PK AHAMMED AND COMPANY,CALICUT V. ITO, WARD-1(3), KOZHIKODE

ITA 613/COCH/2025

AI Insights

The case involves P.K. Ahammed and Company, a partnership firm, which appealed against the order of the National Faceless Appeal Centre (CIT(A)) that confirmed the AO's addition of Rs. 36,74,500 to the firm's income for Assessment Year 2017-18. This addition was based on cash deposits in SBN during the demonetisation period, which the AO deemed unexplained. The CIT(A) upheld the AO's decision, citing the appellant's failure to provide sufficient evidence, such as confirmation letters from debtors. The Tribunal found that the AO and the CIT(A) did not provide the appellant an adequate opportunity to present further evidence, leading to the decision to remand the case back to the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782320 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 29-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: ARJUN NEDUNGADI
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA Nos. 613/Coch/2025 Assessment Years: 2017-18 P.K. Ahammed and Company .......... Appellant 9/510, Big Bazar, Calicut 673001 [PAN: AACFP9677L] vs. Income Tax Officer, Ward - 1(2) .......... Respondent Aayakar Bhavan, Mananchira, Kozhikode Assessee by: Shri Arjun Nedungadi, CA Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 27.10.2025 Date of Pronouncement: 29.10.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 30.06.2025 for Assessment Years (AY) 2017-18. 2. Brief facts of the case are that the appellant is a partnership firm duly constituted under the Partnership Act. The return of income for AY 2017-18 was filed on 23.10.2017 declaring income of Rs. 20,57,270/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1(3), Kozhikode (hereinafter called \"the AO\") vide order dated 24.12.2019 passed Printed from counselvise.com 2 ITA Nos. 613 & 608/Coch/2025 P.K. Ahammed and Company u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 57,31,770/-. While doing so, the AO made addition of cash deposits in specified bank notes (SBN) during demonetisation period of Rs. 36,74,500/-, rejecting the explanation of the appellant that the said cash deposit was made out of realization from debtors on cash as on 08.11.2016. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal placing reliance on judicial precedents that the appellant had failed to discharge the onus of filing confirmation letters from the parties from whom cash was realized. 4. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. 5. The learned counsel for the assessee submitted that the CIT(A), without meeting the arguments and contentions raised, simply dismissed the appeal placing reliance on irrelevant judicial decisions. 6. On the other hand, the learned Sr. DR supported the order and submitted that no interference is called for. 7. I heard the rival contentions and perused the material available on record. The only issue that arises for my consideration is whether the CIT(A) was justified in confirming the addition Printed from counselvise.com 3 ITA Nos. 613 & 608/Coch/2025 P.K. Ahammed and Company made on account of cash deposits in SBN during demonetisation period. On perusal of the assessment order it would be clear that the AO had made the addition by holding that the explanation offered in support of the cash deposit in SBN was not satisfactory. Even on appeal before the CIT(A), the CIT(A) confirmed the action of the AO by holding that the appellant had failed to discharge the onus of proving the explanation rendered by filing confirmation letters from the debtors from whom cash was collected, etc. However, on perusal of the order of the AO as well as the NFAC it is not evident that the appellant was not called upon to produce further evidence in the form of confirmation from parties from whom cash were realised and also from whom cash were collected on account of realization of debts and also PAN, etc. It is trite law that before rejecting the explanation of the appellant for whatsoever reasons, the AO as well as the appellate authority is bound to give opportunity to the appellant to adduce evidences in support of the explanation rendered by the appellant. In the present case the AO as well as the NFAC had failed to do so. In the circumstance I am of the considered opinion that the ends of justice would be met if the matter is restored to the AO for de novo adjudication after affording an opportunity of hearing to the appellant to adduce evidence in support of the explanation offered for the source of cash deposits made in SBN. Printed from counselvise.com 4 ITA Nos. 613 & 608/Coch/2025 P.K. Ahammed and Company 8. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 29th October, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 29th October, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin Printed from counselvise.com "