JOTHI CHETTIAR SIVAKUMAR,CHENNAI vs. ITO, WARD-10(3), CHENNAI

Briefly, the facts of the case are that the appellant is an Individual engaged in the business of dealing in pipes and hardware materials. The Return of Income for the Assessment Year 2017-18 was filed on 30.12.2017 disclosing income at Rs.5,24,760/-. Against the said Return of Income, there was no scrutiny assessment made. Subsequently, based on the information that the appellant had deposited cash in Specified Bank Notes(SBN) to the extent of Rs.12,58,000/- in the bank account maintained with Andhra Bank during the Demonetization Period, the Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly a notice u/s.148 of the Act was issued on 27.07.2022. In response to notice u/s.148 of the Act, the appellant had not responded to the notice. However, the appellant complied with the notice issued u/s.142(1) of the Act. When the appellant was called upon to explain the source of cash deposits, he submitted that cash deposit in the Specified Bank Notes were made out of the collections from the sale proceeds and debtors. However, the Assessing Officer rejected the above explanation by holding that the appellant had not produced relevant ledger copies, cash book or any evidence to show that Specified Bank Notes were received from the sale proceeds of the assessee, accordingly made addition of Rs.12,58,000/- as unexplained money of the appellant.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order while confirming the addition of Rs.12,58,000/-, however, directed the Assessing Officer not to tax the income at the rate prescribed u/s.115BBE of the Act in view of the decision of Hon’ble Madras High Court in the case Smile Micro Finance LimitedVs. ACIT in WP(MD) No.2078 of 2020 & 1742 of 2020 dated 19.11.2024(Mad).

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. The Learned Counsel submits that the cash deposits in Specified Bank Notes during the Demonetization Period in the bank account were made out of the opening balance of cash available as on 08.11.2016 of Rs.12,88,000/- and therefore, the ld.CIT(A) ought not have confirmed addition.

On the other hand, Learned Sr.DR opposed the above submissions and submit that the ld.CIT(A) rendered finding that the appellant had failed to substantiate the explanation offered in support of the source of the Specified Bank Notes during the Demonetization Period.

We heard rival submissions and perused the material available on record. The solitary issue that arises for our consideration is whether the ld.CIT(A) was justified in confirming the addition of Rs.12,58,000/- being cash deposit made in the Specified Bank Notes during the Demonetization Period. During the course of assessment proceedings, the appellant had offered the explanation by stating that the said cash deposits were made out of the sale proceeds of the business. However, the Assessing Officer rejected the above explanation as the appellant failed to produce any documentary evidence in support of the explanation. However, we find from the para 5.4.3 of the ld.CIT(A), impugned order that during the course of proceedings before the ld.CIT(A), the appellant had filed additional evidence. However, the ld.CIT(A) had rejected the same by holding that the additional evidence was filed for first time before him. In our considered opinion, the ld.CIT(A) ought to have admitted the additional evidence and decided the issue in appeal after calling for a remand report from the Assessing Officer in terms of the provisions of Rule 46A of Income Tax Rules, which the ld.CIT(A) had failed to do so. Therefore, we remand the matter back to the file of ld.CIT(A) for denovo adjudication of issues in appeal after affording an opportunity of being heard to the appellant.

In the result, appeal filed by the assessee stands partly allowed for statistical purpose. Order pronounced in the open Court on 31st July, 2026. (MANU KUMAR GIRI) ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 31st July, 2026 SGR, Sr.PS आदेश क" "ितिलिप अ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant.

GANGADHARA RAO SALEELA Date: 2026.08.04 10:06:38 +05'30'