VADIVEL MUTHUKRISHNAN,POLLACHI V. THE INCOME TAX OFFICER, WARD -2, POLLACHI , POLLACHI-INCOME TAX OFFICE, POLLACHI

ITA 2701/CHNY/2024

AI Insights

The case involves an appeal by Vadivel Muthukrishnan against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2017-18. The primary issue was the addition of Rs.10,09,904 under section 69A of the Income Tax Act, 1961, concerning unexplained cash deposits during the demonetization period. The assessee argued that part of the deposit was from the sale of immovable property and sales turnover, and there was a clerical error in reporting the sales. The Income Tax Officer (ITO) added the entire unexplained amount, which was contested in the appeal. The Tribunal, after considering the arguments and the lack of regular books of accounts by the assessee, estimated the business profits and partly allowed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708129 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Goetze India vs. CIT, S.M.I.L.E Microfinance Ltd vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: S. SRIDHAR
• Keywords: Set aside; Revised return

Judgement Text

"आयकर अपीलीय अधिकरण, ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री मनु क ुमार धिरर ,न्याधयक सदस्य एवं माननीय श्री अमिताभ शुक्ला, लेखा सदस्य क े सिक्ष BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2701/Chny/2024 Assessment Years: 2017-18 Vadivel Muthukrishnan, No.27, Kattabomman Street, Pollachi, Coimbatore, Tamil Nadu-642 001. [PAN: AKLPM8847L] The Income Tax Officer, Ward-2, Pollachi (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Shri S.Sridhar, Advocate. प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 16.06.2025 घोषणा की तारीख /Date of Pronouncement : 18.07.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2024-25 / 1067721314(1) dated 19.08.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Centre(NFAC), Delhi for the assessment year 2017-18. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time. ITA No.2701 /Chny/2024 Page - 2 - of 4 2.0 It has been noted that there is a delay of 03 days in the case, in filing of this appeal before the tribunal. In its affidavit the assesse has pleaded that the delay was on account of some misunderstanding of the time barring dates. The assesse submitted that there will not be case of any non-compliance now. We have considered the justification put forth by the assesse and we are satisfied with their adequacy. We are also conscious of the fact that no litigant gains by intentionally delaying its own matters. The Ld. DR did not pose any serious objections to the delay. Accordingly, we hereby condone the delay and proceed to adjudicate this appeal. 3.0 The only issue raised through ground of appeal is regarding the addition of Rs.10,09,904 u/s 69A on account of unexplained cash deposit made by the assessee during the demonetization period along with invocation of section 115BBE. Explaining the brief factual matrix the Ld.AR submitted that the Ld.AO had noted a cash deposit of Rs.23,68,904/- in assessee’s bank account. On being queried, the assessee had submitted that of the same Rs.13,59,000/- represented amounts received on sale of an immovable property and that the balance was sales turnover. Before the Ld.AO assessee had argued that by an inadvertent clerical error the amount of Rs.1,61,496/- shown as sales was actually profit on the turnover of about Rs.9,68,904/-. The Ld. AO however proceeded to add Rs.10,09,904/- being the difference between ITA No.2701 /Chny/2024 Page - 3 - of 4 total cash deposits of Rs.23,68,904/- minus Rs.13,59,000/-. The Ld.Counsel submitted that the Ld.CIT(A) summarily dismissed the assessee’s arguments. He held that the reported mistake was never addressed by way of any revised return and therefore the hypothesis cannot be accepted. Before us the Ld.Counsel for the assessee reiterated the same set of arguments and placed reliance upon judicial precedents. 4.0 Per contra the Ld.DR relied upon the order of lower authorities. 5.0 We have heard the rival submissions in the light of material available on records. We have noted from the arguments made by the assessee that the timeline for filing of revised return had lapsed by the time the impugned mistake had come to its notice. The judicial precedent set by Hon’ble Apex Court in the case Goetze India bars consideration of any revised figures before the Ld.AO other than those through revised return of income. We have noted that the Ld.CIT(A) has confirmed the Ld.AO’s order by merely relying upon the principles of human probability. Nothing has been brought out by the Revenue to allude that the impugned income conclusively does not represent any sale proceeds. Be that as it may be we are of the considered view that ends of justice would be met if we estimate profits from the reported sales turnover of Rs.10,09,904/-. The assessee has reportedly not been maintaining regular books of accounts. We therefore hold the view that an estimation ITA No.2701 /Chny/2024 Page - 4 - of 4 of Rs.4 lakhs would suffice as business profits on the said reported sales turnover of Rs.10,09,904/-. Accordingly, we set aside the order of lower authorities and direct the Ld.AO to sustain the addition of Rs.4 lakhs and delete the balance addition of Rs.6,09,904/-. We have also noted that the invocation of section 115BBE in this case is not maintainable given the ratio laid down by the Hon’ble Madras High Court in its judgement dated 19/11/2024 qua W.P (MD) NO. 2078 Of 2020 & W.M.P (MD) NO. 1742 Of 2020 in the case of S.M.I.L.E Microfinance Ltd . Accordingly all the grounds of appeal raised by the assessee are partly allowed. 6.0 In the result, the appeal of the assessee is partly allowed. Order pronounced on 18th , July-2025 at Chennai. Sd/- (मनु क ुमार धिरर) (MANU KUMAR GIRI) न्याधयक सदस्य / Judicial Member Sd/- (अधमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 18th , July-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai/Coimbatore/Madurai/Salem. 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF "