Paulnathan Sekar, Chennai V. ITO, NON CORP. Ward 22(4) TBM, CHENNAI

ITA 560/CHNY/2023

AI Insights

The case involves an appeal by Paulnathan Sekar against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which pertained to the assessment year 2017-18. The primary issue was the addition of ₹43,98,000 as unexplained investment under section 69 of the Income Tax Act, 1961, due to cash deposits made during the demonetization period. The Assessing Officer had questioned the source of these deposits, leading to a substantial addition to the assessee's income. The CIT(A) partly allowed the appeal but confirmed the addition for the balance amount due to lack of sufficient evidence from the assessee. The Tribunal, considering the circumstances that prevented the assessee from furnishing necessary details earlier, decided to give one more opportunity to the assessee to present his case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135303 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 25-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 69; 143(3); 142(1); 143(2)

Judgement Text

आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी वी दुगाŊ राव Ɋाियक सद˟ एवं ŵी जी. मंजुनाथा, लेखा सद˟ के समƗ Before Shri V. Durga Rao, Judicial Member & Shri Manjunatha, G. Accountant Member आयकर अपील सं./I.T.A. No.560/Chny/2023 िनधाŊरण वषŊ/Assessment Year: 2017-18 Paulnathan Sekar, No. 116, Radha Nagar Main Road, Chrompet, Chennai 600 044. [PAN:ALRPS0457K] Vs. The Income Tax Officer, Non Corporate Ward 22(4), Tambaram, Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Ms. T.V. Muthu Abirami, Advocate ŮȑथŎ की ओर से/Respondent by : Shri AR V Sreenivasan, Addl. CIT सुनवाई की तारीख/ Date of hearing : 26.06.2023 घोषणा की तारीख /Date of Pronouncement : 26.06.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi dated 07.02.2023 for the assessment year 2017-18. 2. Brief facts of the case are that the assessee filed his return of income for the assessment year 2017-18 on 27.10.2017 admitting an income of ₹.9,07,760/-. The case of the assessee was selected for scrutiny under CASS for the reason that cash was deposited during I.T.A. No. 560/Chny/23 2 demonetization period. Accordingly, the Assessing Officer issued notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] dated 10.08.2018 as well as notice under section 142(1) of the Act asking the assessee to produce the cash book, bank statements, source for the cash deposits, etc. along with purchase register, sales register and supporting documents. In the assessment order, the Assessing Officer has observed as under: On verification, the balance sheet for the year ended 31.3.16 and 31.3.17 reveals that the assessee did not have substantial cash balance in the balance sheet. In the absence of cash book and other relevant account books, it cannot be concluded that the assessee is doing the business only in cash. On verification of bank account of M/s. Selvam Agencies with Union Bank of India it is seen that the first cash deposit starts on 11.11,16 i.e., during the period of demonetisation, If the assessee's contention that the cash deposits are represented by way of sales, is true then there should have been periodical and sequential cash deposits from the beginning of the financial year. In the case of IOB account for Selvam Mahal also, but for a deposit of Rs.76000/- prior to 12.11.16, all the deposits have been made during the demonetisation period. It is observed from the bank account of Selvam Agencies with Union Bank that there has been not even a single deposit by cash prior to 9.11.16. A prudent business man who is selling his goods by way of cash definitely would have deposited the proceeds on daily basis into bank account by making contra entries in his cash book maintained by him. Since the assessee has not made a single cash deposit before the demonetisation period, it is construed that the assessee made the cash deposit out of the unexplained cash available with him before the demonetisation period. Since the assessee is not able to substantiate these deposits with his trading in hardware business and receipts from marriage hall, the amount deposited by way of cash is treated as unexplained investment u/s 69 of the Income tax Act and accordingly assessed to income tax in his hands. I.T.A. No. 560/Chny/23 3 Amount Selvam Mahal – IOB 13,98,000 Selvam Agency 26,00,000 City Union Bank 4,00,000 43,98,000 3. Accordingly, the Assessing Officer has completed the assessment order under section 143(3) of the Act dated 06.12.2019 assessing total income of the assessee at ₹.53,05,760/- after making addition of ₹.43,98,000/- under section 69 of the Act. On appeal, in the absence of any response from the assessee, the ld. CIT(A) partly allowed the appeal of the assessee. 4. On being aggrieved, the assessee is in appeal before the Tribunal against the exparte order of the ld. CIT(A). The ld. Counsel for the assessee has submitted that due to the circumstances beyond his control, the assessee could not furnish details before the ld. CIT(A) and prayed for one more opportunity of being heard to the assessee. 5. On the other hand, the ld. DR supported the order passed by the ld. CIT(A). 6. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the addition made on account of unexplained cash deposited during I.T.A. No. 560/Chny/23 4 demonetization, the assessee filed an appeal before the ld. CIT(A). Despite notice of hearing issued, since the assessee could not file any documentary evidence in support of source for the cash deposited during demonetization period, the ld. CIT(A) allowed to the extent the cash deposited earlier to the start of demonetization and the addition towards balance amount was confirmed. In the appellate order, we find that the ld. CIT(A) has given three opportunities to the assessee for furnishing the information towards source for the cash deposited during demonetization period. Since the assessee could not furnish the written submissions due to the circumstances beyond his control, the ld. Counsel prayed for affording one more opportunity of being heard to the assessee. Considering the plea of the assessee and to meet the ends of natural justice, we are of the considered opinion that the assessee shall be given one more opportunity of being heard to furnish the evidence towards source for the cash deposit. Thus, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh in accordance with law by affording an opportunity of being heard to the assessee for furnishing evidence for the source of cash deposited during demonetization period. 7. In the result, the appeal filed by the assessee is allowed for I.T.A. No. 560/Chny/23 5 statistical purposes. Order pronounced in the open Court on 26 th June, 2023 at Chennai. Sd/- Sd/- (MANJUNATHA, G.) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 26.06.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3.आयकर आयुƅ/CIT, 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF.