V.KUPPUSAMY,KANGAYAM vs. INCOME TAX OFFICER,WARD I(4)/TIRUPUR, TIRUPUR

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ITA 3700/CHNY/2025Status: DisposedITAT Chennai08 July 2026AY 2018-195 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted additional evidence filed by the assessee, which included sales invoices and other business documents. The matter was restored to the AO for a fresh verification of these documents and the genuineness of the cash withdrawals.

What were the facts?

The assessee did not file a return of income for AY 2018-19. The Assessing Officer (AO) reopened the case due to substantial cash transactions in the assessee's bank account and made an addition of Rs. 1,30,79,136/- on account of cash withdrawals, treating them as unexplained. The CIT(A) confirmed the addition.

What were the issues?

Whether the cash withdrawals were genuine business expenses and if additional evidence could be admitted at the Tribunal stage to prove the same.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA

Hearing: 01.06.2026Pronounced: 08.07.2026

आयकर अपीलीय अधिकरण, ‘बी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI श्री एबी टी वर्की, न्याययर्क सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3700 /Chny/2025 निर्धारण वर्ा / Assessment Year: 2018-19 V. Kuppusamy The Income Tax Officer Door No.281, Palayavelliyam vs. Ward 1(4) Palayam, Nathakadaiyur Tirupur. Tiruppur – 638 108. [PAN: ATRPK4591J] (अपीलधर्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलधर्थी की ओर से/Appellant by : Shri. Harinanndha Kumar, CA (Virtual) प्रत्यर्थी की ओर से/Respondent by : Ms.Gouthami Manivasagam, Addl.CIT सुिवधई की तधरीख/Date of Hearing : 01.06.2026 घोर्णध की तधरीख/Date of Pronouncement : 08.07.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : The present appeal has been preferred by the Assessee against the order dated 15.11.2025 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the Ld. CIT(A)”], arising from the assessment order dated 16.03.2024 passed by the Assessing Officer, NFAC, Delhi [hereinafter referred to as “the AO”], u/s.147 r.w.s 144 r.w.s 144B of the Income-tax Act, 1961 (hereinafter referred to as “the Act”)for the Assessment Year 2018-19.

:-2-: ITA. No3700/Chny/2025

2.

The brief facts of the case are that the assessee is an individual, had not filed his return of income for the AY 2018-19. As per the information with the Department, the assessee had made a cash deposit of Rs.1,000/- and cash withdrawals of Rs.1,13,93,825/- as per the bank account, during the financial year 2017-18. Accordingly, statutory notices were issued and the case was reopened. However, the assessee was negligent and did not furnish any of the information or evidences except filing of return of income on 11.05.2022 by declaring an income of Rs.2,46,020/- from the business of trading in firewood. Since the assessee failed to furnish any documentary evidences in support of the return of income filed, the AO left with no choice, passed an ex parte order u/s.147 r.w.s. 144 of the Act dated 16.03.2024 by making an addition of cash withdrawal u/s.69A of the Act to the tune of Rs.1,30,79,136/-. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A). During the appellate proceedings, the assessee made certain submissions and noticed that the assessee has not filed any additional evidences nor has filed an application under Rule 46A requesting to accept any kind of additional evidences. Hence, based on the details available along with the assessment order, the ld.CIT(A) confirmed the addition by upholding the order of the AO. 4. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. The ld.AR for the assessee stated that the assessee is a small trader of firewood and filed a paper book consisting of sales invoices raised during the financial year 2017-18, case laws relied on and ledger extract of Kuppanna & Co. and sales ledger and tax audit report of Kuppanna & Co and submitted that the assessee has made cash withdrawals for the purpose of purchase of firewood legally. In light of the above, the ld.AR prayed for deleting the additions made on account of cash withdrawals by setting aside the order of the ld.CIT(A).

