V. MANGALAKSHMI,TIRUVANNAMALAI vs. ITO, WARD-1,, TIRUVANNAMALAI

PER MANU KUMAR GIRI, JM:

The captioned appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [CIT(A)] dated 17.01.2025 for Assessment Year 2015-16. 2. Brief facts of the case: The assessee is an individual. For the assessment year under consideration, information was received by the AO that substantial cash transactions had taken place in bank accounts maintained with Bank of India in the name of M/s IYYA Agencies. Based on such information, proceedings u/s. 147 of the Income-tax Act, 1961 were initiated and notice u/s. 148 was issued after passing an order u/s. 148A(d) of the Act.

ITA No. 867/Chny/2025 (AY 2015-16) V. Mangalakshmi VS ITO W-1 :: - 2 - :: The assessment records reveal that the assessee did not initially respond to the notices issued during the reassessment proceedings. Subsequently, the assessee filed a return of income declaring total income of Rs.3,12,400/-, comprising pension income of Rs.1,13,082/-, remuneration and interest from partnership firm amounting to Rs.1,99,318/- and income from other sources of Rs.337/-.During the course of assessment proceedings, the Assessing Officer (AO) obtained information from the bank and found that Current Account No. 836020110000015 and Cash Credit Account No. 836030110000025 stood reflected with the PAN of the assessee. The AO observed that the accounts were being operated for business relating to mobile phones, SIM cards and recharge activities. On examination of the bank statements, the AO noted cash withdrawals aggregating to Rs.19,55,480/- and, in the absence of books of account and supporting evidence, treated the said amount as unaccounted income of the assessee. Assessment was completed u/s. 147 read with sections 144 and 144B of the Act determining total income at Rs.22,68,217/- after making addition of Rs.19,55,480/-. 3. On appeal, the CIT(A) upheld the addition. According to the ld.CIT(A), the assessee failed to furnish any documentary evidence either before the AO or during appellate proceedings to establish that the impugned bank accounts belonged to a partnership firm. The ld.CIT(A) further observed that no books of account were produced and accepted the reasoning of the AO that the cash withdrawals represented income generated from business activities. The ld.CIT(A) therefore confirmed the addition of Rs.19,55,480/- and dismissed the appeal.

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ITA No. 867/Chny/2025 (AY 2015-16) V. Mangalakshmi VS ITO W-1 :: - 3 - :: Now assessee is in appeal before this Tribunal. 4. The ld. Authorised Representative (AR) submitted that the authorities below proceeded on an incorrect factual premise. It was contended that the impugned bank accounts belonged to M/s IYYA Agencies, a partnership firm in which the assessee was only a partner. The ld. AR drew our attention to the certificate dated 01.03.2023 issued by Bank of India, Kalasapakkam Branch, wherein the bank categorically certified that the accounts belonged to M/s IYYA Agencies having PAN AADFI6769F and that, by mistake, the PAN of one of the partners, namely the assessee, had been updated in the firm's accounts.It was submitted that the assessee had disclosed pension income, remuneration and interest received from the partnership firm and exempt share income from the firm. It was further argued that cash withdrawn from the bank account of a partnership firm cannot, by itself, be treated as income of a partner. The addition was made without proper verification of the ownership of the bank accounts and without examining the banks clarification. The ld. AR therefore pleaded that the addition be deleted. 5. The ld. Departmental Representative (DR) supported the orders of the lower authorities. It was submitted that the assessee did not cooperate during the assessment proceedings and failed to produce books of account or other supporting evidence. It was further contended that the assessee had not satisfactorily established before the lower authorities that the bank accounts belonged to a partnership firm and therefore the AO was justified

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ITA No. 867/Chny/2025 (AY 2015-16) V. Mangalakshmi VS ITO W-1 :: - 4 - :: in drawing an adverse inference. The ld. DR relied upon the orders of the AO and the CIT(A). 6. We have considered the rival submissions and perused the material available on record.The principal dispute relates to the addition of Rs.19,55,480/- representing cash withdrawals from the bank accounts in question. The assessee's specific case is that the accounts belonged to M/s IYYA Agencies, a partnership firm, and that the assessee's PAN was erroneously tagged by the bank. In support thereof, reliance has been placed on a certificate issued by Bank of India dated 01.03.2023 stating that the accounts belonged to M/s IYYA Agencies and that the PAN of the assessee had been wrongly updated in the firm's account.We find that neither the ex-parte assessment order u/s.147 r.w.s 144 r.w.s 144B of the Act nor the appellate order contains any meaningful examination of the aforesaid claim. The authorities below have proceeded primarily on the basis that the assessee failed to furnish adequate details. At the same time, the material now referred to by the assessee, particularly the bank's certificate and the assertion that the accounts belonged to a partnership firm having a separate PAN, requires proper verification. 7. We further note that the addition has been made in respect of cash withdrawals. Whether such withdrawals pertain to the partnership firm, whether the accounts actually belong to the firm, whether the transactions are reflected in the firm's books of account and whether any addition can at all be sustained in the hands of the partner are matters requiring detailed factual examination.

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ITA No. 867/Chny/2025 (AY 2015-16) V. Mangalakshmi VS ITO W-1 :: - 5 - :: 8. In our considered view, the issue has not been properly investigated by the AO being ex-parte order and the relevant facts have not been adequately verified. In the interest of justice, the matter requires fresh examination. Accordingly, we set aside the orders of the lower authorities on this issue and restore the matter to the file of the AO for de novo adjudication. The AO shall call for and examine relevant books of account and other evidences, and thereafter decide the issue afresh in accordance with law after affording adequate opportunity of being heard to the assessee. 9. It is made clear that we have not expressed any opinion on the merits of the addition. All legal and factual contentions available to both parties are kept open. The AO shall adjudicate the matter independently on the basis of material brought on record. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in open court 01st day of June, 2026 in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER चे�नई/Chennai, +दनांक/Dated: 01st 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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ITA No. 867/Chny/2025 (AY 2015-16) V. Mangalakshmi VS ITO W-1 :: - 6 - ::

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