PARTHASARATHI ,TIRUPATTUR V. ITO, WARD 2 , VELLORE

ITA 635/CHNY/2024

AI Insights

The case involves an appeal by the assessee, Parthasarathi, against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi, which confirmed an addition of Rs. 33,10,000 to the assessee's income for the assessment year 2015-16. The addition was initially based on unexplained cash deposits of Rs. 42,60,000 in the assessee's bank account. The Assessing Officer had earlier adopted a peak credit of Rs. 9,50,000, but following a revisionary order under section 263 of the Income Tax Act, the entire amount was added to the income. The Tribunal found that the lower authorities had not adequately considered the assessee's arguments and the nexus of the deposits with earlier cash withdrawals, leading to a partial allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34490 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHEILA PARTHASARTHY
• Assessee Lawyers: P.M. KATHIR
• Keywords: Set aside; Peak credit; Revision of order
• Section: 143(3); 263

Judgement Text

"Page - 1 - of 4 आयकर अपीलीय अधिकरण, ‘बी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI श्री एबी टी. वर्की, न्यायिर्क सदस्य एवं श्री अयिताभ शुक्ला, लेखा सदस्य क े समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.635 /Chny/2024 निर्ाारण वर्ा /Assessment Years: 2015-16 Parthasarathi, No.253, Big Bazaar Street, Tirupattur, Tamil Nadu - 635601. [PAN: APEPP1040E] Income Tax Officer, Ward-2, Vellore (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Shri P.M.Kathir, Advocate प्रत्यर्थी की ओर से /Revenue by : Ms.Sheila Parthasarthy, Addl.CIT सुिवाई की तारीख/Date of Hearing : 02.12.2024 घोर्णा की तारीख /Date of Pronouncement : 22.01.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed against the order bearing DIN & Order No.ITBA/NFAC/S/250/2023-24/1060281013(1) dated 30.01.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center[NFAC], Delhi, for the assessment years 2015- 16. Through the aforesaid appeal the assesse has challenged order u/s 250 dated 30.01.2024 passed by NFAC, Delhi. 2.0 The assessee has raised nine grounds of appeal. As all the grounds of appeal are centering upon addition of Rs. 33,10,000/- , made ITA No.635/Chny/2024 :- 2 -: Page - 2 - of 4 by the Ld. AO and confirmed by the Ld. CIT(A), the same are adjudicated together. 3.0 The only issue in this case is the addition of Rs. 33,10,000/- made in the hands of the assessee. The Ld. Counsel for the assessee explained the brief factual matrix that in this case scrutiny proceedings were initiated for verifying the cash deposits in the assessee’s bank account of Rs.42,60,000/-. Thus, in its order u/s 143(3) dated 21.12.2017, the Ld. AO adopted peak credit of Rs. 9,50,000/- as the figure for making addition to the returned income. Subsequently, the PCIT exercising his revisionary powers u/s 263 vide order dated 18.03.2021 quashed the impugned assessment order holding that as the assessee had failed to explain the source of cash deposits, adoption of peak credit was fallacious act and directed the Ld. AO to add the balance amount of Rs.33,10,000/- (Rs.42,60,000/- -9,50,000/- ). Accordingly the Ld. AO vide his order dated 19.03.2022 made the impugned addition of Rs. 33,10,000/- while holding the assessee had failed to offer any satisfactory explanation qua sources of impugned cash deposits. The Ld. Counsel for the assessee informed that the Ld. CIT(A) vide para 7.2 on page 8 of his order has summarily rejected assessee’s arguments by drawing conjectures and surmises. The Ld. Counsel for the assessee has submitted that the impugned cash deposits had nexus with assesee’s ITA No.635/Chny/2024 :- 3 -: Page - 3 - of 4 earlier cash withdrawals, which has been totally ignored by the lower authorities. Accordingly, a request was made to set aside the order of the Ld.CIT(A). The Ld. DR argued that the assessee has not challenged the proceedings u/s 263 and that the order of lower authorities is based upon correct understanding of the facts. 4.0 We have heard the rival submissions in the light of material available on records. The arguments of the Ld. DR qua non-contest of proceedings u/s 263 by the assessee would have no bearing on the facts of the present case. We have noted that the Ld. AO has recorded that the assessee was not forth coming in filing details before him during the assessment proceedings. We have also noted that the order of the Ld.CIT(A) vide para 7.2 supra of his order is also based upon conjecture premises and primarily rests upon preponderance of human probability alone. It is trite law that human probability test has to be tested on the corner stone of circumstantial evidence also and on its own it cannot be a basis for any objective analysis and consequent conclusions. Be that as it may be we are of the view that the ends of justice would be met if the addition on account of unexplained cash deposits is restricted to an amount being 20% of Rs.33,10,000/-, which will come to Rs. 6,62,000/-. Accordingly, the Ld. AO is directed to restrict his addition to Rs. ITA No.635/Chny/2024 :- 4 -: Page - 4 - of 4 6,62,000/- and delete the balance. Accordingly, all the grounds of appeal raised by the assessee is partly allowed. 5.0. In the result, the appeal of the assessee is partly allowed. Order pronounced on 22nd , January-2025 at Chennai. Sd/- ( एबी टी. वकी) (ABY T VARKEY) न्यानयक सदस्य / Judicial Member Sd/- (अयिताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, नदिांक/Dated: 22nd , January-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF "