VEERAPPAN HUF,SALEM vs. ITO, WARD-1(1), SALEM

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 11.02.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.

- 2 - ITA No.1721/CHNY/2026 Veerappan HUF 2. Brief facts of the case are as follows :- The assessee is a Hindu Undivided Family (HUF). For the assessment year 2017-18, it did not file its return of income within the prescribed time. Based on information available with the Department, it was noticed that the assessee had made substantial cash deposits aggregating to Rs.1,01,25,000 in its current account maintained with Catholic Syrian Bank, Salem, during the relevant previous year. On the basis of this information, the AO (AO) formed a reason to believe that income chargeable to tax had escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. Accordingly, after recording the reasons for reopening the assessment and obtaining the requisite approval from the competent authority, proceedings under section 147 were initiated by issuing a notice under section 148 of the Act on 31.03.2021. In response to the notice, the assessee filed its return of income on 26.04.2021 declaring a total income of Rs.3,18,760. Thereafter, the AO issued statutory notices along with a detailed questionnaire, to which the assessee furnished its replies. During the course of assessment proceedings, the AO observed that apart from the cash deposits of Rs.1,01,25,000 in Catholic Syrian Bank, the assessee had also deposited Rs.70,00,000 in its account maintained with The Lakshmi Vilas Bank, Salem, making the total cash deposits Rs.1,71,25,000. The assessee explained that the cash deposits represented the return of advances earlier paid for the purchase of

- 3 - ITA No.1721/CHNY/2026 Veerappan HUF land. However, the AO found that the assessee had failed to substantiate this explanation with any credible documentary evidence. In particular, the assessee did not furnish the names, addresses or PAN details of the persons to whom the advances had allegedly been paid, nor were any documents relating to the proposed land transactions or evidence of the advances placed on record. In the absence of supporting material, the AO rejected the explanation offered by the assessee and treated the entire cash deposits of Rs.1,71,25,000 as unexplained money under section 69A of the Act, bringing the same to tax.

- 4 - ITA No.1721/CHNY/2026 Veerappan HUF submitted that in the explanatory letter dated 30.03.2022, the assessee had furnished the PAN and other relevant particulars of the person from whom the amounts were received, explaining that the cash deposits represented the return of advances earlier paid for purchase of land. It was contended that despite the relevant details having been placed on record, the AO proceeded to make the addition under section 69A of the Act without examining the same. The Ld. AR also submitted that the First Appellate Authority committed an error in confirming the addition without taking note of the aforesaid reply and the documents furnished before the AO. Accordingly, the Ld. AR prayed that the orders of the lower authorities be set aside and the matter be restored to the file of the AO with a direction to afford the assessee a reasonable opportunity of being heard and to adjudicate the issue afresh after considering the evidences and explanations placed on record.

- 5 - ITA No.1721/CHNY/2026 Veerappan HUF the return of advances earlier paid for purchase of land. It is the specific plea of the assessee that, in response to the show-cause notice dated 29.03.2022, an explanatory letter dated 30.03.2022 was filed before the AO furnishing the PAN and other particulars of the person from whom the amounts were received, but the same was not considered while completing the assessment. On perusal of the assessment order, we find that the AO has observed that the assessee failed to furnish the names, addresses, PAN and other relevant details of the persons from whom the amounts were allegedly received and, therefore, rejected the explanation offered by the assessee. The assessee, on the other hand, contends that such details were in fact furnished before the completion of the assessment. Since the correctness of this contention requires verification and the genuineness of the explanation can be established only on examination of the supporting documents, we are of the considered view that the matter requires fresh adjudication. Accordingly, in the interest of justice, we set aside the orders of the AO & FAA and restore the issue to the file of the AO for de novo consideration. The assessee is directed to furnish complete details of the person(s) from whom the amounts were received, including their names, addresses, PAN, confirmations, bank statements, details of the land transaction, copies of the advance agreements, proof of payment of the original advances and such other documentary evidence as may be necessary to substantiate the claim

- 6 - ITA No.1721/CHNY/2026 Veerappan HUF that the cash deposits represented the return of land advances. Upon receipt of the above details, the AO shall verify the same, make such enquiries as deemed fit, and thereafter decide the issue afresh in accordance with law after affording the assessee a reasonable opportunity of being heard. The assessee is directed to co-operate with the Revenue and shall not seek unnecessary adjournment. It is ordered accordingly.

Order pronounced in the open court on 3rd August, 2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (प�मावती एस) (PADMAVATHY S) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 3rd August, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Salem 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.08.05 09:53:15 +05'30'