PALANI MURALI,PONNERI vs. 92, TIRUVARUR-INCOME TAX OFFICE

PDF · subscribers
ITA 179/CHNY/2026Status: DisposedITAT Chennai25 May 2026AY 2017-20188 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in dismissing the appeal solely on grounds of delay without properly considering the assessee's explanation. The Tribunal directed the CIT(A) to admit the appeal for adjudication on merits.

What were the facts?

The assessee did not file a return of income for AY 2017-18. The Assessing Officer made a best judgment assessment, treating entire bank credits as income. The assessee's appeal before the CIT(A) was dismissed due to a delay of 109 days.

What were the issues?

Whether the CIT(A) was justified in dismissing the appeal on delay without sufficient cause. Whether bank credits, loans, and capital inflows can be treated as income.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148,Section 148A,Section 142(1),Section 68,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES, CHENNAI

Before: HON’BLE ABY T VARKEY & HON’BLE INTURI RAMA RAO

For Respondent: Ms. R Anitha, Addl.CIT

आदेश / ORDER PER INTURI RAMA RAO, ACCOUNTANT MEMBER: This appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], dated 14.11.2025 passed under section 250 of the Income Tax Act, 1961 for the 2017-18.

2.

The Assessee raised the following grounds of appeal :

“2.1 Erroneous Treatment of Bank Credits as Income

2.1.1 The AO erred in law and on facts in treating gross bank credits of ₹307.00 lakhs as income, ignoring legitimate business expenditure and operational costs.

2.1.2 The AO has admitted the facts having cash deposits of Rs.28 lakhs and TDS reported income of 164.90 Lakhs to the overall bank credit of Rs.3.07 Crore, thereby adding the Income twice. Only net profits, after deducting legitimate business expenditure, represent taxable income. Assessment should be made on a best judgement basis, reflecting actual net profit rather than gross turnover.

2.1.3 The Appellant's net profit margin of 3-5% aligns with industry norms, and taxing gross receipts is unjust and unsustainable.

Particulars Amount (In Lakhs) Total Bank credits 307.00 Revenue Receipts w.r.t Business 164.90 Loans 142.10

2.2. Incorrect Invocation of Section 68 and Legitimacy of Credits

2.2.1 The AO wrongly invoked Section 68 on bank credits, ignoring that

Turnover was fully reflected in 26AS TDS was duly deducted, establishing a legitimate and identifiable source of the credits

2.2.2 The credits are fully supported by books of accounts and documentation. Once the source is explained and TDS has been deducted, they cannot be treated as unexplained cash credits.

2.3 Improper Taxation of Loans and Capital Inflows

2.3.1 Loan receipts totalling 2142.10 lakhs and other capital inflows (e.g., LIC policy proceeds) are liabilities or capital receipts and do not constitute income.

2.3.2 Taxing such amounts constitutes double counting, as these receipts are already accounted for in the balance sheet and do not affect net profit.

2.4 Procedural Lapses and Financial Hardship

2.4.1 The Appellant was not granted adequate opportunity of being heard before levy of penalty or initiation of recovery proceedings.

2.4.2 The recovery actions have caused serious financial hardship, including difficulty in meeting ongoing EMI and operational obligations.

2.4.3 Any procedural lapses on the part of the Appellant were unintentional and cannot be construed as concealment of income.

PRAYER: - In view of the facts and circumstances of the case and the grounds raised hereinabove, the Appellant most respectfully prays that this Hon'ble Tribunal may be pleased to:

a) Hold that the Assessing Officer was not justified in treating the entire bank credits as income, without allowing deduction for legitimate business expenditure.

b) Delete the additions made under Section 68, as the impugned credits are duly explained, supported by TDS deductions, and backed by identifiable sources.

c) Hold that loan receipts and capital inflows, including LIC maturity proceeds, cannot be brought to tax as income, and consequently delete such additions.

d) Quash the penalty levied, as there is neither concealment of income nor furnishing of inaccurate particulars, and the additions themselves are unsustainable in law.

e) Direct that all recovery proceedings be kept in abeyance, as the same have resulted in severe financial hardship to the Appellant.

f) Alternatively, remit the matter to the file of the Assessing Officer for fresh adjudication after granting the Appellant a proper and reasonable opportunity of being heard; and

g) Pass such other order(s) as this Hon'ble Tribunal may deem fit and proper in the interest of justice.

