KUMARAVEL HUF,ERODE vs. ITO, ERODE

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ITA 2326/CHNY/2026Status: DisposedITAT Chennai10 September 2026AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee was not given a proper opportunity to be heard by the AO and that the CIT(A) failed to consider additional evidence submitted under Rule 46A. Therefore, the case was remitted back to the AO for fresh consideration.

What were the facts?

The assessee, Kumaravel HUF, made cash deposits during the demonetisation period. The Assessing Officer added the deposits as unexplained income, holding that the HUF status and agricultural income were not properly substantiated. The CIT(A) dismissed the appeal, agreeing with the AO.

What were the issues?

Whether the assessee was provided with adequate opportunity to present evidence and whether the CIT(A) properly considered additional evidence submitted during the appeal.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: MS. PADMAVATHY.S & SHRI MANU KUMAR GIRI

For Respondent: Mr. K. Shivalingam, Addl.CIT

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income-tax (Appeals), Addl/ JCIT(A)-1, Chandigarh (in short “FAA”) passed u/s. 250 of the Income-tax Act, 1961 (the Act) dated 20.03.2026 for assessment year 2017-18.

ITA No.2326/Chny/2026 Kumaravel HUF :2:

2.

The assessee is a HUF and filed the return of income for assessment year 2017-18 on 25.12.2017 admitting a total income of Rs.1,000/- and agricultural income of Rs.4,69,800/-. The case was selected for scrutiny for the reason that the assessee has made cash deposits during demonetisation period. The assessee furnished profit and loss account, balance sheet and details of agricultural income and expenditure. The Assessing Officer called on the assessee to furnish details of evidence for the formation of HUF status and also details pertaining to the agricultural income. The assessee furnished part of the details called for by the Assessing Officer. The Assessing Officer after considering the submissions of the assessee held that the PAN for HUF status is obtained only during the demonetisation period for the purpose of opening bank account and making deposit of SBN. The Assessing Officer further held that the assessee failed to produce documentary evidence for creation of HUF and has not furnished the copy of deeds in respect of the agricultural land holding. Accordingly, the AO held that the assessee has not discharged the onus of proving the source for cash deposit and made an addition of Rs.14,34,000/- u/s. 69A of the Act towards cash deposits. Aggrieved, the assessee filed further appeal before the FAA. Before FAA, the assessee reiterated the submissions made before the Assessing Officer. The assessee in addition filed a petition under Rule 46A of the Income-tax Rules, 1962 (hereinafter “the Rules”) (page 98 to 101 of paper book). The FAA however dismissed the appeal by holding that: “5.3 The assessing officer has not accepted the version of the appellant for the cash deposited during demonetization because of the following reasons:

i. The assessee has obtained the PAN for HUF status on 23.11.2016 and has opened the bank account on 25.11.2016 for the status of HUF and the Old High Denomination currencies of Rs. 500/- and Rs.1000/- only were deposited to the tune of Rs. 14,34,000 in the bank account of the assessee.

ITA No.2326/Chny/2026 Kumaravel HUF :3:

ii. the assessee has not furnished any documentary evidences for the creation of HUF and has not furnished the copy of the deeds in respect of the agricultural land holdings and has not proved the sources for the agricultural income derived. In this connection, it was confirmed that the assessee has created the above mentioned documents for the purpose of depositing the old currencies of Rs. 500/- and Rs.1000/- notes to the tune of Rs. 14,34,000/- in the bank account of the assessee during demonetization period.

5.4 During the course of appellate proceedings the appellant submitted written submission wherein stated that the entire agriculture lands held by the appellant are Pandiyampalayam is 4258 and it is a Gram Panchayat covering geographical area of in Perundural village and Pandiyampalayam village. The population of 953.58 hectares. Perundurai population is 24930 and is a town panchayat. This is only to highlight the fact that the population and land area are also corroborating the carrying on of agricultural operations. The assessee continues to hold and cultivate assessee had furnished reply on creation of HUF and also had cited a legal the lands till date. Appellant has only agricultural income source. Further, the precedent in support of the status of HUF. But the appellant has not submitted in reply that how to generate income and what is source of generate of agriculture income. The appellant has not submitted any supporting documents regarding generation of income i.e. sale and purchase of agricultural product and details of buver of agriculture product. The assessee has also not submitted the copy of deed of HUF which was created during the time of demonetization.

