R D VELLI MAALIHAI,ERODE vs. ACIT, CIRCLE-2, ERODE

The Assessee raised the following grounds of appeal : “1. The order of the ADDL/JCIT (A)-8 Mumbai dated 21.10.2025 vide DIN & Order No. ITBA/APL/S/250/2025-26/1081890222(1) for the above- mentioned Assessment Year is contrary to law, fact and in circumstances of the case.

The ADDL/JCIT (A)-8 Mumbai erred in confirming the rectification order passed by the Assessing Officer in terms of Section 154 of the Act in rectifying the scrutiny assessment order dated 12.12.2019 without assigning proper reasons and justification.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that the issue sought to be rectified by the Assessing Officer in the rectification order was beyond the scope of the provisions in Section 154 of the Act and further ought to have appreciated that the arbitrary re-computation of taxable total income by passing the rectification order should be reckoned as bad in law.it bruges

The ADDL/JCIT (A)-8 Mumbai erred in sustaining a sum of Rs. 20,29,792/-being the unsecured loans received during the assessment year under consideration as unexplained credit in terms of Section 68 of the Act in the computation of taxable total income without assigning proper reasons and justification.

The ADDL/JCIT (A)-8 Mumbai erred in sustaining a sum of Rs. 33,23,280/-being the sundry creditors for the assessment year under consideration as unexplained credit in terms of Section 68 of the Act in the computation of taxable total income without assigning proper reasons and justification.

The ADDL/JCIT (A)-8 Mumbai erred in sustaining a sum of Rs. 62,25,000/-being the cash deposits made in SBNs during the assessment year under consideration as unexplained money in terms of Section 69A of the Act in the computation of taxable total income without assigning proper reasons and justification.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that the provisions of Section 68/69A r.w.s 115BBE of the Act had no application to the present facts and in circumstances of the case, thereby vitiating the findings in relation thereto, especially in view of wrong data received from the bank in implicating the appellant herein.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that the pre-requisite conditions required for making an addition in terms of Section 68/69A of the Act were absent in the present case and ought to have appreciated that in any event provisions of Section 115BBE of the Act had no application in view of the law declared by the Madras High Court on its applicability from Assessment Year: 2018-19 only, thereby negating the findings in relation thereto.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that having placed on record the details of the unsecured loans received, sundry creditors for the assessment year under consideration as well as the details regarding the source for the cash deposits made in SBNs during the assessment year under consideration at the stage of assessment as well as the at the stage of appellate proceedings, the impugned order passed by them in reckoning such sums as unexplained by ignoring the details / explanation given in relation thereto should be reckoned as bad in law.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that, in any event, having not independently examined the nature and source of the disputed sums received and deposited during the assessment year under consideration, the consequential addition of the entire sum as income of the appellant/ unexplained credit and money was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that the entire re- computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that the scrutiny assessment order as well as the rectification order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that having not adhered to the prescription of faceless appellate regime, the consequential appellate order passed should be reckoned as bad in law.

The ADDL/JCIT (A)-8 Mumbai failed to appreciate that there was no effective/proper opportunity given before passing the impugned order including non granting of personal hearing and any order passed in violation of the principles of natural justice is nullity in law.

The Appellant craves leave to file additional grounds/arguments at the time of hearing.”

Briefly, the facts of the case are that the appellant is in a partnership firm duly constituted under the provision of the Partnership Act. It is engaged in the business of retail sale of jewellery under name and style of M/s.Veli Maalihai, Erode. The return of income for the assessment year 2017-18 was filed on 25.10.2017 disclosing total income of Rs.52,38,410/-. Against the said return of income the assessment was completed by the ACIT, Circle-2, Erode (hereinafter called AO) vide order dated 12.12.2019 passed u/s.143(3) of the Income Tax Act at a total income of Rs.1,66,65,493/-. While doing so, the Assessing Officer made addition of Rs.52,02,083/- u/s.68 of the Act as unexplained credits for the failure of the appellant to discharge the onus of proving the identity, creditworthiness of the creditors and genuineness of the transaction. The Assessing Officer also made addition of cash deposits in Specified Bank Notes of Rs.62,25,000/- in the account maintained with Karur Vysya Bank for the failure of the appellant to substantiate the explanation that the cash deposits were made out of the sales made during the month of November.

Subsequently, the Assessing Officer in exercise of powers vested with him u/s.154 rectified the assessment order levying the surcharge on Income Tax vide order dated 31.10.2023 passed u/s.154 of the Act after issuing the show cause notices.

Being aggrieved by the order passed u/s.154 of the Act, an appeal was filed before the Learned CIT(A) challenging that when the original assessment order was subject matter of appeal, the Assessing Officer ought not have passed the order u/s.154 of the Act rectifying the assessment order u/s.143(3) of the Act dated 12.12.2019. However, the ld.CIT(A) dismissed the appeal by holding that rectification proceedings were initiated only to correct the mistakes in the computation of the tax liability and there was no illegality found.

Being aggrieved by the order of the Learned CIT(A), the appellant is in appeal before us in the present appeal.

The Learned Counsel submits that the Learned CIT(A) ought not have confirmed the action of the Assessing Officer u/s.154 of the Act. The learned Counsel further submits that the appeal against the order u/s.143(3) was restored by this Tribunal in ITA No.1921/CHNY/2025 for the A.Y.2017-18 to the file of Assessing Officer, therefore, the order passed u/s.154 also be restored to the file of Assessing Officer.

On the other hand, the Learned Sr.DR has no serious objection to remand the matter back to the file of Assessing Officer. We order accordingly.

In the result, appeal filed by the assessee stands partly allowed for statistical purpose. Order pronounced in the open Court on 19th August, 2026.