3.

Brief facts of the case are that the appellant is an Individual. No regular return of income for the Assessment Year 2017-18 was filed by the appellant. Based on the information that the appellant made cash deposits of Rs.30,79,900/- in the bank account maintained with Dena Bank and also cash withdrawn from the bank account maintained with Dena Bank of R.s1,18,01,700/- and also company contract payments of Rs.1,06,73,093/- The Jurisdictional Assessing Officer formed an opinion that the income got escaped assessment from tax. Accordingly, a notice u/s.148 of the Act was issued on 28.03.20214 after duly complying with the procedure laid down u/s.148A of the Income Tax Act, 1961. The appellant was neither complied with notice u/s.148 of the Act nor notices u/s.142(1) of the Income Tax Act, 1961. In the circumstances, e-Assessment Unit of the Department(hereinafter called ‘AO’) had proceeded with framing best judgment assessment order vide order dated 21.02.2025 passed u/s.147 r.w.s 144B of the Income Tax Act, 1961 at a total income of Rs.1,14,04,565/-. While doing so, the Assessing Officer brought to tax the entire credits found in the bank account maintained with Bank of Baroda of Rs.3,07,25,977/- and also made addition of interest income of Rs.5,495/-.

4.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A) with a delay of 109 days. The appellant also filed a petition seeking the condonation of delay on the ground that the appellant was not aware of the re-assessment proceedings initiated by the Assessing Officer. However, ld.CIT(A) dismissed the appeal by refusing to condone the delay on the grounds of delay.

5.

On the other hand, ld.Sr.DR vehemently opposed the above submissions.

6.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the ld.CIT(A) was justified in dismissing the appeal on the grounds of delay by refusing the condonation of delay. Admittedly, there is a delay of 109 days in presenting the appeal before the ld.CIT(A). The appellant filed a petition seeking the condonation of delay on the ground that the delay in filing of appeal had occurred on account of lack of timely access to professional assistance, limited awareness of the reassessment proceedings and faceless assessment e-proceedings and also the appellant was unaware of the notices, as a result, the appellant was not able to file the appeal within the stipulated time. However, ld.CIT(A) had refused to condone the delay by stating that no sufficient cause was shown for the delay. On careful perusal of the findings of ld.CIT(A), it would be clear that the ld.CIT(A) had not given findings as to how the explanation offered by the appellant for delay does not constitute a reasonable cause. The averments made in the affidavit remain uncontroverted by the learned Sr.DR.

5.

In M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, it was held that an uncontroverted affidavit shall be taken as an affidavit on fact. The averments made in the Affidavit seeking the condonation of delay in filing appeal before the ld.CIT(A), remain uncontroverted by the learned ld.CIT(A). In the absence of any material to the contrary, the averments made in the affidavit cannot be brushed aside. Therefore, we are of considered opinion that the ld.CIT(A) ought to have condoned the delay in filing the appeal and admitted the appeal for adjudication on merits. In the circumstances, we direct ld.CIT(A) to admit the appeal for adjudication on merits.

6.

In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 25th May, 2026.

Sd/- Sd/- (ABY T VARKEY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 25th May, 2026 SGR, Sr.PS

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT Chennai/Madurai/Coimbatore/Salem. 4. �वभागीय ��त�न�ध,आयकर अपील�य अ�धकरण, “सी” ब�च, चे�नई/ DR, ITAT Chennai. गाड� फ़ाइल / Guard File 5.

Digitally signed by GANGADHARA GANGADHARA RAO SALEELA RAO SALEELA Date: 2026.06.03 13:52:59 +05'30'

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →