INDIRA DEVI,CHENNAI V. ITO, NCW-4(1), CHENNAI

ITA 1314/CHNY/2025

AI Insights

The case revolves around an appeal by Indira Devi against the order of the CIT(A) which confirmed the addition of \\u20b9.5,81,810.40 as unexplained cash in her books for the assessment year 2017-18. The Assessing Officer had initially noted excess cash and deposits of demonetized currency in the assessee's accounts, leading to additions to her income. The CIT(A) deleted one of the additions but confirmed the excess cash addition. The Tribunal, after examining the cash book and the transactions recorded therein, found that the CIT(A)'s acceptance of the cash balance as of 08.11.2016 implied acceptance of all preceding transactions, thus leading to the deletion of the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716739 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 07-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V.SUPRAJA
• Assessee Lawyers: HITESH
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी अिमताभ शुƑा, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Amitabh Shukla, Accountant Member आयकर अपील सं./I.T.A. No.1314/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2017-18 Indira Devi, No. 29/8, New No. 38-1-2, Kankar Street, Tondiarpet, Chennai 600 081. [PAN:ABHPI3067M] Vs. The Income Tax Officer, Non Corporate Ward 4(1), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri Hitesh, Advocate for Shri D. Anand, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. V. Supraja, Addl.CIT सुनवाई की तारीख/ Date of hearing : 16.07.2025 घोषणा की तारीख /Date of Pronouncement : 18.08.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 26.03.2025 passed by the Addl./JCIT(A)-7, Mumbai for the assessment year 2017-18. 2. The assessee raised 7 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the addition made by the Assessing Officer to Printed from counselvise.com I.T.A. No.1314/Chny/25 2 an extent of ₹.5,81,810.40 in the given facts and circumstances of the case. 3. Brief facts emanating from record are that the assessee filed return of income for the AY 2017-18 on 27.07.2017 admitting total income of ₹.3,25,690/-. The case was selected for scrutiny under CASS. Against statutory notices, the assessee furnished various details as called for. From return of income, the Assessing Officer noted that the assessee derives income from house property and other sources as the assessee engaged in small scale money lending activity, handicrafts and selling of homemade products etc. From the cash book, the Assessing Officer noted excess cash to an extent of ₹.5,81,810.40. Further, the Assessing Officer also noted that the assessee made cash deposits in the demonetized currency at ₹.3,01,203/- on various dates. In the absence of any explanation for excess cash to an extent of ₹.5,81,810.40 and the deposit of demonetized notes to an extent of ₹.3,01,203/-, the Assessing Officer completed the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] dated 11.12.2019 assessing total income of the assessee at ₹.8,83,013.40, inter alia, made addition of ₹.5,81,810.40 being excess cash as per cash book and ₹.3,01,203/- Printed from counselvise.com I.T.A. No.1314/Chny/25 3 being cash deposited in demonetized currency as unexplained income of the assessee and added to the total income of the assessee. On appeal, the ld. CIT(A) deleted the addition of ₹.3,01,203/- and confirmed the addition made by the Assessing Officer to an extent of ₹.5,81,810.40 and partly allowed the appeal of the assessee. On being aggrieved, the assessee is in appeal before the Tribunal. 4. The ld. AR Shri Hitesh, C.A. submits that the assessee has deposited the said amount in her bank account which is reflected in her cash book, and the same has been accounted for while filing return of income for the AY 2017-18 and the addition made by the Assessing Officer is, in factum, a double addition, which is against the principles and postulates of taxation. He further submits that the assessee is engaged in a wide variety of activities such as selling of handicrafts, homemade products, and small-scale money lending activities. He drew our attention to para 3 of page 13 of the impugned order and submits that the addition of ₹.3,01,203/- made by the Assessing Officer has been deleted by the ld. CIT(A) on the basis that the cash balance as on the midnight of 08.11.2016 was ₹.4,53,149.60 as per the cash books of the assessee, thereby, the ld. CIT(A) accepted the contents and figures specified in assessee’s cash book. The ld. AR further Printed from counselvise.com I.T.A. No.1314/Chny/25 4 submits that as the closing balance of cash in hand as on 08.11.2016 has been computed by the assessee by taking into consideration the transactions entered into prior to 08.11.2016, which is recorded in the cash book furnished before the Ld. CIT(A), the transactions are deemed to have been accepted by the Department, and hence addition cannot be made in the hands of the assessee on the basis of any alleged discrepancies in the cash book. When the closing balance of cash in hand, as on 08.11.2016, has been accepted by the Department, the transactions preceding the same cannot be disputed by the Department, without any basis. He further argued that the Department has partially accepted the records of the cash book and has artificially distinguished between the deposits made during pre- demonetization period and post-demonetization period. The addition made by the Assessing Officer is liable to be deleted, as differential treatment of same category of transactions based merely on selective scrutiny of the transactions entered into the cash book is not a valid ground for addition. 5. The ld. DR Ms. V. Supraja, Addl. CIT supported the order of the ld. CIT(A). Printed from counselvise.com I.T.A. No.1314/Chny/25 5 6. We have heard both the parties and perused the material on record. During the course of assessment proceedings, the Assessing Officer examined the cash book furnished by the assessee on 19.11.2019 and found excess cash deposits upto 23.09.2016 to an extent of ₹.5,81,810.40, which is extracted at page 2 of the assessment order. It is noted that the Assessing Officer in para 4 of the assessment order discussed the opening cash balance as on 01.09.2016 and made addition to an extent of ₹.5,81,810/- on account of excess cash from 09.09.2016. Before us, the ld. AR argued that there was no excess cash deposit made by the assessee and satisfactorily explained the source of deposits before the ld. CIT(A). On perusal of para 3 of page 13 of the impugned order, we note that after verifying assessee’s cash booking and noting that the cash balance as on the midnight of 08.11.2016 is ₹.4,53,149.60, which has not been disputed by the Assessing Officer, the ld. CIT(A) deleted the addition of ₹.3,01,203/-. When the closing balance as on 08.11.2016 is accepted by the ld. CIT(A), it is clear that the transactions entered into prior to 08.11.2016 have been accepted by the Department. As the assessee has computed the closing balance of cash in hand as on 08.11.2016 by taking into consideration the transactions entered into prior to Printed from counselvise.com I.T.A. No.1314/Chny/25 6 08.11.2016, which is recorded in the cash book and furnished before the ld. CIT(A) and the ld. CIT(A) has accepted the cash book, the preceding transactions cannot be disputed by the Department without any basis. Under the above facts and circumstances of the case, the addition of ₹.5,81,810.40 made by the Assessing Officer and confirmed by the ld. CIT(A) stands deleted. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on 18th August, 2025 at Chennai. Sd/- Sd/- (AMITABH SHUKLA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 18.08.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. Printed from counselvise.com "