ld. DR in its Miscellaneous Application has raised the following contentions: Printed from counselvise.com MA No.145/Chny/2024 (AY 2018-19) Shri Subramanian Paramasivam :: 2 :: 1. In the above case the assessee is an individual and a partner in M/s Cholan Auto Finance group consisting of 77 firms engaged in the finance business such as arranging finance for money landing, auto finance and chit funds business at Karur. In this group, first search u/s 132 was conducted on 11 11 2010 and the second search was conducted on 10.08.2017, During the course of search proceedings, was found that an amount of Rs.22.22.50,000/- was introduced by the partners during the assessment year 2018-19 The sum of Rs.22,22,50,000/- was added by the Assessing Officer protectively in the hands of the firm M/s Cholan Auto Finance and the contributions of the different partners as substantively in their hands. Out of Rs 22,22. 50,000/-, the contribution of the assessee was Rs.85.75,000/- and accordingly, assessment was completed u/s 143(3) r.w.s 153C of the Act by adding Rs 86,75,000/- as unexplained money u/s 59A of the Act substantively. 2 Aggrieved by the addition: assessee preferred an appeal before the Ld. CIT(A). The Lid. CIT(A) in the Appellate order No Chennai-19/10770/2017-18, dated 12-07-2024 has allowed the assessee's appeal and directed the Assessing Officer to delete the addition of Rs 86,75, 000/- made u/s 69A. Aggrieved by the order of the LL CIT(A), the Department find appeal before the Hon'ble ITAT. 3. The Hon'ble ITAT \"B\" Bench has upheld the order of the Ld. CIT(A) and opined that the balances and receivables from the borrowers are carried forward from the preceding financial years and hence cannot be added as income of the current year. The sum of the corresponding cumulative amount of Rs 22,22,50,000/- being opening balance of the M/s. Cholan Auto Finance cannot be added as income of the current year in the hands of the partners. The Hon'ble ITAT has further held that the assessing officer has relied solely on the loose sheets seized without bringing on record any other evidence and the act of invoking section 69A of the Act is legally invalid and directed the AO to delete the addition made in the assessment order. 4. The issue in contention is the balance of receivables from borrowers carried forward from preceding financial years. The Appellate proceedings before both the Ld. CIT(A) & Hon'ble ITAT were based on the extracts of balance sheets as at 31.03.2017 & 10.08.2017 in respect of the 77 impugned firms by the assessee. The contention of the department is that this is within the purview of fresh evidence as envisaged u/s 45A of the IT Rules 1962, as the extracts are not per se reproduction of the seized material but a deductive interpretation of the entries in the seized material thereby rendering it afresh data. The basic mandate of Rule 46A for admission of fresh evidence is that the Ld. CIT(A) should record the reasons for admission and secondly, an opportunity has to be given to the AO under the Principles of Natural justice to rebut the same However in this case, neither mandates have been satisfied by the Ld. CIT(A) but the same have been confirmed by the Hon'ble Tribunal rendering the order perverse. 5 Secondly, the issue of \"protective assessment and \"substantive assessment in the hands of the firm viz. M/s. Cholan Auto Finance & the Partners have been dealt in the appeal orders The Ld. CIT(A) in the order, confirmed by Hon'ble Tribunal, has held that the impugned addition is to be treated as \"substantive\" in the hands of the firm and protectively in the hands of the partners but ironically both in the substantive as well as protective assessments, the Ld. CIT(A) has allowed the appeal in favour of the assessee This renders the order perverse. Printed from counselvise.com MA No.145/Chny/2024 (AY 2018-19) Shri Subramanian Paramasivam :: 3 :: 6. Shri Bhagwandas Narayanadas v. Commissioner of Income Tax, Ahmedabad v. Commissioner (1975] 98 ITR 194 (GUJ) & M/s: D.N.Singh Through Partner of Income Tax on 16th May 2023 [454 ITR 595] are cases in which the Hon'ble Supreme Court has opined on the issues of whether fixed deposit receipts and title deeds of immovable property were 'valuable things or articles which required a show-cause notice under Rule 112A of the Income Tax Rules, 1962 vis-à-vis Section 132(5) if the Act also employs the expression 'other valuable articles for the purposes of seizure. The citation relied on by Hon'ble Tribunal are not in any way relevant to the issue under adjudication le the issue of partners contribution/Investment in the firm. Therefore, the reliance on case laws supra to grant relief to the assessee is erroneous and not acceptable. 7. In view of the above, it is prayed that the Hon'ble ITAT may reconsider the issues on merits and render justice. 3. The ld. DR on the basis above contended that the order of the Tribunal dated 08.04.2025 is perverse and hence, he argued and prayed that the order of the Tribunal may please be recalled. 4. Per contra, the ld.AR submitted that there is no mistake apparent on record and hence prayed for dismissing the Miscellaneous Application of the Revenue. 5. Heard both the parties and perused the impugned order passed by the Tribunal dated 08.04.2025. We note that on the above issues the Tribunal has already adjudicated based on the facts on record in accordance with law. The ld.DR for Revenue strenuously tried to reargue the case in extenso which is not permitted under section 254(2) of the Act. We further find that the there is no violation of Rule 46A by the ld.CIT(A), which has been discussed in our order. Printed from counselvise.com MA No.145/Chny/2024 (AY 2018-19) Shri Subramanian Paramasivam :: 4 :: 6. Further, the Revenue could not point out any mistake apparent from record and hence the Miscellaneous Application is liable to be dismissed. Accordingly, we dismiss the same. 7. In the result, Miscellaneous Application filed by the Revenue is dismissed. Order pronounced on the 18th day of November, 2025, in Chennai. Sd/- (जगदीश) (JAGADISH) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (मनु क ुमार िग र) (MANU KUMAR GIRI) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 18th November, 2025. TLN आदेश क \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ\u0010/Appellant 2. \u0011\u0012थ\u0010/Respondent 3. आयकरआयु\u0018/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u0011ितिनिध/DR 5. गाड फाईल/GF Printed from counselvise.com "