INCOME TAX OFFICER, THIRUVANANTHAPURAM V. MAHESH BALAKRISHNAN, THIRUVANANTHAPURAM

ITA 706/COCH/2024

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the Ld.CIT(A) which had favored the assessee, Shri Mahesh Balakrishnan. The dispute centered on unexplained cash deposits in the assessee's bank accounts for the assessment year 2017-18. Initially, the AO treated these deposits as unexplained money under section 69A of the Income Tax Act due to the assessee's non-compliance with notices. However, upon appeal, the Ld.CIT(A) accepted the remand report from the AO which indicated that the deposits were accounted for in the assessee's books. The Tribunal upheld the Ld.CIT(A)'s decision, dismissing the revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31175 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL; SNR
• Section: 148; 142(1); 143(2); 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH : COCHIN BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 706/Coch/2024 Assessment Year : 2017-18 The Income Tax Officer, Ward – 1(1), Thiruvananthapuram. Vs. Shri Mahesh Balakrishnan, No. 1, Prop. Balakrishna Enterprises, TB Junction, Neyyatinkara, Thiruvananthapuram – 695 121. Kerala. PAN: ADAPB0250A APPELLANT RESPONDENT Assessee by : None Revenue by : Smt. Leena Lal, Snr. AR Date of Hearing : 03-02-2025 Date of Pronouncement : 11-03-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the revenue challenging the order of the NFAC, Delhi dated 19/06/2024 in respect of the A.Y. 2017-18. 2. The brief facts of the case are that the assessee had not filed his return of income and based on the information available with the department about the cash deposits made into his bank account, the AO issued a notice u/s. 148 of the Act. The assessee had complied with the Page 2 of 4 ITA No. 706/Coch/2024 notice u/s. 148 and filed his return of income on 16/04/2021. Thereafter, notice u/s. 143(2) were issued seeking the various details and the documents in support of the cash deposits made into the bank account. The assessee had not responded to the said notice and thereafter a notice u/s. 142(1) was issued, for which also the assessee had not responded. Finally, the AO sent the notice through the verification unit but the assessee had not responded to the notice served through the verification unit. Thereafter a show cause notice was issued on 16/03/2022 and draft assessment order was also sent to the assessee but the assessee had not availed the said opportunities. Therefore the AO had treated the cash deposits as unexplained money u/s. 69A of the Act. The AO had also added the difference in the interest income received while computing the taxable income of the assessee. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) based on the remand report given by the AO had accepted the case of the assessee and allowed the appeal filed by the assessee. As against the said order, the revenue is in appeal before this Tribunal. 3. At the time of hearing, the Ld.DR relied on the grounds raised in form 36 and prayed to allow the appeal filed by the assessee. The Ld.AR relied on the remand report of the AO and submitted that the order of the Ld.CIT(A) is in order and requires no interference and prayed to dismiss the appeal. 4. We have heard the arguments of both sides and perused the materials available on record. 5. In this case the Ld.CIT(A) had sought for a remand report from the AO based on the written submissions and other documents filed before him for which the AO had furnished the remand report which has been extracted by the Ld.CIT(A) in page 4 of the order. In the last but one paragraph of the remand report, the AO had submitted as follows: “The assessee also stated that the assessee had made cash deposit of Rs.1,81,51,612/- in the bank Account Page 3 of 4 ITA No. 706/Coch/2024 No.40323070000068 (Current Account) with Syndicate Bank and Rs.69,80,041/- in the account No.514044039239 with Kotak Mahindra Snak Ltd. for the period from 01.04.2016 to 31.03.2017. All these transactions were accounted in the books of Account of the assessee. Assessee in his appeal petition stated the e-mail id to which the, communications were sent was that of his previous Auditor and as such he was not aware of the notices. It is also contented that had an opportunity of being heard been given to the assesse, the assesse would have explained with ease the Ground of Appeal.” 6. As seen from the said remand report, the AO had accepted that all these transactions were accounted for in the books of accounts of the assessee which includes the cash deposits made in the Syndicate Bank as well as in the Kotak Mahindra Bank Ltd. When admittedly, the AO had furnished a remand report,after going through the books of accounts as well as the documents filed by the assessee, to the effect that the entire cash deposits were accounted for in the books of accounts, the order of the Ld.CIT(A) seems to be a reasonable one. The Ld.CIT(A) had allowed the appeal after observing that “6.3 Further, noted that the appellant has shown in the audit report total sales/gross receipts of business of Rs.5,86,62,078/- and also noted that the appellant has deposited cash of Rs.1,81,51,612/- in bank account no. 40323070000068 at Syndicate bank current account and Rs.69,80,041/- in account no. 514044039239 in Kodak Mahindra Bank Limited for the period 01.04.2016 to 31.03.2017. These Bank accounts have been declared by the appellant in its return of income as well as books of account for the year under consideration. All these transactions were accounted in the books of account of the appellant and the same has been verified by the AO and accepted vide remand report dated 19.02.2024. Therefore, the AO is directed to delete the addition of Rs.2,51,39,318/-. Thus, the ground no. 1 & 3 are allowed.” 7. In such circumstances, the ground raised by the revenue that the assessee had not declared the bank account maintained in the Syndicate Bank and therefore the said deposits could not be treated as business receipts cannot be accepted. If there is no remand report available with the Page 4 of 4 ITA No. 706/Coch/2024 Ld.CIT(A), the order of the Ld.CIT(A) may not be correct. But in this case, there is a remand report in which the AO had accepted all the transactions were accounted for and therefore the finding given by the Ld.CIT(A) for allowing the appeal filed by the assessee is a correct finding. In order to disagree with the view taken by the ld CIT, the revenue had not produced any evidences / documents to show that the finding given by the Ld.CIT(A) is incorrect. In such circumstances, we uphold the order passed by the Ld.CIT(A). 8. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 11th March, 2025. Sd/- Sd/- (INTURI RAMA RAO) (SOUNDARARAJAN K.) Accountant Member Judicial Member Cochin, Dated, the 11th March, 2025. /MS / Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Cochin 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Cochin "