V SENGUTUVAN, CHENNAI V. ACIT CENTRAL CIRCLE 1 (1), CHENNAI

ITA 593/CHNY/2022

AI Insights

The case involves an appeal by Shri V. Sengutuvan against the order of the Commissioner of Income Tax (Appeals)-18, Chennai, which confirmed the addition of unexplained cash credit amounting to Rs.2,14,14,396 under section 68 of the Income Tax Act, 1961. The AO had noted a significant increase in cash deposits in the assessee's bank accounts during the demonetization period compared to the corresponding period in the previous financial year, raising suspicions of unexplained cash. The assessee claimed these deposits were from cash balances in their books, but failed to provide satisfactory details to substantiate this claim. The CIT(A) upheld the AO's decision, leading to the appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132695 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 13-07-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ᮰ीमहावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 593/CHNY/2022 िनधाᭅरण वषᭅ /Assessment Year:2017-18 Shri V. Sengutuvan, No.25, Sir C.V. Raman Road, Alwarpet, Chennai – 600 018. PAN: BBWPS 3097M v. The ACIT, Central Circle 1(1), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Ms. S. Vidya, CA ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri AR.V. Sreenivasan, Addl.CIT सुनवाई कᳱ तारीख/Date of Hearing : 19.04.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 19.04.2023 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-18, Chennai in ITA No.149/19-20/CIT(A)-18 dated 07.06.2022. The assessment was framed by the ACIT, Central Circle 1(1), Chennai for the assessment year 2017-18 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 07.06.2022. 2 I.T.A. No.593/Chny/2022 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the order of AO, confirming the addition of unexplained cash credit amounting to Rs.2,14,14,396/- u/s.68 of the Act. For this, assessee has raised various grounds which need not be reproduced. 3. Brief facts are that the AO during the course of assessment proceedings, noticed from information available with the Department that the assessee has deposited large value of cash in bank accounts during demonetization period amounting to Rs.3,92,80,826/- in assessee’s three savings bank account maintained with Indian Bank and one savings bank account with Karur Vysya Bank Ltd. On verification of cash deposits made by assessee during demonetization period in the bank account of M/s. Kamalam Medical Corporation noted that the deposits during 09.11.2016 to 31.12.2016 was Rs.2,52,86,046/- compared with cash deposit during corresponding period in financial year 2015- 16 i.e., 09.11.2015 to 31.12.2015 at Rs.63 lakhs, which was abnormal growth of 301% in the amount of cash deposit during demonetization period. The assessee explained that the cash 3 I.T.A. No.593/Chny/2022 deposits were made out of cash balance available in the books of accounts of Rs.2,51,64,274/-. The AO noted that there was an abnormal growth of 77% in the cash deposits during demonetization period and assessee has not furnished any information like source of deposit or the amount collected from whom and deposited in cash. Since the required information was not produced, the AO treated the sum of Rs.2,14,14,396/- as unexplained cash out of total cash of Rs.3,92,80,826/-. The AO treated the balance cash of Rs.94,59,210/- as explained being cash deposits out of available cash. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) also confirmed the action of the AO by observing in para 7.4 as under:- 7.4 I have considered the submissions of the AR and the findings of the AO. The AO has considered the deposits made in the two bank accounts only, though he has found that the deposits were made in the other two bank accounts with Indian Bank. The deposits allowed by the AO amounted Rs.84,07,220 (Rs.26,35,005 + 57,72,2 15). Apart from the above, the AO has allowed Rs.94,59,210 as probable cash available for the appellant to deposit during demonetization period. The appellant was not able to adduce any reason as to why such huge cash balance was kept on hand without depositing the same into the Bank. The appellant had not shown that the cash was kept for any emergency expenses. In fact, expenses more than Rs.20000 cannot be made in 4 I.T.A. No.593/Chny/2022 cash as it would be violative of the provisions of section 40A(3). The fact that the appellant used to make withdrawals from the bank frequently despite of his claim that he had huge cash balances in his books would only support the inference that the appellant had not maintained such huge cash balance as claimed by it. In view of the above distinguishing facts, the case laws relied on by the assessee are misplaced. I feel that the allowance given by the AO was more reasonable and also on sound grounds. I therefore confirm the addition of Rs.2,14,14,396/- made by the AO and dismiss the grounds raised. 5. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the assessee before AO could not file the required information such as details of persons from whom such cash was collected. Now before us, assessee filed a paper-book consisting of cash transactions containing 79 pages. The assessee has filed complete details of name and address to whom cash sales was made on account of sale of medicines which was never examined because these details were not available before AO or CIT(A). Since these details are vital and there is no adjudication by CIT(A) on the actual facts, we are inclined to remit the matter back to the file of the AO. The assessee will produce these details before AO, who will examine the cash sales vis-à-vis the notification issued by RBI accepting cash and falling in exception category. In case assessee’s case 5 I.T.A. No.593/Chny/2022 falls in exception category, the AO will consider the cash sales and after examination decide the issue afresh. The appeal of the assessee is allowed for statistical purposes. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 19 th April, 2023 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 19 th April, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.