:-3-: ITA. No3700/Chny/2025 5. Per contra, the ld.DR submitted that the assessee has filed additional evidences, which were not furnished before the authorities for verification, and hence, prayed for remitting the matter back to the AO for fresh verification. 6. We have heard the rival submissions, perused the material available on record and carefully gone through the orders of the authorities below. The issue that arises for our consideration is whether the addition made u/s.69A of the Act towards cash withdrawals amounting to Rs.1,30,79,136/- is sustainable in the facts and circumstances of the case. 7. The undisputed facts reveal that the assessee had not filed his return of income within the time prescribed under the Act. On the basis of information available with the Department regarding substantial cash transactions in the assessee's bank account, the assessment was reopened u/s.147 of the Act. It is also an admitted position that despite issuance of statutory notices, the assessee did not furnish the requisite books of account, supporting documentary evidence or any explanation before the AO, except filing the return of income declaring income from the business of trading in firewood. In the absence of any supporting material, the AO completed the assessment ex parte u/s.147 read with 144 of the Act by treating the impugned cash transactions as unexplained and making the addition u/s.69A of the Act. 8. We further notice that even before the ld. CIT(A), the assessee neither produced any documentary evidence nor filed an application under Rule 46A of the Income-tax Rules seeking admission of additional evidence. Consequently, the ld. CIT(A), having no material before him except the assessment records, affirmed the assessment order. 9. However, during the course of hearing before us, the Ld.AR has placed on record a paper book containing copies of sales invoices relating to the relevant previous year, ledger extracts, sales ledger, tax audit report of M/s.Kuppanna & Co. and other supporting documents to substantiate the contention that the assessee was engaged in the business of trading in firewood

:-4-: ITA. No3700/Chny/2025 and that the cash withdrawals were made in the ordinary course of business for procurement of firewood from suppliers who insisted upon cash payments. 10. The aforesaid documents admittedly constitute additional evidence which was never produced before either of the lower authorities. At the same time, we find that these documents go to the root of the controversy, as they have a direct bearing on the nature and source of the impugned cash withdrawals. If the documents are found to be genuine and capable of establishing the business nexus of the withdrawals, they may materially affect the taxability of the addition made u/s. 69A of the Act. 11. It is well settled that the Tribunal, being the final fact-finding authority, is empowered to admit additional evidence where such evidence is necessary for rendering substantial justice or where the same is essential for proper adjudication of the dispute. Simultaneously, the principles of natural justice require that the Revenue should also be afforded an adequate opportunity to verify such evidence before any conclusion is reached. 12. We are also conscious of the fact that the assessee was negligent during the assessment proceedings as well as before the first appellate authority in not producing the relevant material at the appropriate stage. However, procedural lapses on the part of the assessee should not result in taxation of an amount which may ultimately be found to represent genuine business transactions, provided the assessee is able to substantiate the same by cogent evidence. At the same time, the assessee cannot be permitted to derive any undue advantage from his earlier non-cooperation. Therefore, the only equitable course would be to restore the matter to the file of the AO for a comprehensive verification of the additional evidence now placed before us. 13. Accordingly, in the interest of substantial justice, we admit the additional evidence filed before this Tribunal. The impugned orders of the lower authorities are set aside and the matter is restored to the file of the AO with a direction to examine the books of account, sales invoices, ledger extracts, tax audit report

:-5-: ITA. No3700/Chny/2025 and all other supporting documents produced by the assessee. The AO shall verify the genuineness of the business transactions, the source and utilization of the cash withdrawals and thereafter decide the issue afresh in accordance with law by passing a speaking order after affording adequate opportunity of being heard to the assessee. The assessee is also directed to extend full cooperation during the remand proceedings and to furnish all books of account and supporting documentary evidence as may be called for by the Assessing Officer. Needless to state, if the assessee fails to cooperate or fails to substantiate the claim with credible evidence, the AO shall be at liberty to draw appropriate inference in accordance with law. 14. Accordingly, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 08th July, 2026 at Chennai.

Sd/- Sd/- (एबी टी वर्की ) (एस. आर. रघुिधर्थध) (ABY T VARKEY) (S. R. RAGHUNATHA) न्याययर्क सदस्य/Judicial Member लेखधसदस्य/Accountant Member चेन्िई/Chennai, ददिधंक/Dated, the 08th July, 2026. Devadas आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलधर्थी/Appellant 2. प्रत्यर्थी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभधगीय प्रनतनिधर्/DR 5. गधर्ा फधईल/GF DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.07.09 16:45:27 +05'30'

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