SANKAR,ERODE V. ITO, WARD-2(1), ERODE

ITA 1065/CHNY/2025

AI Insights

The case involves an appeal by Sankar against the orders of the A.O and CIT(A) concerning the assessment year 2017-18. The A.O had reopened the assessment due to cash deposits of Rs. 34,79,000 made during the demonetization period, and subsequently made an addition of Rs. 1,01,12,060 by estimating the income at 8% of the total deposits. The CIT(A) upheld this addition after a remand report from the A.O, which stated that notices could not be served to the assessee and no supporting documents were provided. The Tribunal found that the orders were passed ex-parte without proper opportunity to the assessee, thus providing another opportunity for the assessee to substantiate his case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708551 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2025
• 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: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: S.SENTHIL KUMAR
• Keywords: Set aside; Principle of natural justice
• Section: 144

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0019ी एबी टी. वक , \u0011ा ियक सद! एवं \u0019ी जगदीश, लेखा सद! क े सम( BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1065/Chny/2025 िनधा9रण वष9 /Assessment Year: 2017-18 Sankar, 10, Kuppandar Street, Puduppalayam, Gobichettipalayam, Erode – 638 476. [PAN: BGFPS 5245F] Vs. The Income Tax Officer, Ward-2(1), Erode. (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीलाथ की ओर से/ Appellant by : Shri S.Senthil Kumar, Advocate HIथ की ओर से /Respondent by : Ms. Gouthami Manivasagam, JCIT सुनवाई की तारीख/Date of Hearing : 18.06.2025 घोषणा की तारीख /Date of Pronouncement : 15.07.2025 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 19.02.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 144 of the Income-tax Act,1961 (hereinafter “the Act”) on 19.12.2019. ITA No.1065/Chny/2025 Sankar :- 2 -: 2. The A.O has reopened the assessment for the reason that the assessee has made cash deposits of Rs.34,79,000/- during demonetization period. The A.O passed assessment order ex-parte u/s. 144 of the Act and made addition of Rs.1,01,12,060/- by estimating the income @ 8% of the total deposits in the bank account. On appeal, the Ld. CIT(A) called for remand report from the A.O. The A.O in the remand report has submitted that notices could not be served to the assessee on the given address, and concluded that the assessee did not submit any supporting books of accounts or any audit report to claim or justify net income. Accordingly, the Ld. CIT(A) confirmed the addition. 3. The Ld. Authorized Representative has submitted that the assessee could not produce books of accounts or could make any submission as the assessee did not receive any notices from the A.O. The Ld. AR further submitted that the estimation of income @ 8% is excessive as net profit of the assessee in all the preceding year is around 1.09%. For this, the assessee has submitted a chart as under: A.Y Gross Turnover Gross Profit GP Rate Net Profit NP Rate 2013-14 2,39,83,256 6,83,496 2.85% 2,83,411 1.18% 2014-15 5,75,15,717 10,45,232 1.82% 5,86,889 1.02% 2015-16 4,94,20,650 12,76,998 2.58% 5,26,824 1.07% ITA No.1065/Chny/2025 Sankar :- 3 -: 2016-17 5,44,34,432 16,10,347 2.96% 6,03,953 1.11% Average Net Profit Rate 1.09% Therefore, the Ld. AR has requested that one more opportunity be granted to the assessee to substantiate his case before the A.O. 4. On the other hand, the Ld. Departmental Representative (DR), relied on the orders of lower authorities and submitted that the orders were passed ex-parte as the assessee has been non-compliance with the notices issued. 5. We have heard the rival submissions, and perused the materials available on record. It is noted that the AO and the Ld. CIT(A) have passed the orders ex-parte without giving proper opportunity to the assessee. In our considered opinion, and keeping in view the principles of natural justice, the assessee be provided with another opportunity of hearing to substantiate his case before the A.O subject to payment of costs of Rs.5,000/-. The same shall be paid by the assessee to Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras within a period of one month from the date of receipt of this order and produce the receipt before the A.O. Accordingly, we set aside the orders passed by the A.O and the Ld. CIT(A) and remit the matter back to the file of the A.O for denovo ITA No.1065/Chny/2025 Sankar :- 4 -: adjudication. We also direct the assessee to appear before the A.O on the date of hearing without fail and furnish complete details for fresh consideration. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 15th day of July, 2025 at Chennai. Sd/- Sd/- (एबी टी. वक ) (ABY. T. Varkey) \u0011ाियक सद! / Judicial Member (जगदीश) (Jagadish) लेखा सद! /Accountant Member चे\u0010नई/Chennai, \u0013दनांक/Dated: 15th July, 2025. EDN/- आदेश क\u0016 \bितिल\u0019प अ\u001aे\u0019षत/Copy to: 1. अपीलाथ\b/Appellant 2. थ\b/Respondent 3. आयकर आयु\u0010/CIT, Coimbatore 4. िवभागीय ितिनिध/DR 5. गाड\u0019 फाईल/GF "