MANNANA ABDUL KRISHNAGIRI,KRSHANGIRI V. ITO, WARD-1, KIRHSNAGIRI, KRISHNAGIRI

ITA 2839/CHNY/2024

AI Insights

The case revolves around an appeal by Shri Mannan Abdul Krishnagiri against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs.10,10,000 to the assessee's income under section 69A of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer (AO) based on unfiled income tax returns and substantial cash deposits during the demonetization period. The assessee argued that these deposits were from the sale of his wife's jewelry, a claim supported by relevant documents. The Tribunal, after reviewing the submissions and evidence, including a similar case involving the assessee's wife, found the explanation satisfactory and allowed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705555 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Zeenathunnisa vs. ITO in ITA No.3004/CHNY/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWIN GOWDA
• Assessee Lawyers: P.M. KATHIR
• Keywords: Onus to prove

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ (एस एम सी), ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ (SMC) BENCH, CHENNAI ᮰ी जॉजᭅ जॉजᭅ, उपा᭟यᭃ के समᭃ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT आयकर अपील सं./ITA No.: 2839/CHNY/2024 िनधाᭅरण वषᭅ/Assessment Year: 2017-18 Shri Mannan Abdul Krishnagiri, 1/169-6, 5th Cross, Rajaji Nagar, Kattiganapalli, Krishnagiri - 635 001. PAN: AFEPK 5857N Vs. The Income Tax Officer, Ward-1, Krishnagiri (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri P.M. Kathir, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri Ashwin Gowda, JCIT (Through Virtual Mode) सुनवाई कᳱ तारीख/Date of Hearing : 01.07.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 02.07.2025 आदेश/ O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 11.10.2024 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18. ITA No.2839/Chny/2024 :- 2 -: 2. The solitary issue raised is whether the First Appellate Authority is justified in confirming the addition made by the AO u/s.69A of the Act amounting to Rs.10,10,000/-. 3. Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2017-18, assessee did not file his return of income. Based on the information available with the Department that assessee had made cash deposits in Specified Bank Notes (SBNs) during the demonetization period, notice was issued to the assessee to explain the sources for the cash deposits made. The assessment was completed u/s.144 of the Act vide order dated 07.11.2019 wherein the AO added cash deposits made during demonetization period of Rs.10,10,000 plus cash deposited after demonetization of Rs.1,68,000/- u/s.69 of the Act totaling to Rs.11,90,000/-. 4. Aggrieved by the order of assessment order dated 07.11.2019 u/s.144 of the Act, assessee preferred appeal before the First Appellate Authority (FAA). The assessee reiterated the submissions made before the AO that he had sold his wife’s jewellery and had received a sum of Rs.10,10,000/-. The FAA partly-allowed the appeal of the assessee. As regards the cash deposits made ITA No.2839/Chny/2024 :- 3 -: during the demonetization period amounting to Rs.10,10,000/-, the FAA confirmed the addition made by the AO u/s.69 of the Act. As regards the cash deposits in assessee’s Axis Bank account after the demonetization, the FAA deleted the addition made by the AO. 5. Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The assessee has filed two sets of paper-book. In one set assessee has enclosed the notice issued during the course of assessment proceedings and the replies to the same, purchase bill of the jewels, jewels sales bills, submissions before the FAA, response to the notices issued during the course of appellate proceedings, cash withdrawals in the case of assessee’s wife and also the Tribunal’s order in assessee’s wife case. The Ld.AR reiterated the submissions that assessee had sold jewellery for a sum of Rs.10,10,000/- out of which Rs.8,74,010/- was received in cash. It was submitted that Rs.8,74,000/- which was received in the month of September, 2016 has been utilized for making cash deposit during the demonetization period. Further by referring to the Chennai Bench of the Tribunal’s order in assessee’s wife case Zeenathunnisa vs. ITO in ITA No.3004/CHNY/2024 (order dated 23.04.2025), the Ld.AR submitted that there is enough cash withdrawals in the hands of the assessee’s wife who was a retired ITA No.2839/Chny/2024 :- 4 -: professor to the extent of Rs.40,95,000/- and the Tribunal in assessee’s wife case had deleted addition of Rs.12,10,000/- being cash deposits made by her. It was submitted that cash withdrawals of Rs.40,95,000/- is sufficient to cover the balance cash deposits made by the assessee. 