SELLAPPA GOUNDER KUPPUSAMY,TIRUPPUR V. ITO, WARD-2(4), TIRUPPUR

ITA 793/CHNY/2025

AI Insights

The case involves Sellappa Gounder Kuppusamy, the appellant, who contested the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi, for the assessment year 2011-12. The primary issue was the rejection of the condonation petition and the confirmation of the addition made by the Assessing Officer, who treated substantial cash deposits as unexplained money under section 69A of the Income Tax Act. The appellant had opted for the presumptive taxation scheme under section 44AD. The Tribunal considered the medical hardships faced by the appellant and his mother, which contributed to the delay in filing the appeal, and found merit in the appellant's arguments and evidence presented.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652695 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Other Referred Cases: Baskaran v. DCIT, Atish Singla v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: K. MUTHUKUMAR
• Keywords: Condonation of delay; Reasonable cause; Presumptive income
• Section: 148; 144; 142(1); 44AD

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी अिमताभ शुƑा, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Amitabh Shukla, Accountant Member आयकर अपील सं./I.T.A. No.793/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2011-12 Sellappa Gounder Kuppusamy, 125, Sulliporukkupalaiyam, Kilangundal, Mulanur, Tiruppur 638 106. [PAN:BBDPK7658F] Vs. The Income Tax Officer, Ward 2(5), Tiruppur. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri K. Muthu Kumar, C.A. ŮȑथŎ की ओर से/Respondent by : Ms. R. Anita, Addl. CIT सुनवाई की तारीख/ Date of hearing : 03.06.2025 घोषणा की तारीख /Date of Pronouncement : 16.06.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 18.02.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2011-12. 2. The assessee raised 2 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in rejecting the condonation petition and confirming the addition made by the Assessing Officer when the assessee has opted for I.T.A. No.793/Chny/25 2 presumptive taxation scheme under section 44AD of the Income Tax Act, 1961 [“Act” in short]. 3. Brief facts relating to the case are that as per information available with the Department, the Assessing Officer noted that the assessee had deposited cash to the extent of ₹.24,43,800/- in Karur Vysya Bank, Dharapuram and no return of income was filed for the AY 2011-12. Accordingly, the Assessing Officer issued notice under section 148 of the Act. On perusal of the bank statement obtained from Karur Vysya Bank, the Assessing Officer noted that the above sum of ₹.24,43,800/- was deposited in assessee’s SB account and ₹.15,90,109/- were deposited in current account, total cash deposits found to be ₹.40,33,909/-. In response to the notice under section 148 of the Act, the assessee filed his return of income on 02.07.2018 declaring an income of ₹.2,59,800/- under section 44AD of the Act for gross turnover of ₹.32,00,000/-. Since there was no response to the notices issued under section 143(2) of the Act and 142(1) of the Act, the Assessing Officer completed the assessment under section 144 r.w.s. 147 of the Act dated 31.12.2018, inter alia, treating the entire cash deposits as unexplained money under section 69A of the Act. I.T.A. No.793/Chny/25 3 4. The assessee preferred an appeal before the ld. CIT(A) with a delay of more than six months as stated in first para of the impugned order. The assessee offered his explanation under Col. No. 14 of Form 35 and the ld. CIT(A) rejected the condonation of delay and dismissed the appeal filed by the assessee. 5. The ld. AR Shri K. Muthu Kumar, C.A., with regard to the delay in filing appeal before the ld. CIT(A), drew our attention to complete medical records of assessee’s mother at pages 5 to 12 of the paper book and submits that the assessee’s mother was suffering from persistent mid- sternal region pain leading to coronary angiogram in July, 2018 and stenting to the LAD in August, 2018 through the right radial approach followed by her recovery took three-months, the assessee is her primary caregiver fully responsible for her medical care, including frequent hospital visits and admissions. He further submits that compounding these difficulties, assessee’s mother was further diagnosed with Pylori positive gastritis and treatments taken followed by assessee’s hospitalization in March, 2019 and he underwent Angio RF Ablation and was placed on bed rest for six to eight months as is evidence by way medical records placed at pages 13 to 27 of the paper book. He further submits that the assessee underwent critical bypass surgery due to I.T.A. No.793/Chny/25 4 arterial blockages, rendering him bedridden for several months and completely incapable of managing legal or financial matters and moreover, assessee’s mother also underwent similar bypass surgery along with other health issues during the same period, being the sole caregiver, the assessee was burdened with both financial and emotional responsibilities of ensuring medical care for himself and his family. Thus, the ld. AR prayed to condone the delay of 163 days in filing the appeal before the ld. CIT(A). He relied on the order of this Tribunal in the case of Baskaran v. DCIT in ITA No. 201/Chny/2023 dated 09.06.2023. 6. The ld. AR drew our attention to 1st page of assessment order and submits that the assessee filed his return of income and disclosed gross turnover of ₹.32,00,000/- under presumptive taxation scheme under section 44AD of the Act, admitting net profit of 8% being ₹.2,56,000/- for taxation and paid tax thereon. He referred to the order of the Delhi Benches of the ITAT in the case of Atish Singla v. ITO in ITA No. 1185/Del/2021 dated 06.04.2022, wherein, the Tribunal held that once the assessee opted for presumptive taxation under section 44AD of the Act, further scrutiny of cash deposits is unjustified and deleted the entire addition by holding that the Assessing Officer cannot question individual transactions without solid evidence and submitted that the addition made I.T.A. No.793/Chny/25 5 by the Assessing Officer under section 69A of the Act is unjustified. The ld. AR drew our attention to page 3 & 4 of the paper placing on record copy of commercial tax registration certificate. Further, the ld. AR referred to Revenue document (Patta) towards agricultural land in possession of the assessee (pages 28 to 30), Electricity consumer ledger of Sun Mining Tools owned by the assessee (pages 31 to 33), sample sales invoice of Sun Mining Tools (pages 34 to 60), Sales register of Sun Mining Tools (pages 61 to 86), purchase registered and a sample purchase invoice of Sun Mining Tools (pages 87 to 101), cash flow statement of Sub Mining Tools (page 102) and letters from farmers (pages 103 to 125) in the form of paper book and prayed for deleting the same. 7. The ld. DR Ms. R. Anita, Addl. CIT relied on order passed by the ld. CIT(A). 