NARAYANA SHET SADANANDA,COIMBATORE V. ITO, NCW-1(4), COIMBATORE

ITA 1362/CHNY/2025

AI Insights

The case involves Narayana Shet Sadananda, a goldsmith, who appealed against the additions made to his income by the Income Tax Officer, Coimbatore, for the Assessment Year 2017-18. The additions were based on unexplained cash deposits of Rs.30,18,000 in his bank account during the demonetization period. The assessee claimed that these deposits were from business receipts and customer deposits, supported by confirmation letters from four customers. However, the Assessing Officer was not satisfied with the explanations and the documentary evidence provided was deemed insufficient. The Tribunal, after considering the nature of the business and the lack of regular books of accounts, estimated a portion of the deposits as additional income and partly allowed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712226 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUNTHAMI MANIVASAGAM
• Assessee Lawyers: T.VASUDEVAN
• Keywords: Business income; Source of fund
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0019ी यस यस िव ने रिव, \u0011ा ियक सद एवं \u0019ी जगदीश, लेखा सद क े सम( BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1362 /Chny/2025 िनधा :रण वष: /Assessment Year: 2017-18 Narayana Shet Sadananda, 508, Raja Street, Near Telugu Brahmin Street, Coimbatore – 641 001. Vs. The Income Tax Officer, Ward-1(4), Coimbatore. [PAN: AQLPS 8944E] (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीला थH की ओर से/ Appellant by : Shri T. Vasudevan, Advocate JKथH की ओर से /Respondent by : Ms. Gounthami Manivasagam, JCIT सुनवा ई की ता रीख/Date of Hearing : 28.07.2025 घोषणा की ता रीख /Date of Pronouncement : 30.07.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 17.03.2025 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Income-tax Act, 1961 (hereinafter “the Act”) dated 09.12.2019. Printed from counselvise.com ITA No.1362/Chny/2023 Narayana Shet Sadananda :- 2 -: 2. The assessee is a goldsmith and had filed his return of income declaring a total income of Rs.4,93,800/-. The assessee has deposited cash of Rs. 30,18,000/- in his bank account during the demonetization period. The assessee explained that cash of Rs.18,38,000/- has been deposited in Karnatka by the customers and submitted confirmation letters from four customers claiming to have deposited Rs.5,00,000/-, Rs.4,88,000/-, Rs. 4,50,000/- and Rs. 5,00,000/-. The remaining cash of Rs. 10,80,000/- was stated to have been deposited by the assessee himself from his business receipts. The A.O, not being satisfied with the assessee’s explanation that the customers had deposited the demonetized currency on his behalf, made an addition of Rs.19,38,000/-. Out of the self-deposited cash of Rs.10,80,000/-, the A.O accepted Rs.5,00,000/- as savings from earlier years' business income and added the balance of Rs. 5,80,000/-. Aggrieved by these additions, the assessee filed an appeal before the Ld. CIT(A), who upheld the additions made by the A.O. 3. The Ld. Authorized Representative (A.R) of the assessee reiterated that the assessee was engaged in the business of goldsmith and that the cash deposits were from sale proceeds. The Ld. A.R Printed from counselvise.com ITA No.1362/Chny/2023 Narayana Shet Sadananda :- 3 -: submitted that confirmations had been furnished by four customers in support of the cash deposits totaling Rs. 19,38,000/-. 4. On the other hand, the Ld. Departmental Representative (D.R) relied on the orders of the lower authorities and submitted that the assessee did not maintain regular books of accounts and that the confirmations were on plain paper, without any supporting documentary evidence such as PAN numbers, bills, or other verifiable documentation. 5. We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the assessee has deposited cash amounting to Rs.30,18,000/- during the demonetization period, which is significantly higher than the income declared. Though the assessee explained the deposits as business receipts, he failed to substantiate his claim with credible documentary evidence. The confirmations submitted were on plain paper and lacked supporting documents such as bills, PAN numbers, or any other corroborative evidence. Moreover, the assessee does not maintain regular books of accounts. In such circumstances, where the source of funds remains largely unverifiable, a reasonable estimate needs to be made. Considering the nature of the assessee’s business and the Printed from counselvise.com ITA No.1362/Chny/2023 Narayana Shet Sadananda :- 4 -: overall facts and circumstances of the case, we are of the view that it would be fair and reasonable to estimate 20% of the total cash deposits of Rs.30,18,000/- as the assessee’s additional income. Accordingly, we sustain the addition to the extent of Rs. 6,03,600/-, and delete the balance addition. 6. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 30th day of July, 2025 at Chennai. Sd/- Sd/- (यस यस िव ने रिव) (SS Viswanethra Ravi) \u0001याियक \u0001याियक \u0001याियक \u0001याियक सद\bय सद\bय सद\bय सद\bय / Judicial Member (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 30th July, 2025. EDN/- आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Coimbatore 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF Printed from counselvise.com "