KAVVERY PERUMAL SATHEESWARAN,CHENNAI V. ITO,WARD 1, TIRUCHENGODE, TIRUCHENGODE

ITA 3102/CHNY/2024

AI Insights

The case involves an appeal by Kavvery Perumal Satheeswaran against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of \\u20b948,75,500 as unexplained credits under section 69A of the Income Tax Act, 1961. The assessee had made substantial cash deposits which were not reflected in her balance sheet or explained satisfactorily, leading to their treatment as unexplained income. The Tribunal found the initial assessment and appellate decisions insufficiently addressed the assessee's explanations and remanded the case for a detailed examination of the provided documentary evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472154 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAUTHAMI MANIVASAGAM
• Assessee Lawyers: N.C. RAVIKRISHNAN
• Keywords: Condonation of delay; Opportunity of being heard; Unexplained cash credit; Principle of natural justice
• Section: 147; 148; 143(3); 142(1); 143(2); 250; 69A

Judgement Text

" आयकर अपीलीय अिधकरण, ’बी’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी धु᭪वुᱧ आर.एल रे᲻ी, उपा᭟यᭃ एवं ᮰ी एस.आर.रघुनाथा, लेखा सद᭭य के समᭃ BEFORE SHRI DUVVURU RL REDDY, VICE PRESIDENTAND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं/.ITA No.:3102/CHNY/2024 िनधाᭅरणवषᭅ/Assessment Year:2012-13 Kavvery Perumal Satheeswaran, 8/66, Thangavel Illam, Cauvery R.S., Pallipalayam, Erode 638 007. [PAN: ASXPS2629A] Vs. The Income Tax Officer, Ward 1, Tiruchengode. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮकᳱओरसे/Appellant by : Shri N.C. Ravi Krishnan, Advocate ᮧ᭜यथᱮकᳱओरसे/Respondent by : Ms. Gauthami Manivasagam, JCIT सुनवाईकᳱतारीख/Date of Hearing : 25.03.2025 घोषणाकᳱतारीख/Date of Pronouncement : 27.03.2025 आदेश/ O R D E R PER DUVVURU RL REDDY, VICE-PRESIDENT: 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 23.09.2024 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2012-13. 2. We find that this appeal is filed with a delay of 4 days. The assessee filed a petition for condonation of delay explaining reasons for the said delay and prayed for condonation of that delay. On perusal of the - 2 - ITA No.3102//Chny/2024 condonation petition and upon hearing the ld. AR and ld. DR, we find that the reasons explained by the assessee are bonafide and therefore, the delay is condoned and admitted the appeal for adjudication. 3. The only effective ground raised in the appeal is whether the ld. CIT(A) is justified in confirming the addition of ₹.48,75,500/- made under section 69A of the Act in the facts and circumstances of the case. 4. Brief facts of the case are that the assessee filed her return of income declaring an income of ₹.2,88,170/-. The assessee has made huge cash deposits, the Assessing Office reopened the assessment under section 147 of the Act and issued notice under section 148 of the Act dated 28.03.2019. In response to the said notice, the assessee filed return of income on 09.09.2019 declaring total income of ₹.2,88,170/-. Subsequently, notice under section 143(2) of the Act was issued to the assessee on 12.09.2019. Various notices under section 142(1) of the Act/ letters were issued on the assessee to furnish explanation along with supporting documentary evidences. However, the assessee could not response to the above notices. Accordingly, the Assessing Officer completed the assessment under section 143(3) r.w.s. 147 r.w.s. 144B of the Act dated 06.09.2021 by assessing total income of the assessee at ₹.61,85,691/- after making various additions. On appeal after considering the submissions of the assessee, bank statement and audit report, the ld. - 3 - ITA No.3102//Chny/2024 CIT(A) deleted the addition of ₹.10,22,021/- made on account of estimation of income while confirming the addition of ₹.48,75,000/- made on account of unexplained credits under section 69A of the Act. On being aggrieved, the assessee is in appeal before the Tribunal. 5. The ld. Counsel for the assessee has submitted that this is the assessee’s first year of operation in this business and forced to pay the weekly payments even if the assessee has not received the contractual receipts from the company. It is common practice in this line of business to make payment like other contractors deploying funds from various sources, but genuinely deposited the same into her bank account for the purpose of making routine business payments professionally. The ld. Counsel further submits that the bank transactions were already part of the contractual receipts and has been audited by the CA along with the certificate given for the same. He further submits that inadvertently, the assessee failed to disclose the balance of the account in the balance sheet, but, however, the transactions of the account were part of the receipts declared in the financials. Thus, the ld. counsel vehemently argued that the deposits made in UCO Bank cannot be treated as unexplained credit under section 69A of the Act and prayed to delete the addition. 6. On the other hand, the ld. DR supported the order passed by the ld. CIT(A) on this issue. - 4 - ITA No.3102//Chny/2024 7. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. On perusal of the assessment order, we note that the Assessing Officer disallowed cash deposits made with UCO Bank to the tune of ₹.48,75,000/- for the reason that it does not commensurate with the returned income filed by the assessee. We note that on verification of the details of balance sheet, profit & loss account filed along with return of income, the Assessing Officer noted that the assessee has not shown her bank account maintained with the UCO bank in the balance sheet, which implies that the deposits maintained in the said account have not been recorded in the regular books of accounts. Since the assessee could not explain the deposits, the Assessing Officer treated the same as unexplained income under section 69A of the Act and brought to tax. Before the ld. CIT(A), by filing audit report, the assessee has contended that the deposits are made from sales. However, the assessee could not establish the nexus between the cash deposits and turnover. Since the assessee has failed to establish the nature and source of deposits held in the account maintained with UCO bank, the ld. CIT(A) confirmed the addition made under section 69A of the Act. Before us, the ld. counsel for the assessee has submitted that the assessment year under consideration is assessee’s first year of operation in this business and forced to pay the weekly payments even if the assessee has not received the contractual receipts from the company and - 5 - ITA No.3102//Chny/2024 forced to deploy funds from various sources and deposits the same into the bank account for making routine business payments. But, the assessee failed to explain the source for the deposits with documentary evidence before the authorities below. Considering the above facts and circumstances of the case and to meet the ends of natural justice, we deem it proper to remand the matter to the file of the ld. CIT(A) to decide the issue afresh in accordance with law after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish proper explanation with documentary evidences to substantiate her claim before the ld. CIT(A) without fail, otherwise, the order of the ld. CIT(A) on this issue stands sustained. Thus, the ground raised by the assessee is allowed for statistical purposes. 8. In the result the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 27th March, 2025 at Chennai. Sd/- Sd/- (एस.आर. रघुनाथा) (S.R. RAGHUNATHA) लेखा सद˟/ ACCOUNTANT MEMBER (धु᭪वुᱧ आर.एल रे᲻ी) (DUVVURU RL REDDY) उपाȯƗ /VICE PRESIDENT चे᳖ई/Chennai,ᳰदनांक/Date: 27.03.2025 Vm/- - 6 - ITA No.3102//Chny/2024 आदेशकीŮितिलिपअŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकरआयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीयŮितिनिध/DR & 5. गाडŊफाईल/GF. "