5.5 The submissions of the appellant have been examined however the same are not tenable as there is no corresponding proof of the purchases and expenses of agriculture product. Further the appellant has not submitted any credible source of deposit of cash of Rs. 14.34.000/- in the bank account during demonetization.

5.6 In view of the above, it is held that the evidences filed by the appellant during the course of appellate proceedings are not reliable and they do not extend any credibility to the deposit of cash in the bank account or the genuineness of the business transaction. Further, the AO had made clear observation in the assessment order that the source of the cash deposit could not be verified. Hence, the AO has rightly held the cash deposited in the bank during demonetization as appellants own money.

ITA No.2326/Chny/2026 Kumaravel HUF :4:

5.7 In view of the discussion in the preceding paragraphs, I am constrained to concur with the AO's findings of fact and decisions thereof, more particularly in the absence of any meaningful and worthwhile submissions/documentations even during the instant appellate proceedings, to counter effectively the position adopted by the AO on the concerned issues and reduced in writing in the assessment order. It is trite that an appellate authority is essentially called upon to balance the two sides of an argument presented before him as held in Nirmal Singh and Others of the Hon'ble Punjab and Haryana High Court [Cr No. 3791 of 2013 (O&M) dated 01.05.2014]. The additions made by the AO are sustained. As a result, all grounds of appeal are dismissed.”

3.

We heard the parties and perused the material available on record. The primary contention of the ld.AR is that the assessee was not given proper opportunity of being heard by the AO and that the CIT(A) has not considered the additional evidence submitted by the assessee under Rule 46A of the Rules. We notice that the assessee vide letter dated 09.05.2025 has filed an application under Rule 46A of the Rules before the CIT(A) submitting the list of documents in support of the creation of HUF and also to substantiate that the land is being used for agricultural activities. We further notice that the assessee has also submitted the title deeds of the agricultural lands acquired from 2000 till 2012. However, from the perusal of the findings of the CIT(A) as extracted hereinabove, we notice that the CIT(A) has not considered any of the documentary evidence furnished by the assessee. In fact, the CIT(A) has not even recorded anything with regard to filing of additional evidence under Rule 46A of the Rules by the assessee. We also notice that the Assessing Officer has issued the notice u/s. 143(2) of the Act on 17.09.2018 but has issued notice u/s. 142(1) of the Act only on 09.08.2019 and has completed the assessment u/s. 143(3) of the Act on 24.12.2019. Therefore, there is merit in the contention of the ld.AR that the assessee was not given proper opportunity of being heard by the Assessing Officer. Considering the over all facts and circumstances of the case, we

ITA No.2326/Chny/2026 Kumaravel HUF :5:

are of the view that the assessee need to be given one more opportunity in the interest of natural justice and fair play. Accordingly, we remit the impugned issue back to the Assessing Officer with a direction to consider the evidence filed by the assessee to substantiate the source for cash deposits and decide the issue in accordance with law. The assessee is directed to file the necessary documents before the Assessing Officer and cooperate with the proceedings. It is ordered accordingly.

4.

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

Order pronounced on 10th day of September, 2026 at Chennai.

Sd/- Sd/- (मनु कुमार िग!र) (पदमावती यस) (Manu Kumar Giri) (Padmavathy.S) �ाियक सद� / Judicial Member लेखा सद� /Accountant Member चे ई/Chennai, िदनांक/Dated: 10th September, 2026. JPV, Sr. P.S

आदेश की �ितिलिप अ"ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु$/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

PRASANNA Digitally signed by PRASANNA VANI JETTY VANI JETTY Date: 2026.09.11 14:35:50 +05'30'

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