6. The Ld.DR strongly supported the orders of the AO and the FAA. 7. I have heard rival submissions and perused the material on record. The assessee had placed on record, the purchase bills of jewellery (purchased in the year 2013) which were sold in the year 2016 for a total consideration of Rs.10,10,000/-. The sale invoices of the jewellery from Shanthi Jewellers, Krishnagiri, LKS and Kerala Jewellers are placed on record. Out of the total sale receipts of Rs.10,10,000/-, the sale consideration received from Kerala Jewellers alone was credited through bank account. For balance sale receipts from Shanthi Jewellers and LKS amounting to Rs.8,74,010/- the same was paid to the assessee in cash. The sale was effected by the assessee in the month of September, 2016. The Department does not have a case that amount received by assessee on sale of jewellery amounting to Rs.8,74,010/- has been utilized for some other purpose other than cash deposits. Hence, the source of cash ITA No.2839/Chny/2024 :- 5 -: deposits to the extent Rs.8,74,010/- during the demonetization period is explained. 8. Further, I find that assessee’s wife has got adequate cash withdrawals from bank to the extent of Rs.40,95,000/- and assessee’s wife have made cash deposits only to the tune of Rs.14,60,000/- (Total cash deposits by assessee’s wife was Rs.14.60 lakhs and after giving credit for Rs.2.5 lakhs addition was Rs.12.10 lakhs). The Chennai Bench of the Tribunal had deleted the addition of Rs.12,10,000/- in the hands of the assessee’s wife (supra). The relevant finding of the Tribunal reads as follows:- “5. We have heard both the parties and perused the material available on record. We note that the assessee is a Retired Professor, Head of Department of Bio-Chemistry in SIET College and she is noted to have retired in the year 2013; and after that, she has been receiving pension of more than Rs.7 lakhs per annum and returned income in the relevant year to the tune of Rs.6,14,920/-. The assessee is noted to have some medical history [refer medical documents filed before the AO from the year 2005- 2010] which led her to keep at her residence an amount of Rs.15 lakhs as reserve to meet any eventuality in respect of medical emergencies for her as well as her husband [her husband has his own business and is earning money from Xerox machines and computer data entry KIOSK which is utilized mainly for the household expenses] and that her (the assessee’s) adopted daughter has been married in 2007; and therefore, assessee didn’t incur much expenses after retirement though she had undisputedly withdrawn an amount of Rs.40.95 lakhs between 16.05.2014 and 03.10.2016. Therefore, the assessee when asked by the AO to explain the nature and source of Rs.14.60 lakhs deposited during demonetization period, explained the aforesaid facts and stated the source of SBNs was from earlier withdrawals i.e. out of withdrawals of Rs.40.95 lakhs. The AO is noted to have accepted the explanation in respect of Rs.2.5 lakhs ITA No.2839/Chny/2024 :- 6 -: deposited during demonetization period but refused to accept the balance amount of Rs.12.10 lakhs on the specious plea that the assessee might have expended the amount of Rs.40 lakhs since she was having medical history and also by observing that now-adays, hospitals are accepting digital mode of receiving payments and therefore, there was no need to keep Rs.14 lakhs in her house; and the Ld.CIT(A) on the same reasoning, has confirmed the action of making addition of Rs.12.10 lakhs u/s.69 of the Act. We don’t countenance this action of the Ld.CIT(A)/AO for the simple reason that the assessee in this case has discharged her burden to prove the nature and source of the amount/SBNs deposited to the tune of Rs.14.60 lakhs by showing that this was sourced from her withdrawal from 2014 onwards to the tune of Rs.40.95 lakhs. The AO is noted to have accepted the nature and source of Rs.2.50 lakhs from the withdrawals but refused to accept the explanation regarding the balance amount merely on the basis of surmise and conjectures. 