SUTHAKAR,VIRUDHUNAGAR vs. ITO, VIRUDHUNAGAR

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ITA 2113/CHNY/2026Status: DisposedITAT Chennai03 September 2026AY 2018-195 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee was not given a proper opportunity to be heard by the AO. Citing the Supreme Court's decision in Tin Box Co. v. CIT, the Tribunal set aside the CIT(A)'s order and restored the assessment to the AO for de novo assessment.

What were the facts?

The assessee, a non-filer, made significant cash deposits in his bank account. The Assessing Officer (AO) added these deposits as unexplained income under Section 69A, and the CIT(A) dismissed the assessee's appeal. The assessee claimed he did not receive the notices from the AO due to email glitches.

What were the issues?

Whether the assessee was denied a proper opportunity of being heard by the Assessing Officer and whether the matter should be remanded for fresh assessment.

Which sections of the Income-tax Act were involved?

Section 69A,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY.S

Hearing: 17.08.2026Pronounced: 03.09.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)’), Delhi, dated 14.01.2026 for the Assessment Year (hereinafter referred to as ‘AY’) 2018-19 u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

The main grievance of the assessee is against the action of the Ld. CIT(A) dismissing the appeal of the assessee without affording proper

No.2113/Chny/2026 (AY 2018-19) Suthakar :: 2 :: opportunity to explain the nature and source of the cash deposits made during the relevant assessment year. In this regard, the Ld. AR Mr. R. Thulasiram, Adv pointed out that the Assessing Officer (AO) passed an ex parte order qua the assessee, wherein the AO added the entire cash deposits amounting to Rs. 1,06,98,400/- under section 69A of the Act as unexplained money. Therefore, he pleaded that the assessee may be given an opportunity to present the relevant evidence to substantiate the nature and source of the cash deposits, which, according to him, represented commission received by the assessee in the course of business. For going back to AO, he relied upon the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC).

3.

Per contra, the Ld. DR Ms. Pushpa Hemachand, Sr. DR submitted that the assessee did not file a return of income, despite having deposited more than a crore of rupees in his bank account [maintained with City Union Bank Limited]. Further, despite issuance of several notices, the assessee did not bother to appear/explain before the Assessing Officer the nature and source of the deposits. Therefore, according to her, in the absence of explanation the AO had no other alternative but to make assessment against the assessee. The Ld. DR submitted that the Ld. CIT(A), while deciding the appeal of the assessee, having found that no evidence was adduced by the assessee to support his contention that it was commission income, had rightly dismissed the appeal of the assessee. It was submitted that the impugned action of the Ld. CIT(A) did not call for any interference from our side.

No.2113/Chny/2026 (AY 2018-19) Suthakar :: 3 :: 4. We have heard both the sides and perused the records. The assessee is noted to be a non-filer of return of income. Based on the information that the assessee had deposited cash of Rs. 1.07 crores in his bank account maintained with City Union Bank Limited, the AO reopened the assessment of the assessee by issuing statutory notices. Pursuant to the notices so issued, the assessee did not file his return of income. The AO noted that despite issuance of several notices calling upon the assessee to explain the nature and source of the cash deposits, the assessee failed to furnish any explanation along with corroborative evidence. Hence, the AO treated the deposits as unexplained and made an addition of Rs.1,06,98,400/- under section 69A of the Act.

5.

On appeal, the Ld. CIT(A) confirmed the action of the AO having found that no evidence was adduced by the assessee to support his contention that it was commission income. Before us, the assessee submitted that he had not received the notices issued by the AO, possibly due to internet-related glitches, as a result of which the notices were found to have gone to the spam folder of the assessee. Hence, the assessee could not appear before the AO, and an adverse view was taken by the AO on account of the non-compliance by the assessee.

6.

In this regard, it is noted that there have been instances where emails have gone to the spam folder of the recipient. In any case, since the assessee did not get a proper opportunity before the AO during the assessment proceedings, we are of the view that the assessee should be given one more opportunity to explain the nature and source of the cash

No.2113/Chny/2026 (AY 2018-19) Suthakar :: 4 :: deposits, as held by the Hon’ble Supreme Court in the case of Tin Box (supra):-

“1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightaway agree with the assessee's submission that the Income- tax Officer had not given to the assessee proper opportunity of being heard." 2. That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 3. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee?" 4. In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the asses-see. 5. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.” 7. In this case, the assessee was directed by us to deposit a sum of Rs. 5,000/- with the Tamil Nadu State Legal Services Authority, Chennai, as cost for non-participation in the proceedings before the authorities below and also to undertake to appear before the AO. The assessee has complied with the said directions by remitting a sum of Rs. 5,000/- on 11.08.2026. Proof of such remittance has also been filed before us. Hence, without dwelling into the merits of the explanation furnished by the assessee, we set aside the impugned order of the Ld. CIT(A) and

No.2113/Chny/2026 (AY 2018-19) Suthakar :: 5 :: restore the assessment back to the file of the AO for de novo assessment. The assessee is directed to file explanation regarding the nature and source of the cash deposits, along with relevant evidence to substantiate the same. Thereafter, the AO shall frame the assessment afresh in accordance with law, after providing due opportunity of being heard to the assessee.

8.

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

Order pronounced on the 03rd day of September, 2026, in Chennai. Sd/- Sd/- (पदमावती यस) (एबी टी. वक�) (Padmavathy. S) (ABY T. VARKEY) लेखा सद�/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 03rd September, 2026. MM आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

YASH Digitally signed by YASHVIR VIR SINGH Date: 2026.09.17 SINGH 22:11:54 -07'00'

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