BALAKRISHNAN RAMANATHAN,GOBICHETTIPALAYAM V. ITO, WARD-2(1), ERODE

ITA 2437/CHNY/2025

AI Insights

The case involves Balakrishnan Ramanathan, an individual and member of HUF, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the additions made by the AO under sections 144 and 147 of the Income Tax Act, 1961. The additions were based on estimated income from transactions in bank accounts linked to the assessee's businesses. The Tribunal considered previous similar cases and the documentary evidence provided by the assessee, which supported his claim that the transactions were related to the HUF and had been duly reported in its tax filings. The Tribunal's decision to restore the matter to the AO was based on the need to verify the accounting of these transactions in the HUF's hands.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826449 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 02-09-2025
• Other Referred Cases: ITA No 2279/CHNY/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTHAMI MANIVASAGAM
• Assessee Lawyers: N. ARJUN RAJ
• Keywords: Set aside; Principle of natural justice
• Section: 147

Judgement Text

" आयकर अपील य अ धकरण, ‘बी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI \u0015ी मनु क ुमार ग\u0019र, \u000eया\u001aयक सद य एवं \u0015ी एस. आर. रघुनाथा, लेखा सद य क े सम$ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:2437/Chny/2025 \u001aनधा%रण वष% / Assessment Year: 2013-14 Balakrishnan Ramanathan, 17, Canal Street, Gobichettipalayam – 639 452. vs. ITO, Ward 2(1), Erode. [PAN: AEGPR-4674-H] (अपीलाथ'/Appellant) (()यथ'/Respondent) अपीलाथ' क* ओर से/Appellant by : Shri. N. Arjun Raj, Advocate ()यथ' क* ओर से/Respondent by : Ms. Gauthami Manivasagam, JCIT सुनवाई क* तार ख/Date of Hearing : 03.12.2025 घोषणा क* तार ख/Date of Pronouncement : 07.01.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal filed by the assessee is directed against order of the Learned Commissioner of Income Tax (Appeals), Addl/JCIT (A) – 1, Nashik [herein after “ld.CIT(A)] dated 31.07.2025 and pertains to assessment year 2013-14 against the order of the Income Tax Officer, Ward - 2(1), Erode, passed u/s.144 r.w.s 147 of the Income Tax Act, 1961 (in short ‘the Act’) dated 02.12.2019. 2. The assessee has raised the following grounds of appeal: “1. The order of the NFAC, Delhi dated 31.07.2025 vide Din & order No ITBA/APL/S/250/2025-26/1079125160(1) for the abovementioned Assessment Year is contrary to law, fact and in circumstances of the case. Printed from counselvise.com :-2-: ITA. No:2437/Chny/2025 2. The NFAC, Delhi erred in impliedly confirming the assumption of jurisdiction under section 147 of the Act and consequently erred in impliedly confirming the passing of the re-assessment order without assigning proper reasons and justification. 3. The NFAC, Delhi erred in passing the re-assessment order and ought to have appreciated that the re-assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 4. The NFAC, Delhi failed to appreciate that the assumption of jurisdiction u/s.147 of the Act was without sanction of law and ought to have appreciated that the consequential re-assessment order accordingly should be reckoned as bad in law. 5. The NFAC, Delhi failed to appreciate that having not followed the prescription of law/procedure for framing he re-assessment, the consequential reassessment order passed should be reckoned as nullity in law for want of jurisdiction. 6. The NFAC, Delhi erred in confirming the addition of sum of Rs.21,67,696/- being 8% of the total credits in the bank account to the tune of Rs.2,70,96,195/- as income of the appellant in the computation of taxable total income without assigning proper reasons and justification. 7. The NFAC, Delhi failed to appreciate that the disputed credits in the bank account related to the sum received by the appellant while running the petrol bunk in the name & style of M/s.Reliance Petrol Bunk and textile business in the name and style of M/s.GRB Silk Centre in the capacity of HUF and ought to have appreciated that the assessment of such sum in the hands of the appellant in his individual capacity should be construed as nullity in law. 8. The NFAC, Delhi failed to appreciate that having offered to tax the income component embedded on such credits in the return of income filed by the appellant in the capacity of the HUF, the consequential addition made in the appellant herein would tantamount to double taxation, there by vitiating the decision to confirm the addition made in the re-assessment order. 9. The NFAC, Delhi failed to appreciate that the entire-re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 10. The NFAC, Delhi failed to appreciate that having not taken into consideration the directions rendered by the income Tax Appellate Tribunal in appellant’s own case in ITA No 2279/CHNY?2024 for the assessment year: 2011-12, the sustenance of such credits as income of the appellant should be reckoned as bad in law. 11. The NFAC, Delhi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. Printed from counselvise.com :-3-: ITA. No:2437/Chny/2025 12. The appellant craves leave to file additional grounds/arguments at the time of hearing.” 3. Brief facts of the case are that the assessee is an Individual, member of HUF under the name “B.Ramanathan HUF” and has not filed original return of income. Based on information regarding cash transactions in saving bank account for the year under consideration, a notice u/s.148 of the Act was issued to the assessee. In response to the said notice, the assessee filed his return of income on 05.11.2018 declaring a total income of Rs.1,20,000/-. On the basis of enquiry made during the assessment proceedings, the AO completed the assessment vide order dated 02.12.2019 u/s.144 r.w.s.147 of the Act by assessing the total income of the assessee at Rs.22,87,696/- which included additions of Rs.21,67,696/- estimated @ 8% of total income of Rs.2,70,96,195/-. 4. Being aggrieved by the assessment order dated 02.12.2019 passed u/s.144 r.w.s 147 of the Act, the assessee carried the matter in appeal before the ld.CIT(A), assailing the estimation of income and the consequent addition made by applying a rate of 8% on Rs.2,70,96,195/-, resulting in an addition of Rs.21,67,696/-. Accordingly, the assessee challenged, in toto, the assessed income of Rs.22,87,696/- before the ld. CIT(A). On perusal of the documents and details furnished by the assessee, the ld. CIT(A) confirmed the additions made by the AO by holding as under: - “8.7. The above judicial pronouncements are squarely applicable in the instant case as the appellant has failed to satisfactorily discharge his onus to establish that the said transactions pertain solely to HUF status and were correctly reported in tax filings. Thus due to lack of adequate proof in support of his claim, the addition was made by the AO. 8.8. In view of the above discussion, the Jurisdictional Assessing Officer was correctly estimating the income of Rs.21,67,696/- @ 8% of total transaction of Rs.2,70,96,195/- in the hands of appellant. Therefore, the action of the Jurisdictional Assessing Officer is found to be justifiable and does not warrant any interference at this stage. The additions made by the Assessing Officer is confirmed. 9. In the result, the appellant’s appeal is dismissed.” Printed from counselvise.com :-4-: ITA. No:2437/Chny/2025 5. Aggrieved by the impugned order of the ld.CIT(A), the assess preferred an appeal before us. 6. Before us, when the appeal was taken up for hearing, the ld.AR of the assessee assailed that the ld.CIT(A) has erred in the confirming the estimation of income and the consequent addition made by applying a rate of 8% on Rs.2,70,96,195/-, resulting in an addition of Rs.21,67,696/- and in toto the additions at Rs.22,87,696/- despite the assessee having explained the facts of the case. During the course of hearing, the ld.AR filed a paper book for A.Y.2013-14 with 173 pages which contains the return of income, computation of total income of HUF. The Tax audit report and the financial statements of HUF were also placed on record of the impugned year. The ld.AR further contended that similar additions were made by the AO in the hands of the individual assessee for A.Y.2017-18 which were consequently deleted by the ld.CIT(A) vide order dated 18.12.2024, by accepting the similar explanations of the assessee, which was also placed at pages 149 of the paper book. 7. Further, ld. AR submitted that similar additions were also made in A.Y.2011-12, and the Tribunal, vide its order in ITA No.2279/Chny/2024 dated 03.02.2025, restored the matter to the file of the AO for the limited purpose of verification of facts, with a direction that if the bank account in question had already been accounted for in the hands of the HUF, no separate addition should be made in the hands of the individual assessee and accordingly prayed that the additions made in the impugned year be deleted by following the aforesaid decision. 8. Per contra, the ld. DR on the other hand, strongly relied on the impugned order of the ld.CIT(A) and that of the AO and prayed for confirming the addition by dismissing the appeal of the assessee. Printed from counselvise.com :-5-: ITA. No:2437/Chny/2025 9. We have heard the rival contentions, perused material available on record and gone through the orders of lower authorities. The fact with regard to the impugned dispute are that the assessee has deposited a sum of Rs.5,58,995/- into the bank account of the assessee bearing account number 002501503209 and Rs.2,18,37,200/- into another bank account bearing Account No.002505000252 held with ICICI bank, Gobichettipalayam branch and thus the total transactions appearing in above mentioned bank accounts amounts to Rs.2,70,96,195/-. Admittedly, the assessee has filed a return in response to notice u/s.148 of the Act on 05.11.2018 by admitting income of Rs.1,20,000/-. A notice u/s.143(2) was issued on 14.05.2019 and the same was served on the assessee. The assessee submitted that he was engaged in the business of petroleum retail trading and textile business in the status of HUF and that the transactions reflected in the bank accounts held in his individual name pertained to the said businesses carried on by the HUF during the impugned year. We find from the paper book placed on record, which contains the return of income, computation of total income, tax audit report, and financial statements of the HUF, that the said contention of the assessee is supported by documentary evidence. We also observe that similar additions were deleted by the ld CIT(A) for A.Y.2017-18 vide order dated 18.12.2024. 10. We also find that the Tribunal, vide its order in ITA No.2279/Chny/2024 dated 03.02.2025, has restored the matter to the file of the AO for the limited purpose of verification of facts, with a direction that if the bank account in question had already been accounted for in the hands of the HUF, no separate addition should be made in the hands of the individual assessee. 11. In the light of the above facts, and after considering the submissions of the ld.AR, the documents filed during the course of hearing, and the decisions relied upon by the assessee in its own case, we are of the considered view and in the interest of justice, the matter should be restored to the file of the AO for the limited purpose of verifying the bank accounts. Accordingly, the AO is Printed from counselvise.com :-6-: ITA. No:2437/Chny/2025 directed to examine whether the cash deposits appearing in the bank accounts have already been accounted for in the hands of the HUF, and if so, no separate addition shall be made in the hands of the individual assessee. Thus, we set aside the order passed by the ld. CIT(A) and restore the issue to the file of the AO, with a direction to verify the bank accounts for the limited purpose as stated supra. We also direct the assessee to appear before the AO and furnish the relevant details as and when called for. Thus, the ground raised by the assessee is allowed for statistical purposes. No other ground has been urged in the appeal. 12. In the result, the appeal filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 07th January, 2026 at Chennai. Sd/- Sd/- (मनु क ुमार ग\u0019र) (MANU KUMAR GIRI) \u000eया\u001aयक सद य/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद य/Accountant Member चे\u000eनई/Chennai, /दनांक/Dated, the 07th January, 2026 SP आदेश क* (\u001aत1ल2प अ3े2षत/Copy to: 1. अपीलाथ'/Appellant 2. ()यथ'/Respondent 3.आयकर आयु4त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 2वभागीय (\u001aत\u001aन ध/DR 5. गाड% फाईल/GF Printed from counselvise.com "