ATHIMOOLAM CHETTIAR RAVI,MADURAI V. ACIT, CENTRAL CIRCLE-1, MADURAI

ITA 3238/CHNY/2024

AI Insights

The case involves appeals by Shri Venugopal Sethuraman Rajkumar and Shri Athimoolam Chettiar Ravi against the orders of the Learned Commissioner of Income Tax (Appeals)-19, Chennai, concerning the Assessment Year 2018-19. The appeals were related to the addition of Rs.28,88,000 as unexplained money under section 69A of the Income Tax Act, 1961, following the seizure of cash during a police action in Kerala. The primary legal contention was the jurisdiction and the procedural validity of the assessments made under sections 144 and 147 read with section 148 of the Act. The Tribunal found that the CIT(A) had erred in restoring the assessment back to the AO without addressing the legal issues raised by the assessees.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398240 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: N.V. LAKSHMI
• Keywords: Set aside; Business income; Additional evidence

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी मनोज क ुमार अ\u0019वाल, लेखा सद\u0007 क े सम BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3237/Chny/2024 िनधा\u000eरण वष\u000e/Assessment Year: 2018-19 Venugopal Sethuraman Rajkumar, 18/1, Fathima Jinna Street, New Meenakshi Nagar, New Ramnad Road, Madurai-625 009. v. The ACIT, Central Circle-I, Madurai-625 002. [PAN: BEYPR 4618 L] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) आयकर अपील सं./ITA No.3238/Chny/2024 िनधा\u000eरण वष\u000e/Assessment Year: 2018-19 Athimoolam Chettiar Ravi, 10-C/5, D3, Road, Balarengapuram, Madurai-625 009. v. The ACIT, Central Circle-I, Madurai-625 002. [PAN: ACQPR 2915 R] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Ms.N.V. Lakshmi, Advocate \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Mr.Shiva Srinivas, CIT सुनवाईक\u001aतारीख/Date of Hearing : 07.05.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 04.06.2025 आदेश / O R D E R ITA No.3237/Chny/2024 (AY 2018-19) Venugopal Sethuraman Rajkumar & ITA No.3238/Chny/2024 (AY 2018-19) Athimoolam Chettiar Ravi :: 2 :: PER ABY T. VARKEY, JM: These are appeals preferred by the assessees, Shri Venugopal Sethuraman Rajkumar (Shri V.S. Rajkumar) & Shri Athimoolam Chettiar Ravi (Shri A.C.Ravi), against separate orders of the Learned Commissioner of Income Tax (Appeals)-19, (hereinafter referred to as “the Ld.CIT(A)”), Chennai, both dated 30.10.2024 for the Assessment Year (hereinafter referred to as \"AY”) 2018-19. 2. At the outset, the Ld.AR of the assessee brought to our notice that ITA No.3237/Chny/2024 is preferred by Shri V.S. Rajkumar who is son-in- law of the other assessee, Shri A.C.Ravi [ITA No.3238/Chny/2024]. And the back ground facts which led to the addition of Rs.28,88,000/- for AY 2018-19 are that Shri A.C.Ravi, [father-in-law] while travelling in the State of Kerala on 15.11.2017 was found to carry a sum of Rs.28,90,350/- which was seized by Thirunelli Police, Wayanad District, Kerala, which was handed over to Judicial First Class Magistrate-II, Mananthavady, Wayanad District, Kerala; and the information was passed on to the Income Tax Department, based on which, the Dy. Director of Investigation, recorded a Sworn Statement from Shri A.C.Ravi who deposed that the cash represented sale proceeds of ‘960’ grams of old gold belonging to his son-in-law, Shri V.S. Rajkumar. Shri V.S.Rajkumar ITA No.3237/Chny/2024 (AY 2018-19) Venugopal Sethuraman Rajkumar & ITA No.3238/Chny/2024 (AY 2018-19) Athimoolam Chettiar Ravi :: 3 :: had confirmed in his Sworn Statement on 20.11.2017 that the amount belongs to him and the source of cash was his savings for the past four (4) years from his business income. Thereafter, according to Shri V.S.Rajkumar, he filed his return of income (RoI) on 31.08.2018 admitting total income at Rs.3,19,440/- which was processed by the