M. KAMALAKANNAN,VELLORE V. DCIT, CENTRAL CIRCLE-3(4), CHENNAI

ITA 946/CHNY/2023

AI Insights

The case revolves around an appeal by M. Kamalakannan against the order of the Commissioner of Income Tax (Appeals) - 18, Chennai, which confirmed an addition of \\u20b919,31,240 to the assessee's income for the assessment year 2020-21 under section 69A of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer following a search operation under section 132 of the Act. The primary contention was whether the addition was justified as the cash found did not belong to the assessee but to his sons, who operated their own businesses and had declared the cash in their income tax returns. The Tribunal, referencing a decision by the Hon'ble High Court of Madras, ruled in favor of the assessee, stating that the addition was not maintainable as the cash did not belong to the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107469 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Other Referred Cases: CIT v. A.N. Dyaneswaran 297 ITR 135
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. MARUTHU PANDIAN
• Assessee Lawyers: M. NUZHATH KHANAM
• Keywords: Condonation of delay
• Section: 143(3); 132; 153A; 69A

Judgement Text

"आयकर अपीलीय अिधकरण, ’बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी जगदीश, लेखा सद˟ क े समƗ । Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Jagadish, Accountant Member आयकर अपील सं./I.T.A. No.946/Chny/2023 िनधाŊरण वषŊ/Assessment Year: 2020-21 M. Kamalakannan Rep. by Legal Heir K. Kumaravel, No. 44, Kavi Medicals, Gudiyatham Road, Pallikonda, Vellore 635 809. [PAN:AVSPK5120C] Vs. The Deputy Commissioner of Income Tax, Central Circle 3(4), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Ms. M. Nuzhath Khanam, Advocate ŮȑथŎ की ओर से/Respondent by : Shri S. Maruthu Pandian, CIT सुनवाई की तारीख/ Date of hearing : 01.04.2025 घोषणा की तारीख /Date of Pronouncement : 09.04.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 09.02.2023 passed by the ld. Commissioner of Income Tax (Appeals) - 18, Chennai for the assessment year 2020-21. 2. We find that this appeal is filed with a delay of 149 days. The assessee filed a petition for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said petition, we find the reasons stated by the assessee are bonafide, which really I.T.A. No.946/Chny/23 2 prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication. 3. The assessee raised 10 grounds of appeal, amongst which, the only issue emanates for consideration as to whether the ld. CIT(A) is justified in confirming the addition made to an extent of ₹.19,31,240/- under section 69A of the Income Tax Act, 1961 [“Act” in short]. 4. Brief facts relating to the issue are that the assessee is an individual, running a provision stores in the capacity of proprietary concern under the name and style of M/s. Srinivasa Stores. A search action was conducted under section 132 of the Act on 09.04.2019. The assessee filed return of income disclosing total income of ₹.16,41,310/- and the Assessing Officer determined the same at ₹.60,72,550/- after making addition of ₹.44,31,240/- under section 69A of the Act vide his order dated 29.09.2021 under section 153A r.w.s. 143(3) r.w.s. 153B(1)(b) of the Act. 5. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) confirmed the addition to an extent of ₹.19,31,240/- [₹.44,31,240 – ₹. 25,00,000] by allowing relief of ₹.25,00,000/- to the assessee. I.T.A. No.946/Chny/23 3 6. On being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 7. The ld. AR M. Nuzhath Khanam, Advocate submits that the addition as confirmed by the ld. CIT(A) is not reasonable as the said amount does not belong to the assessee and therefore, the addition made under section 69A of the Act is not justified. She submits that while referring to chart containing closing cash balance as on 31.03.2019 in respect of two sons of assessee appeared in the assessment order. She submits that the assessee’s family is a joint family and his sons also having their own business under proprietary concern. She referred to one son by name Shri K. Srinivasan who looks after M/s. Kavi Supermarket has admitted to have closing cash balance of ₹.12,50,843/-. Further, she refer to another son by name Shri K. Kumaravel who looks after M/s. Kavi Medicals has admitted to have closing cash balance of rs..11,39,830/-. She argued that the Assessing Officer did not give any consideration to the said closing cash balance as offered during the course of assessment proceedings. The ld. CIT(A), without having any basis, given relief only on the basis of assessment, which is not justified. The ld. AR vehemently argued that the said seized cash does not belonging to the assessee, which is substantiated by evidence, cannot be made addition under section 69A of I.T.A. No.946/Chny/23 4 the Act and drew our attention to the decision of the Hon’ble High Court of Madras in the case of CIT v. A.N. Dyaneswaran 297 ITR 135. She argued that the Hon’ble High was pleased to answer question No. 2 & 7 in favour of the assessee by upholding the order of the Tribunal in holding that the cash found should not be taxed in the hands of the assessee therein as it was belongs to some other assessees. 