6. It is settled position of law that when the assessee has given an explanation regarding source of the credit/currency, which is plausible/probable from prudent persons point of view, then, it can’t be rejected by the AO without having any material to rebut the plausible explanation given by assessee. The Hon’ble Supreme Court in the case of Sreelekha Banerjee & Ors. v. CIT reported in [1963] 49 ITR 112 (SC), observed that “the department could not act unreasonably and reject that explanation to hold that it was income. If, however, the evidence was unconvincing then such rejection could be made. The department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof”. 7. The assessee is noted to have filed the bank statement and also the relevant documents to prove that her husband is also earning income from the business of KIOSK data entry which income was primarily used for running the household expenses, and thus, assessee has shown that she kept as reserve Rs.14.60 lakhs for medical emergencies out of her withdrawal of Rs.40 lakhs, since there was no major expenses incurred by her. In this regard, it is noted that assessee has placed before the AO the primary facts to prove the nature and source of SBNs, which has not been found by him to be incorrect or false. Therefore, the action of the AO to make addition u/s.68 of the Act, is not acceptable for the reasons stated (infra). ITA No.2839/Chny/2024 :- 7 -: 8. The assessee is noted to have proved by adducing medical evidence of her earlier medical history [2005-2010] and then she has made out a case that she may require Rs.15 lakhs to meet any medical emergencies and thus, has discharged her burden to that extent. However, the AO is noted to have initially observed that cash is not necessary for treatment now-a- days, but gave an interesting finding that considering her earlier medical history, she might have expended the amount which was withdrawn which finding to justify addition is noted to be ex-facie contradictory in nature. 9. In the light of the aforesaid discussion and the judicial precedents on the subject, it is noted that when assessee proves that she had on relevant date a large sum of money sufficient to cover the deposit of cash in the bank during demonetization period, this Tribunal/Hon’ble Courts, in the absence of something which showed that the explanation was inherently improbable has accepted the explanation that the assessee had such amount in SBNS which was deposited in the bank account. In other words, assessee was held to have prima facie discharged the initial burden upon him/her which was upon him in such cases. Moreover, once the AO has accepted the genuineness of the source of Rs.2.5 lakhs as source from the withdrawals of Rs.40 lakhs, the AO can’t be expected to reject part of the explanation [i.e. Rs.12.10 lakhs as source from the very same source viz., withdrawal of Rs.40 lakhs] without cogent reason or adducing any material to show that the withdrawn amount of Rs.40 lakhs had been spent by assessee or invested in immovable/movable assets of which is not the case of the AO. Therefore, the action of the AO rejecting in part, the explanation given by the assessee can’t be accepted. However, we are of the view that the explanation which was held to be reasonable [by the AO] as to a part, must be good for the whole, because there is no material on which it could be held that the balance constituted income from some undisclosed source to distinguish case about the part rejected from the part accepted. In the light of the aforesaid discussion, we are of the view that the assessee has prima facie discharged her burden about the source of Rs.12.10 lakhs, which has not been rebutted by the Ao/Ld.CIT(A) which is merely based on no evidence rather it is based on conjectures, surmises and suspicion; and furthermore is vitiated by failure of lower authorities in not taking into consideration relevant materials bearing on the fact in issue. Thus, the assessee’s appeal is allowed and the addition made u/s.69 of the Act of Rs.12.10 is directed to be deleted.” ITA No.2839/Chny/2024 :- 8 -: 9. From the above order of the Tribunal, it is clear that assessee’s wife has also huge cash withdrawals, out of which only Rs.14,60,000/- was cash deposits made by wife, the balance certainly would have been available for making deposits by the assessee. For the afore mentioned reasons, I delete the entire addition sustained by the FAA to the extent of Rs.10,10,000/-. It is ordered accordingly. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 2nd July, 2025 at Chennai. Sd/- (जॉज[ जॉज[ क े) (GEORGE GEORGE K) उपाÚय¢ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 2nd July, 2025 RSR आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत /CIT, Salem 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF. "