CPC vide its intimation dated 21.02.2019 u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘). Later on, the assessment of the assessee (Shri V.S. Rajkumar) was transferred to DCIT, Central Circle-1, Madurai, from the ITO, NCW-1(7), Madurai, by order passed u/s.127 of the Act dated 12.12.2019 and thereafter, the DCIT, Central Circle-1, Madurai (the AO) issued reopening notice u/s.148 of the Act on 11.02.2021, pursuant to which, the assessee claims to have filed his RoI on 12.03.2021 declaring total income at Rs.3,19,440/- which was e- verified on 23.11.2021, wherein the AO asked the assessee to explain the nature and source of cash seized from his father-in-law, Shri A.C. Ravi on 15.11.2017 which according to the assessee/Shri V.S.Rajkumar has been filed wherein he reiterated that amount seized belongs to him and the source of it was his savings of earlier four years. However, the AO was of the view that the assessee didn’t file any explanation regarding the nature and source of cash seized and added Rs.28,88,000/- u/s.69A of the Act by passing assessment order on 31.03.2022 u/s.147 r.w.s.144 of the Act. ITA No.3237/Chny/2024 (AY 2018-19) Venugopal Sethuraman Rajkumar & ITA No.3238/Chny/2024 (AY 2018-19) Athimoolam Chettiar Ravi :: 4 :: 3. Similarly, in the case of father-in-law, Shri A.C. Ravi [from whom cash was seized on 15.11.2017], the AO noted that the PCIT passed order u/s.127 of the Act on 12.12.2019 transferring the case from the ITO, NCW-1(7), Madurai, to the DCIT, Central Circle-1, Madurai (the AO) who issued notice u/s.148 of the Act on 11.02.2021, pursuant to which Shri A.C. Ravi filed his RoI on 12.03.2021 admitting total income at Rs.2,05,000/- which was e-verified on 23.11.2021. Pursuant to notice u/s.142(1) of the Act, according to Shri A. C. Ravi, he along with Shri V.S.Rajkumar appeared before the AO on 10.02.2022 and deposed that cash belong to Shri V.S.Rajkumar and pleaded before the AO that no adverse view should be taken against him (Shri A.C.Ravi) in respect of cash seized. But the AO framed assessment u/s.147 r.w.s.144 on 31.03.2022 by adding Rs.28,88,000/- u/s.69A of the Act on protective basis with addition on substantive basis in the case of Shri V.S.Rajkumar. 4. Aggrieved by the aforesaid action of the AO, both Shri V.S.Rajkumar & Shri A. C. Ravi filed appeals before the Ld.CIT(A) wherein they raised several legal issues as well as contested the addition on merits. However, the Ld.CIT(A) is noted to have restored the assessment back to the file of the AO with certain directions for framing a fresh ITA No.3237/Chny/2024 (AY 2018-19) Venugopal Sethuraman Rajkumar & ITA No.3238/Chny/2024 (AY 2018-19) Athimoolam Chettiar Ravi :: 5 :: assessment without considering the legal issues raised before him. Therefore, both the assessees are before us. 5. We have heard both the parties and perused the material available on record. The aforesaid facts are not disputed and therefore, not repeated for the sake of brevity. The only grievance of the assessee’s are that the Ld.CIT(A) while adjudicating the appeals preferred by them against the action of the AO has not considered the legal issues raised before him and has merely restored the assessment back to the file of the AO for making fresh assessment. According to the Ld.AR, the legal issue raised before the Ld.CIT(A), if found in favour of the assessee’s would go to the root of the jurisdiction of the AO to have framed the assessment and therefore, the impugned action of the Ld.CIT(A) restoring the assessment back to the file of the AO would defeat the purpose of filing of the legal issue before the Ld.CIT(A) and therefore, prayed that the impugned order of the Ld.CIT(A) be reversed and the Ld.CIT(A) be directed to examine the legal issue raised before him as per sub-section (6) of section 250 of the Act. Per contra, the Ld.DR pointed out that since the order has been passed u/s.144 of the Act [best judgment assessment], the Ld.CIT(A) has invoked the power vested in him by the Finance Act, 2024, wherein, the proviso has been inserted to section ITA No.3237/Chny/2024 (AY 2018-19) Venugopal Sethuraman Rajkumar & ITA No.3238/Chny/2024 (AY 2018-19) Athimoolam Chettiar Ravi :: 6 :: 251(1)(a) of the Act which empowered the Ld.CIT(A) to set aside the assessment order passed u/s.144 of the Act and restore it back to the file of the AO for making fresh assessment and therefore, the action of the Ld.CIT(A) can’t be faulted viz., for exercising his discretion in restoring the assessment back to the file of the AO. Therefore, the Ld.CIT-DR, doesn’t want us to interfere with the action of the Ld.CIT(A). 6. After hearing both the parties, we note that the main plea of the assessee, Shri V.S.Rajkumar is that he has responded to the notices issued by the AO and when called upon by the AO to explain the nature & source of the cash of Rs.28,90,350/- [seized from his father-in-law], he explained that the source of the cash was from his savings for the past four (4) years of his business income and in order to support his statement, he claims to have filed copy of the financials for FY 2016-17 & 2017-18 and physically appeared before the AO on 10.02.2022 along with father-in-law, Shri A.C. Ravi. However, the AO in the assessment order notes that the assessee Shri V.S.Rajkumar didn’t explain the source of cash seized and therefore, relying on the Sworn Statement given by him (Shri V.S.Rajkumar) on 20.11.2017, he treated the same as unexplained money and brought to tax u/s.69A r.w.s.115BBE of the Act substantially in the hands of Shri V.S.Rajkumar; and protectively in the hands of Shri ITA No.3237/Chny/2024 (AY 2018-19) Venugopal Sethuraman Rajkumar & ITA No.3238/Chny/2024 (AY 2018-19) Athimoolam Chettiar Ravi :: 7 :: A.C. Ravi by passing order u/s.147 r.w.s.144 of the Act by separate order dated 31.03.2022. After going through the records and especially Annexure IV & V [copy of letter dated 03.02.2022 submitted by Shri V.S.Rajkumar before the AO and copy of P & L a/c, receipts & payments of two financial years], which documents assessee, Shri V.S.Rajkumar have filed physically before the AO, when they were called to be present before him; In the light of the same, we are of the view that even though the AO has termed the assessment order to be passed u/s.144 of the Act but considering the material on record, it can’t be presumed to have been passed u/s.144 of the Act. Therefore, the Ld.CIT(A) erred in exercising his powers as provided under proviso to section 251(1)(a) of the Act and thus, erred in restoring the assessment back to the file of the AO for fresh assessment. Therefore, we set aside the impugned order of the Ld.CIT(A) and restore the appeal back to the file of the Ld.CIT(A) with a direction to decide the appeal as mandated in sub-section (6) of section 250 of the Act after hearing the assessee to pass a speaking order. Needless to say that the legal issues need to be adjudicated and if necessary, Remand- Report may be called for from the AO incase assessee files any additional evidences in respect of merits of the case. The Ld.CIT(A) is directed to pass speaking order in accordance to law in both the appeals. ITA No.3237/Chny/2024 (AY 2018-19) Venugopal Sethuraman Rajkumar & ITA No.3238/Chny/2024 (AY 2018-19) Athimoolam Chettiar Ravi :: 8 :: 7. In the result, appeals filed by both the assessees are allowed for statistical purposes. Order pronounced on the 04th day of June, 2025, in Chennai. Sd/- (मनोज क ुमार अ\u0019वाल) (MANOJ KUMAR AGGARWAL) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 04th June, 2025. TLN आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000eथ /Respondent 3. आयकरआयु\u0014/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF "