RAJAMANICKAM AMSAVANI,ERODE V. ITO, WARD-2(1), ERODE

ITA 1197/CHNY/2025

AI Insights

The case revolves around an appeal by Ms. Rajamanickam Amsavani against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which sustained an addition of Rs.15,00,000 to her income as unexplained money under section 69A of the Income Tax Act, 1961. This addition was initially made by the AO following the scrutiny of her income tax return for the assessment year 2017-18, where she had reported a total income of Rs.3,33,520 and net agricultural income of Rs.6,75,450. The primary contention was whether the cash deposits made during the demonetization period were out of an opening cash balance, which the AO rejected based on discrepancies in the reporting of the opening balance in the previous year's return. The Tribunal, after reviewing the submissions and evidence, including bank statements and cash flow summaries, concluded that the addition was unjustified and deleted it.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706925 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 28-04-2025
• Other Referred Cases: S.M.I.L.E Microfinance Ltd. vs. ACIT in W.P. (MD) No.2078 of 2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWIN GOWDA
• Assessee Lawyers: ARJUN RAJ

Judgement Text

"आयकर अपीलीय अिधकरण, ‘सी’ (एस एम सी), ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ (SMC) BENCH, CHENNAI ᮰ी जॉजᭅ जॉजᭅ, उपा᭟यᭃ के समᭃ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT आयकर अपील सं./ITA No.: 1197/CHNY/2025 िनधाᭅरण वषᭅ/Assessment Year: 2017-18 Ms. Rajamanickam Amsavani, Site No 58A, Turmeric Complex, Nasiyanoor Post, Erode – 638 107. PAN: AFUPA 4532N Vs. The Income Tax Officer, Ward 2(1), Erode. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri Arjun Raj, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri Ashwin Gowda, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 03.07.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 09.07.2025 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 25.03.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18. ITA No.1197/Chny/2025 :- 2 -: 2. The solitary issue that is raised is whether the First Appellate Authority is justified in sustaining the addition of Rs.15,00,000/- being cash deposit made by the assessee during the demonetization period as unexplained money u/s.69A of the Act. The assessee has also raised an alternative ground, namely provisions of section 115BBE of the Act will not have application for the relevant assessment year and is applicable only for and from 2018-19. In this context, the Ld.AR relied on the recent judgment of the Hon’ble Jurisdictional High Court in the case of S.M.I.L.E Microfinance Ltd., vs. ACIT in W.P. (MD) No.2078 of 2020 (judgment dated 19.11.2024). 3. Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2017-18, the return of income was filed on 22.03.2018 admitting total income of Rs.3,33,520/- and net agricultural income of Rs.6,75,450/-. The case was selected for scrutiny and notice u/s.143(2) of the Act was issued on 24.09.2018. In response to the notice, assessee submitted the details called for, brief note on business activities, copy of return of income, statement of total income, profit and loss account, balance sheet, cash flow statement, details of cash deposits during demonetization period, etc. The assessment was ITA No.1197/Chny/2025 :- 3 -: completed u/s.143(3) of the Act vide order dated 27.12.2019. In the said assessment order, AO made an addition of Rs.15,00,000/- as unexplained cash u/s.69A of the Act on account of cash deposit made during the demonetization period in Axis Bank account of the assessee. The sole reason for not accepting the claim of the assessee that deposits were made out of opening cash balance is that assessee had not reported the said opening balance correctly in the return of income filed for the earlier assessment year. 4. Aggrieved by the addition of Rs.15,00,000/-, assessee filed appeal before the First Appellate Authority (FAA). The FAA confirmed the addition made by the AO by reiterating the findings in the assessment order. 5. Aggrieved by the order of the FAA, assessee has filed the present appeal before the Tribunal. The Ld.AR has filed a paper- book enclosing therein the financials for the Assessment years 2016-17 and 2017-18, consolidated cash statement, business- wise cash flow statement for assessment years 2016-17 & 2017- 18. The Ld.AR reiterated the submissions made before the Income-tax Authorities. ITA No.1197/Chny/2025 :- 4 -: 6. On the other hand, the Ld.DR supported the orders of the AO and the FAA. 7. I have heard rival submissions and perused the material on record. The solitary reason stated by the AO in the impugned assessment order for rejecting the claim of the assessee that the deposits were out of opening cash balance is that the assessee had not reported the said opening balance correctly in the return of income filed for the earlier assessment year. The assessee had placed on record the bank statements, cash flow statements and financial statements before the AO during the assessment proceedings for the AYs 2014-15 to 2016-17 which clearly establishes availability of cash as on 01.04.2016. The assessee had also placed on record the business wise cash flow summary (at Page No. 12 & 25) and consolidated cash flow summaries (at Page No. 11 & 24) for the AY 2016-17 and AY 2017-18 in the paperbook filed. The assessee had three verticals of business namely Share investments, TLC insurance business and VKR Turmeric godown and the financials of each of the verticals are also placed on record in the paperbook filed. The Closing cash balance as on 31.03.2016 is tabulated below:- ITA No.1197/Chny/2025 :- 5 -: 8. The relevant extract of the financials for the Assessment Year: 2016 -17 is extracted herein below: 9. Furthermore, the assessee had reported the fact of withdrawals for the immediately previous assessment year and the same is also evident from the financials in this regard, 10. However, as mentioned earlier, the disputed addition came to be made by the AO solely on the ground on incorrect disclosure / reporting of such financials in the Assessment Year 2016- 17. Having not disputed the fact of availability of the cash / cash ITA No.1197/Chny/2025 :- 6 -: withdrawals as on 31.03.2016 neither by the Assessing Officer nor by the First Appellate Authority and further not disputing any other components of cash flow, the disputed addition made without considering the actuals, solely based on the clerical mistake in the return of income would be contrary to the principles of fairness in taxation. Therefore, addition of Rs.15,00,000/- made by AO and sustained by the FAA is deleted. Since I have deleted the addition, the alternative ground that Section 115BBE of the Act will not have application for the relevant assessment year is rendered infructuous. It is ordered accordingly. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 9th July, 2025 at Chennai. Sd/- (जॉज[ जॉज[ क े) (GEORGE GEORGE K) उपाÚय¢ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 9th July, 2025 RSR आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत /CIT, Coimbatore 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF. "