JAYARAM BALASUBRAMANIAN,DINDIGUL V. ACIT, CORPORATE CIRCLE-1(4), CHENNAI

ITA 2301/CHNY/2024

AI Insights

The case involves Shri Jayaram Balasubramanian, an individual engaged in the business of leather products, who appealed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2017-18. The primary issue was the addition of Rs.1,85,97,000 as unexplained capital introduced into the business, which the AO added under section 68 of the Income Tax Act, 1961. The assessee contended that the CIT(A) passed a cryptic order without considering the additional evidence submitted, which explained the source of the capital. The Tribunal found merit in the assessee's arguments and directed a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107149 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961, Income-Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KEERTHI NARAYANAN
• Assessee Lawyers: G.TARUN
• Keywords: Set aside; Additional evidence

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u000eा यपीठ, चे\u0013ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0016ी एबी टी. वक\u001a, \u000eा ियक सद\u001d एवं \u0016ी अिमता भ शु$ा , लेखा सद\u001d क े सम& BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2301/Chny/2024 िनधा (रण वष(/Assessment Year: 2017-18 Shri Jayaram Balasubramanian, 743/5, Duraikulam Shop, Madurai Road, Pallapatty Village Begampur Post, Dindigul – 624 001. [PAN: AEGPB 9719R] Vs. The Assistant Commissioner of Income Tax, Non-Corporate Circle 4(1), Chennai. (अपीला थ\u001a/Appellant) (+,थ\u001a/Respondent) अपीला थ\u001a की ओर से/ Appellant by : Shri G. Tarun, Advocate +,थ\u001a की ओर से /Respondent by : Shri Keerthi Narayanan, JCIT सुनवा ईकीता रीख/Date of Hearing : 23.12.2024 घोषणा कीता रीख /Date of Pronouncement : 05.02.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) / NFAC (hereinafter in short “CIT(E)\") dated 27.08.2024 for assessment year 2017-18 (hereinafter in short “AY\"). 2. The main grievance of the assessee is against the action of the Ld.CIT(A) in passing a cryptic non-speaking order without considering the ITA No.2301/Chny/2024 (AY 2017-18) Jayaram Balasubramanian :: 2 :: application filed by the assessee for admission of additional evidence under Rule 46A of the Income-Tax Rules, 1962 [herein after “Rules”]. 3. Brief facts are that the assessee is an individual carrying on business of leather products in the name and style of M/s. AJB Leather. The assessee filed his return of income for AY 2017-18 on 03.11.2017 declaring gross total income of Rs.43,42,463/- and taxable income of Rs.41,66,300/-. Later the case of the assessee was taken up for scrutiny in CASS and the AO noted that the assessee has introduced fresh capital of Rs.1,85,97,000/- into his business and asked the assessee to explain the source of the capital. However, according to the AO, the assessee failed to explain the source and therefore, he made an addition of Rs.1,85,97,000/- u/s.68 of the Income Tax Act, 1961 [herein after “Act”]. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) and filed Form No.35, wherein the assessee brought to his notice that he (assessee) is staying 500 Kms. away from Chennai and therefore could not appear before the AO as directed by him on 10.12.2019; and that assessee’s Ld.AR appeared before AO on 13.12.2019, wherein he was informed that assessment order has been already passed on 12.12.2019. Thus, the assessee submitted that relevant evidences/materials couldn’t be filed before AO during the assessment proceedings. ITA No.2301/Chny/2024 (AY 2017-18) Jayaram Balasubramanian :: 3 :: 4. The assessee also filed written submissions before the First Appellate Authority which fact is discernible from the e-proceedings acknowledgment kept at page 1 of PB, which reveals that assessee had uploaded written submission on 08.01.2024 along with four enclosures and the copy of written submission uploaded before the Ld.CIT(A), which facts are discernable from the copy found placed at page Nos. 3 to 5 of the PB, wherein the assessee has explained that the major component leading to the increase in capital was on account