8. Heard both the parties and perused the material available on record. The assessee filed a details written submissions along with appeal memo reveals that the assessee is an individual and engaged in a lathe workshop business by name & style of “Sun Mining Tools and the same has been registered with the Commercial Taxes Department in Form D dated 09.06.2009 during the AY 2011-12 and filed copy of registration certificate at pages 3 & 4 of the paper book. According to the I.T.A. No.793/Chny/25 6 Assessing Officer, the assessee deposited cash to an extent of ₹.24,43,800/- in his SB account and also deposited ₹.15,90,109/- in current account. On perusal of the assessment order at 1st page, we note that against the notice under section 148 of the Act, the assessee filed return of income declaring an income of ₹.2,59,800/- under section 44AD of the Act admitting gross turnover of ₹.32,00,000/-. However, the Assessing Officer treated the entire cash deposit as unexplained money and brought to tax. Since the ld. CIT(A) has not satisfied with the reasons for the delay in filing the appeal, the appeal filed by the assessee was dismissed in principle, against which, the assessee filed detailed medical reports in respect of assessee’s mother at pages 5 to 12 & pages 13 to 27 of the paper book in respect of assessee. 9. In this case, the Assessing Officer issued notice under section 143(2) of the Act dated 11.09.2018 and notice under section 142(1) of the Act dated 05.10.2018 and completed the assessment under section 144 r.w.s. 147 of the Act dated 31.12.2018. Upon perusal of the medical reports, we note that assessee’s mother was under medical treatment for coronary angiogram in July, 2018 and stenting to the LAD on 08.08.2018 followed by post medical care. Further, we note that in February, 2019, assessee’s mother was further diagnosed with H. Pylori positive gastritis I.T.A. No.793/Chny/25 7 and was under medical treatment. Against the assessment order, the assessee was required to file further appeal on or before 30.01.2019 before the ld. CIT(A), whereas, the assessee filed the appeal on 19.07.2019. As per medical report, the assessee has been underwent Angio RF Ablation on 02.03.2019 and he has been under medical treatment from 10.09.2018 to 15.07.2019. Under the above facts and circumstances, we find that the assessee was prevented by reasonable cause for the delay in filing appeal before the ld. CIT(A) subject to the condition of payment of ₹.10,000/- in favour of the State Legal Aid Authority, Hon’ble Madras High Court within 30 days from the date of receipt of this order and produce the receipt before the ld. CIT(A). The ld. CIT(A) shall satisfy the payment of cost and proceed to dispose of the appeal of the assessee after condoning the delay. 10. On merits, the assessee could not furnish any details such as trade license/TIN No./Registration with any Government Department, sales bills, month wise sales tax return/service tax return etc. as called for by the Assessing Officer during the course of assessment proceedings as well as appellate proceedings since the assessee and assessee’s mother were under prolonged medical treatment for which the assessee has furnished complete details in the form of paper book. However, the I.T.A. No.793/Chny/25 8 assessee furnished complete details at pages 3 & 4, 28 to 125 of paper book before the Tribunal. Considering the old assessment year being 2011-12, we proceed to consider the materials filed in the form of paper book and adjudicate the issue on merits. 11. We find the Assessing Officer noted that the assessee filed his return of income and disclosed gross turnover of ₹.32,00,000/- under presumptive taxation scheme under section 44AD of the Act, admitting net profit of 8% being ₹.2,56,000/- for taxation. 12. We note that there is no dispute with regard to the business of the assessee and having two bank accounts viz., one is savings bank account and other one is current account. The Assessing Officer proceeded to add the entire cash deposit as unexplained money only for the reason for non-submissions of details as we discussed supra, wherein, we held the reasons stated by the assessee are bonafide in filing the appeal before the ld. CIT(A) with delay as well as non- appearance before the Assessing Officer and ld. CIT(A). The assessee, before us, furnished all the details as is evident from pages 3 & 4 and 28 to 125 of the paper book. On verification of the complete details furnished by the assessee and in view of the special provision for computing profits and gains of business on presumptive basis under section 44AD of the I.T.A. No.793/Chny/25 9 Act, we are of the considered opinion that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is not justified. Therefore, keeping in mind the assessment year 2011-12, being old, we direct the ld. CIT(A) to accept the return of income and delete the addition made by the Assessing Officer and accordingly the ld. CIT(A) shall pass order. Thus, the grounds raised by the assessee are allowed for statistical purposes with the direction to the ld. CIT(A) to pass order in accordance with the directions given herein above. 13. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 16th June, 2025 at Chennai. Sd/- Sd/- (AMITABH SHUKLA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 16.06.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "