ASUMUGHU THANGARAJ,VELLORE vs. INCOME TAX OFFICER, WARD 2 VELLORE, VELLORE

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ITA 581/CHNY/2026Status: DisposedITAT Chennai22 July 2026AY 2020-214 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the order of the CIT(A) and restored the assessment to the AO for de novo assessment. The assessee was directed to provide documents to substantiate the cash deposits.

What were the facts?

The assessee's case was reopened due to large cash deposits without filing a return. The assessee filed a return but failed to respond to subsequent notices, leading to an ex-parte assessment order. The CIT(A) also dismissed the appeal ex-parte.

What were the issues?

Whether the assessment order and the CIT(A) order were passed without affording a proper opportunity of being heard to the assessee, violating principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 148,Section 142(1),Section 144,Section 144B

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: 15.06.2026Pronounced: 22.07.2026

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)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)’), Delhi, dated 04.11.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2020-21.

2.

Drawing our attention to the impugned order of the Ld.CIT(A), the Ld.AR submitted that the Ld.CIT(A) has passed an ex-parte order without hearing the assessee. He also brought to our notice that the AO has

ITA No. 581/Chny/2026 (AY 2020-21) Asumughu Thangaraj :: 2 :: passed the assessment order making huge addition of Rs.89,88,900/- u/s.69A of the Income-Tax Act, 1961 (hereinafter referred to as ‘the Act’) without granting proper opportunity to the assessee. Thus, there is violation of natural justice and 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 prayed for one more opportunity before the AO.

3.

Brief facts of the case as taken note by the Ld.CIT(A) is that the assesssee’s case was reopened u/s 147 of the Act for A.Y 2020-21 on the basis of information that he didn’t file return of income, despite undertaking large financial transaction in the form of cash deposits in bank to the tune of Rs.89,88,900/-. The case was reopened by issuing notice u/s 148 on 31.03.2024. In response to the notice u/s 148, the assessee filed his return of income on 04.04.2024 declaring total income of Rs.4,58,750/-; however, the assessee did not respond to the subsequent notices issued during the course of assessment proceedings u/s 142(1) of Act. In response to the final show cause notice, the appellant responded by stating that he was engaged in the wholesale proprietary business of unprocessed millets, cereals, vegetables and acting as an agent between wholesalers and local retail customers like shopkeepers and traders. The appellant submitted that nature of his business mostly involved cash transactions as the receipts from sale of goods to retail customer would be in cash and the same were deposited in the bank on daily basis and used for purchasing new lots. The appellant

ITA No. 581/Chny/2026 (AY 2020-21) Asumughu Thangaraj :: 3 :: stated that the cash deposits of Rs.89,88,900/- were sourced from the cash receipts of the goods sold during the year; however, the AO noticed that appellant failed to furnish any cogent evidence to establish his claims regarding the nature of his business activities as well as the source of his cash deposits. Therefore, in the absence of any documentary evidence, the AO completed the assessment u/s 147 r.w.c 144 r.w.s 144B of the Act, on the basis of material available on record. The AO added the cash deposits of Rs.89,88,900/-, as ‘unexplained money’ u/s 69A of the Act and accordingly assessed the total income at Rs.94,47,650/-, vide assessment order dated 06.01.2025.

4.

Aggrieved, assessee preferred an appeal before the Ld.CIT(A) who was pleased to dismiss the same by taking note that his four (4) notices issued to assessee has not been responded to by the assessee. The reason for non-compliance was attributed to non-receipt of notices in his e-mail ID. The Ld.AR submitted that it is common knowledge that at times the communications go to spam account.

5.

Having perused the affidavit filed by the assessee and considering overall facts of the case we find that Ld CIT(A) has passed an ex-parte order qua assessee, and reason attributed for not responding to his notices was due to non-receipt of such notices, which were traced to spam account. Be that as it may, we find that Ld CIT(A) has confirmed the action of AO making an addition of Rs.89,88,900/-, u/s 69A of the Act, without hearing the assessee therefore, we inclined to set aside the impugned order of the Ld.CIT(A) and further taking note that the AO has

ITA No. 581/Chny/2026 (AY 2020-21) Asumughu Thangaraj :: 4 :: made the addition only on the ground that the assessee didn’t produce the material to substantiate the nature and source of cash deposits, and considering the undertaking given by the Ld.AR of the assessee that he will produce the relevant documents before the AO, we restore the assessment back to the file of AO for de nova assessment. The assessee is directed to file all the relevant documents to substantiate the nature and source of the cash deposits and the AO to pass assessment order in accordance to law after hearing the assessee.

6.

In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced on the 22nd day of July, 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: 22nd July, 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

Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.08.03 12:13:23 +05'30'

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