MR. AMMAIYAPPAN CHIDAMBARAM,KARUR vs. ITO, WARD-1, KARUR, KARUR

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ITA 3888/CHNY/2025Status: DisposedITAT Chennai02 June 2026AY 2017-184 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) order was passed without providing the assessee an adequate opportunity of being heard, violating principles of natural justice. Therefore, the order was set aside for fresh adjudication.

What were the facts?

The assessee failed to file an income tax return for AY 2017-18. Based on information, cash deposits of Rs. 12,68,000/- were made during demonetization, and substantial bank credits of Rs. 1,51,98,697/- were observed. The Assessing Officer treated cash deposits as unexplained and estimated business income.

What were the issues?

Whether the appellate order was passed in violation of principles of natural justice due to lack of proper opportunity of hearing to the assessee.

Which sections of the Income-tax Act were involved?

Section 144,Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI

Hearing: 02.06.2026

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

The captioned online appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [CIT(A)] dated 28.05.2025 for Assessment Year 2017- 18. 2. The assessee, an individual, did not file the return of income for A.Y. 2017-18. Based on information received under "Operation Clean Money", it was noticed that cash deposits aggregating to

ITA No 3888/Chny/2025 (AY 2017-18) Ammaiyappan Chidambaram Vs ITO, W(1) Karur :: 2 :: Rs.12,68,000/- were made during the demonetization period. The Assessing Officer (AO) issued notice u/s. 142(1) dated 09.03.2018 and subsequent reminders; however, there was no effective compliance. Consequently, the AO completed the assessment ex parte u/s. 144 on 30.12.2019. The AO observed that the assessee had deposited cash of Rs.12,68,000/- during the demonetization period and had substantial credits/deposits of Rs.1,51,98,697/- in the bank account during the relevant financial year. The return of income filed on 04.12.2019 was treated as invalid. The assessee claimed that the cash deposits were sourced from money-lending business and sought to rely upon a cash book/day book showing cash balance of Rs.12,87,911/- as on 08.11.2016. The AO rejected the explanation, holding that the assessee had not produced a proper cash book and that the day book contained entries of NEFT and other non-cash transactions under the cash column, rendering the books unreliable. The AO treated the cash deposits of Rs.12,68,000/- as unexplained money u/s. 69A. Further, considering the aggregate credits/deposits of Rs.1,51,98,697/-, the AO estimated undisclosed business income at 8%, resulting in an addition of Rs.12,15,896/-. Assessment was completed u/s. 144 with total additions of Rs.24,83,896/-.

3.

On appeal, the ld. CIT(A) noted that the assessee had remained non-compliant during assessment proceedings despite repeated opportunities. It was observed that no authentic cash book or supporting records were furnished and the claim of availability of cash balance was not substantiated. The CIT(A) acknowledged that the assessee was engaged in money-lending activities and could have earned income therefrom; however, found that the AO had

ITA No 3888/Chny/2025 (AY 2017-18) Ammaiyappan Chidambaram Vs ITO, W(1) Karur :: 3 :: correctly estimated income at 8% on the bank credits. The CIT(A) held that the cash deposits made during the demonetization period remained unexplained in the absence of satisfactory evidence regarding source, cash flow, denomination-wise details, or supporting party ledgers. The assessee's contentions regarding applicability of section 69A, taxation u/s. 115BBE, and treatment of deposits as business receipts were rejected. Accordingly, the CIT(A) upheld addition of Rs.12,68,000/- u/s.69A and estimated income at Rs.12,15,896/- being 8% of deposits/credits and levied of tax u/s. 115BBE.

Now assessee is in appeal before this Tribunal.

4.

The ld. Authorised Representative (AR) submitted that no notice was ever issued to the assessee regarding hearing of appeal. It was further submitted that the assessee possesses relevant documents and evidences to substantiate the source of cash deposits and that the matter deserves to be examined on merits in the interest of justice. 5. The ld. Departmental Representative (DR), on the other hand, supported the order of the ld. CIT(A). Accordingly, she prayed for dismissal of the appeal. 6. We have heard the rival submissions and perused the record. We observe that the order of the CIT(A) had been passed without providing the assessee an effective opportunity of being heard during the appellate proceedings. It is settled law that the principles of natural justice require that adequate and reasonable opportunity be afforded before adjudicating the appeal. Since no proper notice of hearing/opportunity was provided to the assessee, the appellate order suffered from violation of principles of natural justice.

ITA No 3888/Chny/2025 (AY 2017-18) Ammaiyappan Chidambaram Vs ITO, W(1) Karur :: 4 :: Accordingly, we set aside the order of the CIT(A) and restored the matter to the file of ld.CIT(A) for fresh adjudication. The CIT(A) is directed to decide the appeal denovo after granting adequate opportunity of hearing and considering the submissions/evidence that may be furnished by the assessee. 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on the 02nd day of June 2026, in Chennai.

Sd/- Sd/- (इंतूरी रामा राव) (मनु कुमार िग�र) (INTURI RAMA RAO) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER

चे�नई/Chennai, +दनांक/Dated: 02nd June, 2026. SNDP, Sr. PS

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

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