SURESH BABU CHALORAKANDY ,BENGALURU V. INCOME TAX OFFICER, WARD-5(3)(6), BENGALURU

ITA 1156/BANG/2025

AI Insights

Mr. Suresh Babu Chalorakandy, employed at M/s. Tripura Chits Pvt. Ltd., faced scrutiny from the Income Tax Department following substantial cash deposits in his bank account during the demonetization period. The AO assessed these deposits as income under section 69A of the Income Tax Act due to non-filing of income tax returns by the assessee. The CIT(A) upheld this assessment. The Tribunal, however, found merit in the assessee's argument that the deposits were company funds, not personal income, and remitted the matter back to the AO for further investigation. The Tribunal also addressed the procedural delay in filing the appeal, citing the assessee's relocation and the closure of his employer's business as reasons for the delay.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772124 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Collector of Land Acquisition Vs. MST Katiji and Others
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: CHYTANYA V. MUDRABETTU
• Keywords: Opportunity of being heard; Salary income; Principle of natural justice; TDS; FORM 26AS
• Section: 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.1156/Bang/2025 Assessment Year : 2017-18 Mr. Suresh Babu Chalorakandy, No. 54, Shivamayam, Someshwara Layout, MS Palya, Near Sambram College, Vidyaranyapura (PO), Bangalore North, Bangalore – 560 097. PAN : ADFPC 6359 J Vs. ITO, Ward – 5(3)(6), Bangalore. APPELLANT RESPONDENT Assessee by : Shri. Chytanya V. Mudrabettu,Advocate Revenue by : Shri. Sankar Ganesh D, Addl. CIT(DR)(ITAT), Bangalore. Date of hearing : 13.08.2025 Date of Pronouncement : 28.08.2025 O R D E R Per Laxmi Prasad Sahu, Accountant Member : This is an appeal filed by the assessee against the Order passed by the CIT(A) vide DIN &Order No: ITBA/NFAC/S/250/2024-25/1065599748(1) dated 12.06.2024. 2. Briefly stated, the facts of the case are that assessee is employed in M/s. Tripura Chits Pvt. Ltd., and as per the information it was noticed that during demonetization period, there was cash deposit in the bank account of the assessee and on perusal of the portal it was noticed that assessee had not filed return of income and assessee was given opportunities. A show cause notice was also issued to the assessee but the assessee did not file his return of income Printed from counselvise.com ITA No.1156/Bang/2025 Page 2 of 4 despite being provided with several opportunities. Notices were sent on the registered email ID available in the web portal of the assessee and notices through speed post / registered post were also sent to the assessee. A notice was issued to the bank under section 133(6) of the Act and bank furnished the information. On perusal of the bank statement, it was noticed that during the demonetization period a sum of Rs.15,80,000/- was deposited and further on verification of the entire bank statement, it was noticed that there was total cash deposit of Rs.36,35,500/-. For natural justice, show cause notice was issued on 06.12.2019 and assessee was asked to justify the source of cash deposits of Rs.36,.35,500/- but the assessee did not respond to any of the notices issued. Therefore, the entire cash deposit was treated as income under section 69A of the Act. Further, on perusal of Form 26AS, it was seen that the assessee has been paid Rs.28 lakhs as salary and TDS of Rs.6,71,601/- made on the salary but the assessee did not file any return of income. Since the assessee did not file return of income, the entire amount appearing in Form 26AS was treated as income. Accordingly, the total income was assessed at Rs.64,34,500/-. 3. Aggrieved from the above Order, assessee filed appeal before the learned CIT(A). During the appellate proceedings, written submissions were uploaded in the ITBA portal. The learned CIT(A) after considering the entire written submissions confirmed the Order of the AO. 4. Aggrieved from the above Order, assessee filed appeal before the Tribunal with a delay of 262 days. The learned Counsel reiterated the submissions with regard to delay in filing appeal before the Tribunal, furnished copy of the Order of the Co-ordinate Bench in ITA No.04/Bang/2025 in which the sequence of events have been narrated and the assessee has been given opportunity to file appeal before the CIT(A). The Printed from counselvise.com ITA No.1156/Bang/2025 Page 3 of 4 learned Counsel submitted that the employer company is closed and assessee was working as manager and many depositors were coming to the office and asking for return their deposits. The Director of the company is sent behind the bars. Therefore, assessee shifted to Andhra Pradesh, appeal could not be filed within the due date. On going through the Order of the Co-ordinate Bench and explanation submitted by the learned Counsel by relying on the judgment of the Hon’ble Supreme Court in the case of Collector of Land Acquisition Vs. MST Katiji and Others, (1987) 2 SCC 107 : 1987 (2) SC, the delay in filing the appeal is condoned. The learned Counsel reiterated the submissions made before the learned CIT(A) and submitted that the company has deposited its money in the assessee’s bank account (current account). The cash deposited in the assessee’s bank account does not belong to the assessee. It is the money of the company and he produced Form 16 generated through Traces and enclosed Form 16 whereas income from salary is shown as Rs.27,78,400/-. The gross salary is Rs.28,00,000/-. The gross salary shown in Form 16 enclsoed is matching with Form 16 Part A obtained through traces whereas TDS has been made of Rs.6,71,601/- and TDS deposited is fully matched. Therefore, the addition of Rs.28 lakhs made by the AO is out of salary income received from his employer. Therefore, this addition made is to be taxed at normal rate of tax. Further, in respect of cash deposits in assessee’s bank account, this matter is remitted back to jurisdictional AO since the cash before the AO as well as learned CIT(A) was not presented properly. During the course of hearing the learned Counsel undertook that the assessee will substantiate cash deposits in his bank account does not belong to the assessee, it belongs to the employer company and company has utilised. Therefore, this issue is remitted back to the jurisdictional AO and decide as per law after giving reasonable opportunity of being heard to the assessee and assessee is directed to produce necessary documents to substantiate his claim Printed from counselvise.com ITA No.1156/Bang/2025 Page 4 of 4 with cogent documents / evidences and not seek unnecessary adjournments in the case. In case of failure, no second leniency shall be granted to the assessee. 5. In the result, appeal filed by the assessee ispartly allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/ Sd/- Sd/- (SOUNDARARAJAN K) (LAXMI PRASAD SAHU) Judicial Member Accountant Member- Bangalore. Dated: 29.08.2025. /NS/* Copy to: 1. Appellants 2. Respondent 3. DRP 4. CIT 5. CIT(A) 6. DR,ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore. Printed from counselvise.com "