8. The ld. DR Shri S, Maruthu Pandian, CIT argued that the assessee has not proved with any books of account or other records to prove that the cash balance with them on the date of search are arising out of business and earlier drawings. He submits that the ld. CIT(A), considering the returns of income and other factors, allowed ₹.10,00,000/- on estimation basis, which is beneficial to the assessee. The ld. DR relied on the order of the Assessing Officer. 9. Heard both the parties and perused the material available on record. The main contention of the ld. AR is that the cash found in the search at assessee’s residence belongs to joint family of two sons of the assessee who are in the business under proprietary concern. We note that the chart of closing cash balance of assessee and two sons were furnished to the Assessing Officer, but, however, no consideration was given by the Assessing Officer. The ld. CIT(A) at para 7.4 of the I.T.A. No.946/Chny/23 5 impugned order observed that there is no dispute with regard to joint family staying two sons with the assessee and were conducting business independently a medical shop and super market. But, however, the ld. CIT(A) given benefit on estimation basis to an extent of ₹.10,00,000/-. Further, the ld. CIT(A) has given relief to the assessee in respect of sale consideration as received on the sale of immovable property. Further, we note that in the ITR for AY 2020-21 of Mr. Kumaravel, son of the assessee, who conducts business under the name and style of M/s. Kavi Medicals, has shown cash in hand at ₹.11,31,883/-, which is evident from page 28 of the paper book. Further, another son Mr. Srinivasan, who conducts business by name M/s. Kavi Super Market has shown cash in hand at ₹.23,22,733/-, which is evident from his ITR for AY 2020-21 placed at page No. 142 of the paper book. On examination of all the details with the findings of the ld. CIT(A) clearly demonstrate that the cash found in assessee’s residence was of joint family proceeds, but, not belongs to the assessee. When the said amount does not belong to the assessee and when it is claimed by two sons of the assessee in their hands as cash in hand in the returns of income, the addition made by the Assessing Officer and as confirmed to an extent therein by the ld. CIT(A) is not justified. I.T.A. No.946/Chny/23 6 10. The Hon’ble High Court of Madras in the case of CIT v. A.N. Dyaneswaran (supra) upheld the order of the Tribunal in holding that addition is not maintainable when the cash belonging to the TNBA having found in the residence of Chairman-cum-Chief Patron. The facts before the Hon’ble High Court is that the cash found during the course of search in assessee’s bed room and official chamber of the assessee therein, stated that the said cash belonging to TNBA for which he is the Chairman-cum-Chief Patron. However, the Assessing Officer added the entire cash found during the search in the hands of the assessee. Before the Tribunal, the assessee stated that the cash belonged to the TNBA of which he was the Chief Patron. The money had been collected from various parties as advance for the construction of a stadium and most of the names were of Basketball Association members. Subsequently, the TNBA filed its return of income and the same had been accepted by the Department. On further appeal by the Department, the Hon’ble High of Madras held that the Tribunal had correctly arrived at the conclusion that these monies should not be included in the hands of the assessee. 11. Respectfully following the decision of the Hon’ble High Court of Madras in the case of CIT v. A.N. Dyaneswaran (supra), we are of the considered opinion that the addition in the hands of the assessee and as I.T.A. No.946/Chny/23 7 confirmed by the ld. CIT(A) is not justified and deleted. Thus, the grounds raised by the assessee are allowed. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced on 09th April, 2025 at Chennai. Sd/- Sd/- (JAGADISH) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 09.04.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "