PAULNATHAN SEKAR,CHENNAI vs. ITO, NON CORP. WARD 22(4) TBM, CHENNAI

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ITA 560/CHNY/2023Status: DisposedITAT Chennai26 June 2023AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s order and remitted the matter back to the CIT(A) for fresh adjudication. The assessee was granted one more opportunity to furnish evidence regarding the source of cash deposits.

What were the facts?

The assessee deposited a significant amount of cash during the demonetization period. The Assessing Officer treated these deposits as unexplained investment under Section 69 of the Income Tax Act, 1961, as the assessee could not provide supporting evidence like a cash book.

What were the issues?

Whether the cash deposits made during the demonetization period are unexplained investments. Whether the assessee should be granted another opportunity to present evidence for the source of these deposits.

Which sections of the Income-tax Act were involved?

Section 69,Section 143(2),Section 142(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Before: Shri V. Durga Rao & Shri Manjunatha, G.

Hearing: 26.06.2023Pronounced: 26.06.2023

आयकर अपीलीय अिधकरण, ’ए’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी वी दुगा� राव �ाियक सद� एवं �ी जी. मंजुनाथा, लेखा सद� के सम� Before Shri V. Durga Rao, Judicial Member & Shri Manjunatha, G. Accountant Member आयकर अपील सं./ Year: 2017-18 Paulnathan Sekar, Vs. The Income Tax Officer, No. 116, Radha Nagar Main Road, Non Corporate Ward 22(4), Chrompet, Chennai 600 044. Tambaram, Chennai. [PAN:ALRPS0457K] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Ms. T.V. Muthu Abirami, Advocate ��थ� की ओर से/Respondent by : Shri AR V Sreenivasan, Addl. CIT सुनवाई की तारीख/ Date of hearing : 26.06.2023 घोषणा की तारीख /Date of Pronouncement : 26.06.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi dated 07.02.2023 for the assessment year 2017-18.

2.

Brief facts of the case are that the assessee filed his return of income for the assessment year 2017-18 on 27.10.2017 admitting an income of ₹.9,07,760/-. The case of the assessee was selected for scrutiny under CASS for the reason that cash was deposited during demonetization period. Accordingly, the Assessing Officer issued notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] dated 10.08.2018 as well as notice under section 142(1) of the Act asking the assessee to produce the cash book, bank statements, source for the cash deposits, etc. along with purchase register, sales register and supporting documents. In the assessment order, the Assessing Officer has observed as under:

On verification, the balance sheet for the year ended 31.3.16 and 31.3.17 reveals that the assessee did not have substantial cash balance in the balance sheet. In the absence of cash book and other relevant account books, it cannot be concluded that the assessee is doing the business only in cash. On verification of bank account of M/s. Selvam Agencies with Union Bank of India it is seen that the first cash deposit starts on 11.11,16 i.e., during the period of demonetisation, If the assessee's contention that the cash deposits are represented by way of sales, is true then there should have been periodical and sequential cash deposits from the beginning of the financial year. In the case of IOB account for Selvam Mahal also, but for a deposit of Rs.76000/- prior to 12.11.16, all the deposits have been made during the demonetisation period. It is observed from the bank account of Selvam Agencies with Union Bank that there has been not even a single deposit by cash prior to 9.11.16. A prudent business man who is selling his goods by way of cash definitely would have deposited the proceeds on daily basis into bank account by making contra entries in his cash book maintained by him. Since the assessee has not made a single cash deposit before the demonetisation period, it is construed that the assessee made the cash deposit out of the unexplained cash available with him before the demonetisation period. Since the assessee is not able to substantiate these deposits with his trading in hardware business and receipts from marriage hall, the amount deposited by way of cash is treated as unexplained investment u/s 69 of the Income tax Act and accordingly assessed to income tax in his hands.

Amount Selvam Mahal – IOB 13,98,000 Selvam Agency 26,00,000 City Union Bank 4,00,000 43,98,000 3. Accordingly, the Assessing Officer has completed the assessment order under section 143(3) of the Act dated 06.12.2019 assessing total income of the assessee at ₹.53,05,760/- after making addition of ₹.43,98,000/- under section 69 of the Act. On appeal, in the absence of any response from the assessee, the ld. CIT(A) partly allowed the appeal of the assessee.

4.

On being aggrieved, the assessee is in appeal before the Tribunal against the exparte order of the ld. CIT(A). The ld. Counsel for the assessee has submitted that due to the circumstances beyond his control, the assessee could not furnish details before the ld. CIT(A) and prayed for one more opportunity of being heard to the assessee.

5.

On the other hand, the ld. DR supported the order passed by the ld. CIT(A).

6.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the addition made on account of unexplained cash deposited during demonetization, the assessee filed an appeal before the ld. CIT(A). Despite notice of hearing issued, since the assessee could not file any documentary evidence in support of source for the cash deposited during demonetization period, the ld. CIT(A) allowed to the extent the cash deposited earlier to the start of demonetization and the addition towards balance amount was confirmed. In the appellate order, we find that the ld. CIT(A) has given three opportunities to the assessee for furnishing the information towards source for the cash deposited during demonetization period. Since the assessee could not furnish the written submissions due to the circumstances beyond his control, the ld. Counsel prayed for affording one more opportunity of being heard to the assessee. Considering the plea of the assessee and to meet the ends of natural justice, we are of the considered opinion that the assessee shall be given one more opportunity of being heard to furnish the evidence towards source for the cash deposit. Thus, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh in accordance with law by affording an opportunity of being heard to the assessee for furnishing evidence for the source of cash deposited during demonetization period.

7.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 26th June, 2023 at Chennai.

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