of the amount received from the assessee’s wife Smt. Sasikala B, who is the proprietrix of M/s. Mukesh Impex and filed the following chart explaining/reconciling the source of increase in capital to the tune of Rs.1,85,97,000/-, which is noted as under:- S.No. Date Particulars Amount (Rs.) Bank Account 1 15.07.2016 Amount received from Mukesh Impex (Proprietorship of Assessee’s wife) 5,00,000/- OBC Bank 2 05.08.2016 Amount received from Mukesh Impex (Proprietorship of Assessee’s wife) 3,00,000 OBC Bank 3 11.08.2016 Kattaria Advance 75,000/- 4 02.01.2017 Amount received from Mukesh Impex (Proprietorship of Assessee’s wife) 15,00,000/- OBC Bank 5 03.01.2017 Amount received from Mukesh Impex (Proprietorship of Assessee’s wife) 80,00,000/- OBC Bank 6 12.01.2017 Cash 12,000/- ICICI Bank ITA No.2301/Chny/2024 (AY 2017-18) Jayaram Balasubramanian :: 4 :: 7 01.02.2017 Amount received from Mukesh Impex (Proprietorship of Assessee’s wife) 50,000/- ICICI Bank 8 13.02.2017 Contra Entry 50,000/- ICICI Bank 9 31.03.2017 Mukesh Impex (Opening Balance) transferred through journal 81,00,000/- OBCBank (earlier year) TOTAL Rs.1,85,97,000/- The assessee has also filed the following documents: - i) Bank statements of the assessee maintained with Oriental Bank of Commerce in A/c No.06594011000011 pertaining to the AY 2017-18. Enclosed as Annexure-A. ii) Bank statements of M/.s. Mukesh Impex (Proprietorship of the assessee’s wife) maintained with Oriental Bank of Commerce in A/c. No.06591131000068 pertaining to the AY 2017-18. Enclosed as Annexure-B 5. Further, the Ld.AR brought to our notice that assessee had opening balance of Rs.81,00,000/- (Sl.No.9 of the above chart), payable to M/s. Mukesh Impex as on 01.04.2016, which amount was also transferred to the capital account of the assessee; and the assessee has also filed the break- up of the amount paid to M/s. Mukesh Impex reflecting in the books of accounts, which was also filed as additional evidences before the ITA No.2301/Chny/2024 (AY 2017-18) Jayaram Balasubramanian :: 5 :: Ld.CIT(A). The assessee also filed the bank statements of M/s. Mukesh Impex (Proprietorship of the assessee’s wife) maintained with Oriental Bank of Commerce in A/c. No.06591131000068 pertaining to the AY 2016- 17 as Annexure-C, which captures the payments made to the assessee. 6. Even though, the aforesaid relevant documents and explanation of the source of capital introduced to the tune of Rs.1,85,97,000/- was filed before the Ld.CIT(A), however, the Ld.CIT(A) ignored the evidences and has passed a cryptic order blaming the assessee for not adducing any evidence and has upheld the action of the AO, which impugned action of the Ld.CIT(A) cannot be countenanced and therefore, we set aside the impugned order; and taking note that as per the scheme of Income Tax Act, the AO is the primary authority who is vested with the power to examine the facts as well as law to determine the correct taxable income of the tax payer. And since relevant evidences couldn’t be filed before AO, for the ends of justice and fair play, we are of the view that one more opportunity should be given to the assessee for proving the source of capital introduced. With the aforesaid observation, we set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO with a direction to frame the assessment de novo after hearing the assessee and after considering the aforesaid/relevant ITA No.2301/Chny/2024 (AY 2017-18) Jayaram Balasubramanian :: 6 :: evidences adduced by the assessee. The Ld.AR is directed to file relevant documents/written submissions before the AO and the AO to de novo pass assessment order in accordance to law after hearing the assessee. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 05th February, 2025 at Chennai. Sd/- (अिमताभ शु ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक\u0012) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे\u0003ई/Chennai, \u0005दनांक/Dated: 05th February, 2025. RSR आदेश की +ितिलिप अ0ेिषत/Copy to: 1. अपीला थ\u001a/Appellant, 2.+,थ\u001a/ Respondent, 3. आयकर आयु1/CIT, Chennai 4. िवभा गीय +ितिनिध/DR & 5. गा ड( फा ईल/GF. "