RAMACHANDRAN SENTHILKUMAR, ERODE V. ITO , WARD - 1 (2) , ERODE

ITA 989/CHNY/2022

AI Insights

The case involves an appeal by Shri Ramachandran Senthilkumar against the order of the Commissioner of Income Tax (Appeals), which confirmed the AO's decision treating a cash deposit of Rs.9.51 lakhs during the demonetization period as unexplained cash credit under section 68 read with section 155BBE of the Income Tax Act, 1961. The AO had initially issued a show-cause notice to the assessee, who responded with various financial documents and requested additional time to provide further details. However, the AO proceeded to tax the unexplained cash deposit due to insufficient explanation from the assessee regarding the source of the cash. The Tribunal found that the lower authorities had not adequately addressed whether the cash deposits were made before the demonetization announcement or if they were covered by any exceptions in the relevant notifications.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135096 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 21-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; FORM 26AS

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ (एस एम सी) ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ (SMC) BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT आयकर अपील सं./ITA No.: 989/CHNY/2022 िनधाᭅरण वषᭅ/Assessment Year: 2017-18 Shri Ramachandran Senthilkumar, 469/671, Brough Road, Near SCS Hospital, Erode – 638 001. PAN: AVNPS 1118H Vs. The Income Tax Officer, Ward-1(2), Erode (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri S. Sridhar, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri S. Chandrasekaran, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 07.03.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 07.03.2023 आदेश /O R D E R This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.CIT(A), Coimbatore – 3/10816/2019-20 dated 26.10.2022. The assessment was framed by the Income Tax Officer, Ward 1(2), Erode for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 24.12.2019. - 2 - ITA No.989/Chny/2022 2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO despite the fact that no opportunity of being heard or proper opportunity of being heard was allowed to the assessee to explain the cash deposit in assessee’s bank account i.e., demonetization cash in Specified Bank Notes (SBNs) amounting to Rs.9.51 lakhs. 3. I have heard rival contentions and gone through the facts and circumstances of the case. I noted from the assessment order that the AO noted that the assessee is running a proprietor concern in the name of Sri Amman Agency engaged in the business of confectionery. The AO noted that the assessee has deposited cash in three bank accounts maintained with Syndicate Bank and Axis Bank in aggregate amounting to Rs.9,51,000/-. The details of cash deposits were given in assessment order at page 2 which need not be repeated again. The AO issued show-cause notice on 20.11.2019 to the assessee to show-cause as to why assessment should not be completed u/s.144 of the Act. In response, assessee submitted copies of bank statement, Form 26AS, P & L, balance sheet, list of trader debtors and business activity on 14.12.2019 and 18.12.2019. He requested for 5 days time to produce all the necessary details. The AO noted in his assessment order that even after many opportunities, the assessee failed to furnish the details he has asked - 3 - ITA No.989/Chny/2022 for. Hence, he noted that since there was a cash deposit in assessee’s bank account during demonetization period in SBNs amounting to Rs.9,51,000/-, the same was treated as unexplained cash credit and brought to tax u/s.68 r.w.s. 155BBE of the Act. The CIT(A) also not considered the submissions of the assessee but confirmed the action of the AO making addition of cash deposit during demonetization period in SBNs amounting to Rs.9,51,000/-. The explanation of the assessee is that the same is arising out of the business of the assessee i.e., running a confectionary business under the proprietorship of assessee’s name. 4. Now before me, the ld.counsel for the assessee only requested one opportunity to explain linking of the entries of cash deposit of Rs.9,51,000/- in Syndicate Bank and Axis Bank, as mentioned in the assessment order that this cash is deposited prior to the announcement of demonization i.e., 08.11.2016 or out of the proceeds that happened on or prior to 08.11.2016 but in any case if the assessee’s business falls under any of the exceptions as provided by Gazette Notification No.2654 – S.O. 3409(E) & 2654-S.O. 3407(E) & 2653 – S.O. 3408(E) dated 8.11.2016 issued by Government of India, Ministry of Finance. The AO will examine the same. I, when pointed out to ld. Senior DR, he could not controvert the above fact situation. - 4 - ITA No.989/Chny/2022 5. I after going through the assessment order and the order of CIT(A), is of the view that none of the authorities below have gone into these factual aspect that whether these cash is deposited before 08.11.2016 or after 08.11.2016 and secondly, whether the same is arising out of the proceeds earned by assessee prior to 08.11.2016 or after 08.11.2016. Another aspect not considered by lower authorities is that whether the same is covered by any of the exceptions as provided in the Gazette Notification Gazette Notification No.2654 – S.O. 3409(E) & 2654-S.O. 3407(E) & 2653 – S.O. 3408(E) issued on 8.11.2016. With the above directions, I set aside the issue back to the file of the AO and appeal of 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 7 th March, 2023 at Chennai. Sd/- (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 7 th March, 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.