PARAMASIVAM MUTHUVEL,THIRUVARUR vs. ACIT, CIRCLE-2(1), TRICHY

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ITA 134/CHNY/2026Status: DisposedITAT Chennai03 June 2026AY 2017-186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that an addition cannot be solely based on a statement recorded during a survey. Since the assessee claimed the CIT(A) passed an ex-parte order and the CIT(A)'s notices were disputed, the appeal was restored to the CIT(A) for fresh adjudication.

What were the facts?

During a survey, the assessee could not explain the source of Rs. 40,00,000/- in cash deposits. The Assessing Officer (AO) added this amount to the income under Section 69A. The Commissioner (Appeals) granted partial relief, confirming Rs. 25,00,000/-.

What were the issues?

Whether an addition can be made solely based on a survey statement, and whether the CIT(A) passed an ex-parte order without proper hearing.

Which sections of the Income-tax Act were involved?

Section 69A,Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI INTURI RAMA RAO

Hearing: 20.04.2026Pronounced: 03.06.2026

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), (hereinafter referred to as ‘Ld.CIT(A)’), Chennai-18, dated 17.07.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2017-18.

2.

At the outset, it is noted that there is a delay of 104 days in filing of this appeal before this Tribunal. Assessee has filed an affidavit explaining

ITA No. 134 /Chny/2026 (AY 2017-18) Paramasivam Muthuvel :: 2 :: the cause for the delay. Having perused the contents of the affidavit, the relevant supporting documents and explanation of the cause for the delay, we are of the view that there is sufficient reason for the condoning the delay. Hence, we condone the delay and proceed to hear the appeal on its merits.

3.

Sole grievance of the assessee is against the action of the Ld.CIT(A) confirming Rs.25,00,000/- out of Rs.40,00,000/- added by the AO.

4.

Brief facts are that the assessee is an individual, who is a Civil Contractor mainly executing work for State Public Works Department. Pursuant to survey on 22.03.2017, in the premises of the assessee u/s.133A of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) the survey team noticed that cash deposits were made in the bank account maintained by the assessee to the tune of Rs.74,38,500/-, out of which assessee could explain the source of fund of Rs.34,38,500/-, but couldn’t explain the source of the balance amount of Rs.40,00,000/-, hence, survey team confronted the assessee and put him on notice as to why the balance amount of Rs.40,00,000/-, be treated as unaccounted cash. Pursuant to which, assessee offered the same under ‘Pradhan Mantri Garib Kalyan Yojana (PMGKY) Scheme 2016’ (hereinafter referred to as the ‘Scheme’) and offered to pay the tax by submitting appropriate Form before the PCIT within 31.03.2017. However, the AO noted that

ITA No. 134 /Chny/2026 (AY 2017-18) Paramasivam Muthuvel :: 3 :: assessee didn’t keep his undertaking, and filed his return of income (ITR) for AY.2017-18 on 29.08.2017 admitting total income of Rs.31,60,620/-. According to the AO, on perusal of the ITR it was found that the unexplained cash deposit of Rs.40,00,000/- was not offered as per PMGKY Scheme and only Rs.15,00,000/- was offered under the PMGKY Scheme. Since, the assessee has gone back on his word, the return was selected to scrutiny and the assessee was asked to explain why Rs.25,00,000/- should not be treated as unexplained money u/s.69A of the Act, in addition to the total income of Rs.31,60.620/- offered by him in his return. In response, the assessee submitted his P&L account, balance sheet as on 31.03.2017 and proof of payment offered under the PMGKY to the tune of Rs.15,00,000/-.

5.

The AO finding the assessee not offering Rs.40,00,000/- under PMGKY, added the same u/s.69A of the Act by passing the assessment order on 15.12.2019.

6.

Aggrieved the assessee preferred an appeal before the Ld.CIT(A) who gave partial relief to the assessee by reducing Rs.15,00,000/- from the total addition of Rs.40,00,000/-. Thus, partly allowed the appeal of the assessee by confirming only Rs.25,00,000/- out of Rs.40,00,000/- added by the AO.

7.

Aggrieved the assessee is before us.

ITA No. 134 /Chny/2026 (AY 2017-18) Paramasivam Muthuvel :: 4 :: 8. The only grievance that is agitated before us is that the Ld.CIT(A) has passed an ex parte order without hearing the assessee. Hence, pleaded for one more opportunity before the authorities below.

9.

Per contra, Ld.DR does not want us to give one more innings to the assessee.

10.

Heard both parties and after perusal of the records, it is noted that the assessee is an individual, who is a Civil Contractor mainly executing work for Tamil Nadu Public Works Department. Pursuant to survey in his premises on 22.03.2017 u/s.133A of the Act, the survey team noticing that cash deposits were made in the bank account maintained by the assessee to the tune of Rs.74,38,500/-, accepted the explanation of assessee the source of funds of Rs.34,38,500/- but couldn’t explain the source of the balance amount of Rs.40,00,000/-. Hence, survey team confronted the assessee and put him on notice as to why the balance amount of Rs.40,00,000/-, be treated as unaccounted cash. Pursuant to which, assessee offered the same under Scheme. However, the AO noted that assessee didn’t keep his undertaking, and offered only Rs.15,00,000/- under the PMGKY Scheme. Since, the assessee has gone back on his word, the ITR filed by assessee was taken for scrutiny added Rs.40,00,000/- u/s.69A of the Act by passing the assessment order on 15.12.2019. On appeal, the Ld.CIT(A), taking note of the amount offered

ITA No. 134 /Chny/2026 (AY 2017-18) Paramasivam Muthuvel :: 5 :: under PMGKY Scheme to the tune of Rs.15,00,000/- gave credit to the same and gave partial relief to the assessee by confirming only Rs.25,00,000/- out of Rs.40,00,000/- added by the AO u/s.69A of the Act. However, the main grievance of the assessee is that based on involuntary admission during survey cannot be basis for making addition of Rs.25,00,000/-. We agree with the proposition of the assessee that merely based on statement recorded during survey cannot be the sole basis of making addition. However, the fact remans that assessee had to discharge the burden to prove the nature and source of Rs.25,00,000/- found to have been deposited in the assessee’s bank account. Before us the assessee has not filed any paper-book and has not explained the nature and source of the same. The Ld.CIT(A) has found that assessee despite given several notices has not responded to his notices. Hence, he has passed an ex parte order based on the materials on the record. Even though, it is noted that the Ld.CIT(A) asserts that he has given several notices to the assessee, he has not given the dates of the notices, etc. and the assessee asserts that he has not received any notices. Be that as it may, in such a scenario, we cannot countenance the action of the Ld.CIT(A) confirming Rs.25,00,000/-. Hence, we restore the appeal back to the file of Ld.CIT(A) for limited purpose of adjudicating the addition of Rs.25,00,000/-. The Ld.AR of the assessee submitted that he will participate in the appellate proceedings and prove to the satisfaction of

ITA No. 134 /Chny/2026 (AY 2017-18) Paramasivam Muthuvel :: 6 :: the Ld.CIT(A) the nature and source of cash deposits of Rs.25,00,000/- by adducing the relevant materials. In light of the undertaking given by the Ld.AR of the assessee, we restore the appeal back to the file of Ld.CIT(A) for the limited purpose of adjudicating the addition of Rs.25,00,000/- after hearing the assessee.

11.

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

Order pronounced on the 03rd day of June, 2026, in Chennai.

Sd/- Sd/- (इंटूरी रामा राव) (एबी टी. वक�) (INTURI RAMA RAO) (ABY T. VARKEY) लेखा सद�/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 03rd June, 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: 2026.06.20 16:41:08 +05'30'

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