SHRI NATARAJAN SUDHAKAR,ERODE V. ITO, WARD-1(2), SALEM

ITA 1259/CHNY/2024

AI Insights

The case involves an appeal by Natarajan Sudhakar against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which confirmed the addition of Rs.13,63,500 as unexplained investments during the demonetization period. The Income Tax Officer had initially assessed this amount along with other unexplained transactions at an 8% presumptive income rate, later reduced to 5% by the CIT(A). The Tribunal found the CIT(A)'s estimation reasonable and directed a uniform application of this rate to all similar transactions, including those during the demonetization period.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 29377 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 29-04-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.ANITA; IRS
• Assessee Lawyers: S. SRIDHAR; ERODE
• Keywords: Business income; Unexplained investment; Gift

Judgement Text

" आयकर अपीलीय अिधकरण ‘सी’’ Ɋायपीठ चेɄई मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI माननीय ŵी मनोज क ुमार अŤवाल ,लेखा सद˟ एवं माननीय ŵी मनु क ुमार िगįर, Ɋाियक सद˟ क े समƗ। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI MANU KUMAR GIRI, JM आयकरअपील सं./ ITA No.1259/Chny/2024 (िनधाŊरणवषŊ / Assessment Year: 2017-2018) Natarajan Sudhakar, 66-83, Thirumala Elite, Amgammal Colony Main Road, Salem 636 009. [PAN: AGUPS 1512M] Vs. The Income Tax Officer, Ward 1(2) Salem (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Shri. S. Sridhar, Advocate (Erode) Ĥ×यथȸ कȧ ओर से /Respondent by : Ms R. Anita, IRS, Addl. CIT. सुनवाई कȧ तारȣख/Date of Hearing : 12.09.2024 घोषणा कȧ तारȣख /Date of Pronouncement : 27.11.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member) This appeal by the assessee is directed against the order No.ITBA/NFAC/S/250/2023-2024/1062618166 (1) dated 14.03.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The assessment was framed by the Income Tax Officer, Ward 1(2), Salem for the assessment year 2017-18 passed u/s.144 of 2 ITA No.1259 /Chny/2024 the Income Tax Act, 1961 (hereinafter the ‘Act’), vide order dated 28.10.2019 2. Brief facts of the case are that the ld. Assessing Officer had received information that the assessee has deposited huge cash in the bank account during the demonetization period. On examination of the database related to the assessee, the AO noticed that the assessee had not filed any return of income for the A.Y.s 2015-16, 2016-17 and 2017-18. During the assessment proceedings, the assessee was asked to explain the reasons for not filing returns of income. In response, the authorized representative of the assessee stated that, due to his preoccupations with the family affairs he could not prepare and file his return of income for the A.Ys 2015-16, 2016-17 and 2017-18 in time. As the present scheme of Income Tax Act is not allowing assessee to file the returns belatedly he could not file his return of income belatedly. As regards, the source of cash deposited in the bank account during demonetization period, the assessee inter-alia had submitted as under: - Sl.No Nature of Sources Amount 1 Op. Cash Balance (1.04.2016) 1,36,538 2 Rentals received 2,82,000 3 Sale of gold jewellery 6,85,984 4 Cash Withdrawals from TMB-SB a/c. 028100050046320 5,38,300 5 Coriander Processing Job works 1,74,000 6 Gift from mother in law 1,20,000 7 Income tr. from HUF u/s 10(2) 1,00,000 Total 20,36,822 3 ITA No.1259 /Chny/2024 The ld. Assessing Officer found that assessee maintained two account bearing numbers 028100050080118 and 0371500508000275 with Tamil Nadu Mercantile Bank, during the period from 01.04.2016 to 31.03.2017. The details of deposits for the period from 01.04.2016 to 31.03.2017 in the bank accounts were summarized as under. Sl.No Account No. Total cash & Other credits other than demonetization period Cash deposit during demonetization 1 028100050080118 (SB Account) 3,29,059/- 2,00,000/- 2 0371500508000275 (Current Account) 2,06,06,303/- 11,63,500/- Total 2,09,35,362/- 13,63,500/- Since the assessee did not render any explanation for the above transactions of Rs.2,09,35,362/- i.e., the cash and other transactions related to the period other than demonetization period, the ld. Assessing Officer assessed the same on presumptive basis at the rate of 8% and estimated income of Rs.16,74,829/-. However, the entire cash deposit during demonetization period was added as unexplained investments u/s.69A of the Act which would be taxed at the rates specified u/s.115BBE of the Act. Finally, the assessment was framed. Aggrieved, assessee preferred an appeal before the ld. Commissioner of Income Tax (Appeals). 3. The ld. CIT(A) confirmed the addition of Rs.13,63,500/-, being cash deposited during demonetization period. 4 ITA No.1259 /Chny/2024 4. On estimate addition, the assessee argued before ld. CIT(A) that ld. Assessing Officer had estimated the business income @8% of total cash of Rs.2,09,35,362/- deposited during the period, whereas all the major transactions were related to the assessee’s current account and same were received on transfer through banking channels and subsequently transferred to other concerns and accordingly, prayed for deletion of addition. The ld. CIT(A) vide letter dated 12.09.2019 requested the assessee to explain the cash and other banking transactions during the period from 01.04.2016 to 31.03.2017 which assessee failed to do so. In the absence of any credible supporting documentary evidences forthcoming from the assessee, the ld. CIT(A) estimated the business income @5% of the total cash deposit of Rs.2,09,35,362/- as against estimation of 8% as made by Ld. AO. Aggrieved, the assessee is in further appeal before us. 5. It is clear that the assessee is unable to adduce any records to substantiate the source of cash deposit. Considering the conduct of the assessee, Ld. AO estimated business income of 8% against normal deposits which was reduced to 5% by Ld. CIT(A). This estimation, in our considered opinion, is quite reasonable and the same, therefore, would not require any interference on our part. At the same time, artificial distinction created in deposits made during demonetization period is not correct. The transactions have happened throughout the year and the nature of transaction is similar. Therefore, similar estimation could be made against demonetization deposit of Rs.13,63,500/-. The Ld. AO is directed to adopt similar 5 ITA No.1259 /Chny/2024 estimation of 5% against these deposits. No other ground has been urged in the appeal. 6. The appeal stand partly allowed. Order pronounced on 27th day of November, 2024 at Chennai. Sd/- Sd/- (मनोज क ुमार अŤवाल) (मनु क ुमार िगįर) (MANOJ KUMAR AGGARWAL) लेखा सद˟ / ACCOUNTANT MEMBER (MANU KUMAR GIRI) Ɋाियक सद˟ / JUDICIAL MEMBER चेɄई Chennai: िदनांक Dated : 27-11-2024 KV आदेश कȧ ĤǓतͧलͪप अĒेͪषत /Copy to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT, Chennai/Coimbatore/Madurai/Salem. 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF "