BALASUNDARAM THIRUMAVALAVAN,CUDDALORE V. ITO, WARD-5, CUDDALORE

ITA 552/CHNY/2025

AI Insights

The case involves Balasundaram Thirumavalavan, an individual employed as a Helper at Annamalai University, who appealed against the orders of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi. The appeals were related to the assessment year 2012-13, where the assessee's substantial cash deposits were treated as unexplained money under section 69A of the Income Tax Act. The Tribunal found that the assessee had collected fees from students and deposited them, which constituted the source of the cash deposits. The Tribunal's decision to estimate the assessee's income at 8% of the cash deposits was based on the need to reduce further litigation and was supported by similar cases in the High Courts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314296 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. Krishi Tyre Retreading and Rubber Industries, CIT vs. Sangrur Vanaspati Mills Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITHA
• Assessee Lawyers: N. ARJUN RAJ
• Keywords: Condonation of delay; Set aside; Reasonable cause; Salary income

Judgement Text

" आयकर अपीलीय अिधकरण, ‘सी’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी मनु क ुमार िगįर, Ɋाियक सद˟ एवं ŵी एस. आर. रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.: 551 & 552/Chny/2025 िनधाŊरण वषŊ / Assessment Year: 2012-13 Balasundaram Thirumavalavan, No.128, Senniantham South, Sethiathoppu, Chidambaram TK, Cuddalore – 608 702. vs. ITO, Ward 5, Coimbatore. [PAN: ALJPT-1706-E] (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से/Appellant by : Mr. N. Arjun Raj, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 24.04.2025 घोषणा की तारीख/Date of Pronouncement : 05.05.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: This appeals by the assessee are filed against the separate orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the same assessment year 2012-13, vide orders dated 25.07.2024 and 29.08.2024 respectively. 2. At the outset, we find that there is a delay of 148 days and 117 days respectively in appeals filed by the assessee, for which petition for condonation of delay along with reasons for delay has been filed. After considering the petition filed by the assessee and also hearing both the parties, we find that the assessee was aware of the impugned orders only :-2-: ITA Nos.551 & 552/Chny/2025 after receiving recovery notices of demand by approaching physically. Further, the orders were sent to the Email ID of tax practioner’s office, which was not brought to the notice of the assessee and hence there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit appeal filed by the assessee for adjudication. 3. The assessee is an individual filed had not his return of income u/s.139 (1) of the Act. As per the information available with the AO the assessee had deposited substantial cash in his bank account at Indian bank to the tune of Rs.15,48,988/-. Case of the assessee was reopened and the statutory notices were issued. In response the assessee filed his return of income declaring a Total income of Rs.3,08,830/- on 01.10.2019. Further, the assessee submitted that he was working as a Helper in Annamalai University and also had collected exam and other fees from students of different cities as it was not convenient for them to come and deposit the fees. The assessee also submitted a letter from Professor & PCP co-ordinator Chemistry Wing, DDE, wherein it is stated that the assessee had collected fees from students and remitted to the University account. The assessee stated that the cash deposit is the amount received from students and remitted the to the University account. However, the AO was not convinced and made an entire cash deposit of Rs.15,48,988/- as unexplained money u/s.69A of the Act and brought to tax by passing an order u/s.143(3) r.w.s. 147 of the Act dated 21.12.2019. Aggrieved by the order of the AO the assessee preferred an appeal before the ld.CIT(A). :-3-: ITA Nos.551 & 552/Chny/2025 4. The ld.CIT(A) has dismissed both the appeals of the assessee by confirming the order of the AO for the reason that the assessee has failed to respond for any of the notices issued by the ld.CIT(A) as noted in the order dated 25.07.2024 and 29.08.2024 respectively. 5. The ld.AR for the assessee submitted that the assessee is an individual who was working as a Helper in Annamalai University. The ld.AR stated that the assessee was co ordinating with the students of taken up for distance education with the University and collected the applicable tuition & other course fees along with little margin and remitted the same within due dates on behalf of students. Further, the ld.AR stated that the assessee had also filed a letter obtained from ‘Professor & PCP co-ordinator Chemistry Wing’, DDE, wherein it is stated that the assessee had collected fees from students and remitted to the University account. The ld.AR explained that the assessee had made cash deposit from the amount received from students and remitted the to the University account. The margin earned has already been included in the return of income filed along with his salary income. The ld.AR also furnished the salary slips of the assessee to prove that he was employed in the Annamalai University. In light of the above, the ld.AR prayed for deleting the addition made by the AO and the same has been confirmed by the Ld.CIT(A). 6. Per contra, learned DR opposed to the submissions of learned AR and stated that there is no evidence to prove that the fees has been collected by the assessee from the students and hence pleaded for dismissal of the appeal. :-4-: ITA Nos.551 & 552/Chny/2025 7. We have heard rival submissions and perused the record. It is admitted fact that the assessee was working as a Helper in Annamalai University and has drawn salary. In support of the same the assessee has submitted the salary slips issued by the university has been submitted. Further, the assessee also has received a certificate dated 22/11/2019 from ‘Professor & PCP co-ordinator Chemistry Wing’, DDE, and submitted the same before the AO, wherein the it has been certified that the assessee had collected the fees from the students of Distance Education and remitted to the university on behalf of students, since the online payment facility was not available in the university in that period. Since, the assessee has proved the source of the cash deposit as fees collected from the students and remitted the amount to the university, the issue of quantum of net gain retained by the assessee needs to be decided. In the present facts and peculiar circumstances of the case and in the interest of justice and to reduce further litigation, we are making a reasonable estimate of 8% of the cash deposit i.e. Rs.15,48,988/- made as his net income from business and direct the AO to recompute the total income. Accordingly, the we are setting the order of the ld.CIT(A) by allowing the grounds of appeal raised by the assessee. 8. Further, the quantum appeal filed by the assessee against the order of the ld.CIT(A) has been adjudicated by estimating the income of the assessee @ 8% of the cash deposit made, hence the consequential penalty levied u/s.271(1)(c) of the Act has been deleted. Our view has been supported by the decision of the Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tyre :-5-: ITA Nos.551 & 552/Chny/2025 Retreading and Rubber Industries reported as 360 ITR 580 has held that where addition is made purely on estimate basis, no penalty u/s. 271(l)(c) of the Act is leviable and the similar view has been expressed by the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Sangrur Vanaspati Mills Ltd. reported as 303 ITR 53. Therefore, we are inclined to set aside the order of ld.CIT(A) by allowing the grounds of appeal raised by the assessee. 9. In the result, the appeals filed by the assessee in ITA No.551/Chny/2025 is partly allowed and the ITA No.552/Chny/2025 is allowed. Order pronounced in the open court on 05th May, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार िगįर) (MANU KUMAR GIRI) Ɋाियक सद˟/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखासद˟/Accountant Member चेɄई/Chennai, िदनांक/Dated, the 05th May, 2025 SP आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "