PALANISWAMY SIVAPAKKIAM,CHENNAI vs. ITO, NCW-1950, CHENNAI

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ITA 2861/CHNY/2025Status: DisposedITAT Chennai05 August 2026AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the AO had made the addition without proper application of mind, considering details for the wrong assessment year and not giving the assessee a proper opportunity to explain the deposit. The assessee's health condition was also noted as a factor.

What were the facts?

The assessee, an elderly individual, did not file a return for AY 2015-16. The AO reopened the assessment due to a Rs. 50 lakh cash deposit in the assessee's bank account. The assessee's representative provided details for AY 2014-15, and the AO added the Rs. 50 lakhs as unexplained investment.

What were the issues?

Whether the AO correctly framed the assessment by considering details of a different assessment year and whether the assessee was given a proper opportunity to explain the cash deposit.

Which sections of the Income-tax Act were involved?

Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI GAGAN GOYAL

Hearing: 18.06.2026Pronounced: 05.08.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/Addl/JCIT (A), Panchkula, (hereinafter referred to as ‘Ld.CIT(A)’), dated 14.08.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2015-16 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. At the outset, the Ld.AR of the assessee submitted that the assessee is an individual aged about 76 years, who is drawing pension and interest income, didn’t file his return of income for AY 2015-16. The

ITA No. 2861/Chny/2025 (AY 2015-16) Palaniswamy Sivapakkiam :: 2 :: AO on receiving information that cash to the tune of Rs.50 lakhs was deposited in his bank account maintained in Indian Overseas Bank, reopened the assessment and issued statutory notices to the assessee u/s.148 of the Act on 25.03.2019. Pursuant to which, assessee filed the return of income on 08.05.2019 for AY 2014-15 admitting total income of Rs.4,21,670/-. The AO inter alia noted that in response to his notice the assessee’s authorized representative appeared and submitted the details pursuant to AY 2014-15. The AO noted that since assessee could not substantiate the source for the cash deposit of Rs. 50 lakhs, he added it to the returned income as unexplained investment by observing in the assessment order dated 15.12.2019 for AY 2015-16 as under: -

5.

In response to the notice assessee's AR appeared and submitted the details pertaining to assessment year 2014-15 only. The case was discussed and since she could not substantiate the source for the cash deposits to the tune of Rs.50,00,000. Hence the amount of Rs.50,00,000 was added to the returned income as unexplained investment and the assessment is completed as under: Total income returned : 4,21,670/- Add: Undisclosed income : 50,00,000/- Assessed income : 54,21,670/-

3.

Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), wherein, assessee is noted to have brought to the notice of the Ld.CIT(A) that during the assessment proceedings, assessee’s health started deteriorating and she was undergoing dialysis and had lost her memory/Alzheimer's. And because of those issues, assessee could not bring to the notice of the AO the relevant facts necessary to prove the nature and source of the deposit of Rs.50 lakhs.

4.

Ld.CIT(A) noted that the assessee had filed confirmation letter from the brother of the assessee however, the assessee failed to file

ITA No. 2861/Chny/2025 (AY 2015-16) Palaniswamy Sivapakkiam :: 3 :: evidences substantiating financial capacity of the brother, hence, the Ld.CIT(A) was of the view that assessee could not prove the identity, genuineness and creditworthiness of the transaction. Hence, he dismissed the appeal of the assessee.

5.

Aggrieved the assessee is in appeal before us.

6.

Heard both the parties and perused the records. Before us, the Ld.AR of the assessee Dr. K G Raghunath, Adv drawing our attention to the assessment order passed by the AO for AY2015-16 dated 15.12.2019 brought to our notice that the AO had passed the assessment order without application of mind. According to him on perusal of the same, it would reveal that the AO has considered the evidences filed for AY 2014-15 instead of relevant assessment year AY2015-16 and made the addition, which is per se erroneous. Hence, relying on the decision of Hon’ble Supreme Court in the case of Tin Box Company vs. Commissioner of Income-Tax, reported in [2001] 249 ITR 216, the assessee prays for one more opportunity before the AO.

7.

Having carefully gone through the assessment order passed by the AO, we find that pursuant to the notice issued u/s.148 of the Act dated 25.03.2019, the assessee had filed return of income on 08.05.2014 for AY 2014-15 not for AY 2015-16 as discernible from the Para 3 of the assessment order, wherein, the AO is noted to have observed as under :-

“3. Hence the case was reopened by issuing notice u/s.148 of the IT Act dated 25/03/2019 after obtaining approval of the Joint Commissioner of Income-tax, Non Corporate Range-2, Chennai. In response to the notice the assessee filed the return of income on 08.05.2019 for the

ITA No. 2861/Chny/2025 (AY 2015-16) Palaniswamy Sivapakkiam :: 4 :: A.Y.2014-15 admitting a total income of Rs.4,21,670 Notice u/s.143(2) of the IT Act, dated 09.08.2019 issued to the assessee.” 8. Thereafter, the AO is noted to have acknowledged at Para 5 that in response to the notice the authorized representative of the assessee appeared and submitted the details pertaining to AY 2014-15 only. And thereafter, the AO notes that the assessee failed to substantiate the source of the cash deposit to the tune of Rs. 50 lakhs and has added it (Rs. 50 lakhs) as unexplained investment.

9.

Taking note of the fact that the relevant assessment year is AY 2015-16; and the AO having discussed about the return of income for AY 2014-15 instead of AY 2015-16, has made the addition. Hence, we find force in the submission of the Ld.AR that there was non-application of mind by the AO while framing the assessment; and the considering the health condition of the assessee who was suffering from dialysis/Alzheimer, we find that proper opportunity was not given to the assessee to explain the nature and source of the cash deposit of Rs.50 lakhs which was deposited on 14.07.2014 and simultaneously withdrawn through cheque. According to the assessee, her brother had deposited the cash in question in her bank account for her treatment, but the assessee refused to accept it; and gave it back to him on the same day. Be that as it may, the assessee has to prove the nature and source of the cash deposit by adducing credible evidence which is a burden casted upon her. The Ld.AR has undertaken to file all the relevant documents/details to prove the identity, creditworthiness and genuineness of the creditor. Considering the fact that assessee didn’t get proper opportunity before the AO, we set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of AO for de nova assessment by relying on the decision of Hon’ble Supreme Court in the case of Tin Box Company

ITA No. 2861/Chny/2025 (AY 2015-16) Palaniswamy Sivapakkiam :: 5 :: (supra) and the AO to pass assessment order in accordance to law after hearing the assessee. 10. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 05th day of August 2026, in Chennai.

Sd/- Sd/- (गगन गोयल) (एबी टी. वक�) (ABY T. VARKEY) (GAGAN GOYAL) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated: 05th August, 2026. YS 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 YASHVI Digitally signed by YASHVIR R SINGH Date: SINGH 2026.08.11 18:03:28 +05'30'

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