NOOTHANAM, CHIDAMBARAM V. ACIT, CIRCLE-1, CUDDALORE

ITA 596/CHNY/2023

AI Insights

The case involves an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals), which was related to the assessment year 2017-18. The primary issue was the disallowance of a difference amount of ₹40,10,823, which was the difference between the closing cash balance as of 08.11.2016 and the cash deposited in demonetized notes during the demonetization period. The Assessing Officer had disallowed this amount, considering it unexplained cash credit under section 68 of the Income Tax Act, 1961. The CIT(A) dismissed the appeal for want of prosecution without adjudicating on the merits. The Tribunal, after hearing the submissions, decided to remit the matter back to the CIT(A) for a detailed examination and fair hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135305 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 17-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 68; 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.596/Chny/2023 िनधाŊरण वषŊ/Assessment Year: 2017-18 Noothanam, 169, West Car Street, Chidambaram 608 001. [PAN:AAIFN2778E] Vs. The Assistant Commissioner of Income Tax, Circle 1, Cuddalore. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Ms. Lekha, C.A. ŮȑथŎ की ओर से/Respondent by : Shri AR V Sreenivasan, Addl. CIT सुनवाई की तारीख/ Date of hearing : 18.07.2023 घोषणा की तारीख /Date of Pronouncement : 30.08.2023 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 18.03.2023 relevant to the assessment year 2017-18. 2. Brief facts of the case are that the assessee filed the return of income for the assessment year 2017-18 on 31.03.2017 admitting total income of ₹.49,89,910/-. The case was selected for scrutiny through I.T.A. No.596/Chny/23 2 CASS and a notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] dated 22.09.2018 has been served on the assessee. Further notice under section 142(1) of the Act calling or details have been served on the assessee by e-mail. After examining the details furnished by the assessee, the Assessing Officer has noted that the assessee had a closing cash balance of ₹.79,79,177/- as on 08.11.2016. However, during the demonetization period, the assessee had deposited ₹.1,19,90,000/- in demonetized currency in its Indian Bank account. After considering the submissions of the assessee and details of cash deposit during demonetization period, the Assessing Officer disallowed the difference amount of ₹.40,10,823/- between closing balance as on 08.11.2016 and cash deposited in old demonetized notes and completed the assessment under section 143(3) of the Act dated 25.12.2019. On appeal, the ld. CIT(A) dismissed the appeal as the assessee could not furnish any written submissions in response to the hearing notices issued by the ld. CIT(A). 3. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee had already offered sale realization and such income was accepted by the Assessing Officer to be the income of the assessee, addition of the same I.T.A. No.596/Chny/23 3 amount once again under section 68 of the Act would tantamount to double taxation of the same income. It was further submission that when the cash deposited was reflected as cash sales in books of accounts and if the Assessing Officer has not rejected the books of account, he cannot make any separate addition for cash deposit. When books of accounts of the assessee were accepted by revenue as genuine and cash balance shown therein was sufficient to cover high denomination notes held by the assessee, the Assessing Officer cannot question the genuineness of such cash sales. Similar grounds were also raised before the ld. CIT(A) and without adjudicating the ground on merits, the ld. CIT(A) dismissed the appeal for want of prosecution. It was further submission that due to the reasons beyond its control, the assessee could not respond to the hearing notice and prayed for remitting the matter back to the ld. CIT(A) for adjudicating the issue on merits by affording an opportunity of being heard to the assessee. 4. On the other hand, the ld. DR fairly conceded that the issue may be remitted back to the ld. CIT(A) for adjudicating the issue on merits. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including written submissions of the assessee. In this case, the assessee had a closing I.T.A. No.596/Chny/23 4 cash balance of ₹.79,79,177/- as on 08.11.2016. However, during the demonetization period, the assessee had deposited ₹.1,19,90,000/- in demonetized currency in its Indian Bank account. Accordingly, the Assessing Officer disallowed the difference amount of ₹.40,10,823/- and brought to tax. On appeal, the ld. CIT(A) dismissed the appeal for want of prosecution without adjudicating the issue on merits. Since the assessee firm was a Departmental Stores, the sales receipts are shown in the books of accounts as income at the time of sale only. The contention of the assessee was that the assessee had already offered sales realization and such income was accepted by the Assessing Officer to be the income of the assessee, again the Assessing Officer cannot make addition of the same amount under section 68 of the Act. Similar grounds has also been raised before the ld. CIT(A) during the course of appellate proceedings. However, the ld. CIT(A) has passed exparte order since there was no response from the assessee against the hearing notices. 6. During the course of present proceedings, the ld. Counsel for the assessee has submitted that due to the reasons beyond its control, the assessee could not respond to the hearing notice and prayed for remitting the matter back to the ld. CIT(A) for adjudicating the issue on merits by affording an opportunity of being heard to the assessee. In view of the I.T.A. No.596/Chny/23 5 above facts and circumstances and in order to meet the ends of natural justice, we are of the considered opinion that the ld. CIT(A) shall adjudicate the issue on merits by affording one more opportunity to furnish relevant materials for deciding the issue on merits. Accordingly, we set aside the exparte order and remit the matter back to the file of the ld. CIT(A) for adjudicating the issue on merits by affording an opportunity of being heard to the assessee. The assessee is also directed to furnish complete details before the ld. CIT(A) for consideration. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 30 th August, 2023 at Chennai. Sd/- Sd/- (MANJUNATHA, G.) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 30.08.2023 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.