RAJAVELU RAJENDRA,PUDUCHERRY vs. INCOME TAX OFFICER, WARD 3, PUDUCHERRY, PUDUCHERRY

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ITA 4012/CHNY/2025Status: DisposedITAT Chennai19 June 2026AY 2018-196 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had discharged their onus under Section 68 by providing evidence of employment and salary remittances from China. The addition made by the AO was based on suspicion and surmises, and therefore not sustainable.

What were the facts?

The Assessing Officer (AO) reopened the assessment of the assessee for AY 2018-19 based on information about time deposits and interest income not disclosed in the original return. The AO assessed the total income at Rs. 46,73,443/-. The assessee appealed, arguing that foreign earnings were taxed in China and that reassessment proceedings were invalid.

What were the issues?

Whether the reassessment proceedings initiated were valid, and whether the foreign earnings were correctly taxed in India despite being taxed in China.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 148,Section 148A,Section 139,Section 194A,Section 234A,Section 234B,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: HONOURABLE SHRI ABY T. VARKEY & SHRI GAGAN GOYAL

Hearing: 16.06.2026Pronounced: 19.06.2026

आयकर अपीलीय अधिकरण ‘सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 4012/Chny/2025 ननिाारण वर्ा /Assessment Years: 2018-19 Rajavelu Rajendra, v. The Income Tax Officer, No.33, Bharathi Street, Kathirkamam, Ward-3, Pondicherry-605 009. Puducherry. [PAN: AJTPR1068H] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. V. Meenakshi Sundar, C.A, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. Chilaka Marthi Vijay Raju, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 16.06.2026 घोषणाकीतारीख /Date of Pronouncement : 19.06.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (A) / NFAC (hereinafter referred as the ‘Ld.CIT(A)’) for the assessment year (hereinafter referred as the ‘AY’) 2018-19.

GROUNDS OF APPEAL

1.

The order passed by the Assessing Officer is contrary to law and the facts of the case and is therefore not sustainable in law. 2. The Assessing Officer erred in taxing the foreign earnings earned by the Appellant during the year under assessment. 3. The Assessing Officer erred in determining the total income at Rs. 46, 73,443/- as against the returned income of Rs. 60,160/-.

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ITA No.4012/Chny/2025 (2018-19) Rajavelu Rajendra 4. The Assessing Officer failed to appreciate that the information available with the Jurisdictional Assessing Officer regarding time deposits amounting to Rs. 1, 03, 30,000/- does not constitute valid "reason to believe" and therefore the reassessment proceedings initiated under section 147 are bad in law and liable to be quashed.

5.

The Assessing Officer erred in not following the directions of the Hon'ble Supreme Court and in not initiating proceedings under the new regime of section 148A, even though the notice under section 148 was issued after 31.03.2022.

6.

The Assessing Officer observation that non filing the return of income for the financial year 2017-18 as found in the assessment order is not an ingredient to reopen case under section 148

7.

The Appellant submits that tax clearance certificates have been furnished in proof of the claim that the salary earned in China had already suffered tax in China during the year under assessment.

8.

The Assessing Officer erred in levying interest under sections 234A and 234B of the Act.

9.

The Assessing Officer erred in initiating and levying penalty under section 270A of the Act in respect of the said income.

10.

The Appellant craves leave to add to, alter, amend or modify any of the above grounds at the time of hearing of the appeal.

For those grounds stated above and those that may be adduced at the time of hearing the Learned Commissioner of Income Tax Appeals may be pleased to allow the appeal of the appellant to grant appropriate relief or reliefs.

2.

As per the information available with the Revenue, the assessee has deposited in fresh time deposits to the tune of Rs. 1, 03, 30,000/- (other than a time deposit made through renewal of another time deposit) and interest other than interest on securities to the tune of Rs. 60, 155/- (Section 194A) in the previous year relevant to A.Y 2018-19. However, the assessee did not file return of income u/s. 139 of the Act for the relevant A.Y. 2018-19 disclosing the above financial transactions and thus income chargeable to tax has escaped assessment. The case of the assessee has been reopened on the basis of the information available with the JAO that during the F.Y. 2017-18 relevant to A.Y. 2018-19 assessee has deposited in fresh time deposits to the tune of Rs. 1, 93, 30, 000/- (other than a time deposit

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ITA No.4012/Chny/2025 (2018-19) Rajavelu Rajendra made through renewal of another time deposit) and interest other than interest on securities to the tune of Rs. 60, 155/- (section 194A) in the previous year relevant to the A.Y. 2018-19. A notice u/s. 148 of the Act was issued on 30.03.2022. In response to the notice issued u/s. 148 of the Act, the assessee has filed return of income at Rs. 60, 160/-. After detailed deliberation between the AO and the assessee, ultimately, the case of the assessee was assessed at a total income of Rs. 46, 73, 443/- u/s. 147 r.w.s. 144B of the Act.

3.

The assessee being aggrieved with the above order, preferred an appeal before the Ld. CIT (A) who in turn dismissed the appeal of the assessee and confirmed the order of the AO. The assessee being further aggrieved preferred the present appeal before us. We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee along with grounds taken before us. At the outset of the issue we would like to clarify that the following judicial pronouncements relied upon by the assessee are not applicable in the present case as under:

1.

Bombay High Court – CIT vs. Jet Airways (I) Ltd. [2010] 195 Taxman 117/331 ITR 236(Bombay) 2. Madras High Court – Tractors and Farm Equipment Ltd. (TAFE) Vs. ACIT [2019] 102 Taxmann.com 130. 3. Madras High Court – Anand Cine Services (P) Ltd. vs. ACIT [2024] 169 taxmann.com 236 (Madras) As in the above matters the assessee filed return u/s. 139 of the Act and then in the light of provisions as contained in section 147 of the Act, law was discussed and pronounced by the Hon’ble High Courts. In the present case, there was no return filed by the assessee u/s. 139 of the Act. Hence, these judicial pronouncements are of no help.

4.

In addition to the above, one more technical ground raised by the assessee in the light of notification no.18 of 2022 dated 29.03.2022 issued by the CBDT. For the sake of better understanding and clarity on the issue we are reproducing herein below the notification as under:-

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ITA No.4012/Chny/2025 (2018-19) Rajavelu Rajendra

“..NOTIFICATION S.O. 1466(E) [NO. 18/2022/F. NO. 370142/16/2022-TPL (PART1], DATED- 29.03.2022 In exercise of the powers conferred by sub-sections (1) and (2) of section 151A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:— Short title and commencement 1. (1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022. (2) It shall come into force with effect from the date of its publication in the Official Gazette. Definitions 2. (1) in this Scheme, unless the context otherwise requires, –– (a) "Act" means the Income-tax Act, 1961 (43 of 1961); (b) "automated allocation" means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act. Scope of the Scheme 3. For the purpose of this Scheme,–– (a) assessment, reassessment or recomputation under section 147 of the Act, (b) issuance of notice under section 148 of the Act, Shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee.”

We have gone through the provisions as pronounced of the declared by CBDT vide notification reproduced (supra) but it is observed that to support any violation of the above, the assessee did not furnished any documentary evidence / explanation. Hence, the only issue to be decided by us is on facts of the case only, no legal/technical ground remained.

5.

In support of factual grounds / merits of the case, the assessee furnished the following documents before us as under:- Sl. Particulars Page No. Nos. 1. Proof of working of Mr. Rajendra Rajavel in China during the 1 - 2 period 17.02.2014 to 01.11.2016 2. Proof of working of Mrs. Jayamala Rajendra in China during the 3 period 11.08.2014 to 04.01.2016. 3. Payslip for the month of Aug 2016 of Mr. Rajendra Rajavel 4 4. Copy of the Debit card of Mr. Rajendra Rajavel for account held 5 with China Construction bank 5. Copy of the Debit card of Mrs. Jayamala Rajavel for account held 6 with China Construction bank

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ITA No.4012/Chny/2025 (2018-19) Rajavelu Rajendra 6. Alipay card statement of Mr. Rajavelu Rajendra for the period 7-16 12.10.2016 to 13.09.2017 All these documents were there before the Ld. CIT (A) also but the same were not considered by him. It is observed that the assessee submitted the copy of his employment contract with the Chinese’s Company along with tax deduction certificate issued by the Chinese authorities. The assessee also submitted passport and visa details evidencing stay and employment in China. The details of credits in the assessee’s account are as under:-

Credits in ICICI Bank S. No. Value Date Transaction Remarks (as per Bank Deposit Amount Statement) (Rs.) 1 02.05.2017 IRM/USD 3578.22 @ 62.7 – INREM 2,24,111.12 2. 31.05.2017 IRM/USD 4499.75 @ 63.11 - INREM 2,83,691.24 3. 28.06.2017 IRM/USD 4492.41 @ 63.12 - INREM 2,83,273.25 4. 25.07.2017 IRM/USD 4558.77 @ 62.92 – INREM 2,86,489.66 5. 28.08.2017 IRM/USD 4552.63 @ 62.45 – INREM 2,83,965.86 6. 26.09.2017 IRM/USD 4638.44 @ 63.76 – INREM 2,95,390.76 7. 27.10.2017 IRM/USD 4728.39 @ 63.57 – INREM 3,00,223.22 Total – ICICI Bank 19,57,145.11

Credits in Indian Overseas Bank: S. No. Value Date Transaction Remarks (as per Bank Deposit Amount Statement) (Rs.) 1 29.11.2017 USD 4321 @ 64.12 2,76,761 2. 27.12.2017 USD 4678.33 @ 63.85 – GREATWALL M 2,98,352 31.01.2018 USD 4688.94 @ 63.42 3. 2,97,015 4. 13.02.2018 USD 23991.98 @ 64.07 – GREATWALL 15,36,079 5. 02.03.2018 USD 4755.76 @ 64.86 – GREATWALL M 3,08,091 Total – IOB Bank 27,16,298.00 Total Inward Remittances: Amount (Rs.) Particulars Total Credits – ICICI Bank 19,57,145.11 Total Credits – IOB Bank 27,16,298.00 Total Salary Received 46,73,443.11 6. It is observed that there is no doubt about the residential status of the assessee, receipt of money from China, and employment of the assessee with Chinese Company i.e. GREATWALL Motor Company Limited. In presence of these

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ITA No.4012/Chny/2025 (2018-19) Rajavelu Rajendra facts in our opinion the assessee has discharged his onus for the purposes of section 68 of the Act. Moreover, the assessee’s wife Mrs. Jayamala Rajendra was also working with a Chinese Company namely Techtronic Industries (Dongguan) Co. Ltd. In entirety of the facts it can be concluded that the assessee was a man of means in the relevant assessment year and also discharged his onus to establish the sources of his deposits in the above mentioned bank accounts. In view of this, it is observed that the addition of Rs. 46, 73, 443/- made by the AO and further confirmed by the Ld. CIT (A) is not justified rather the same is based merely on suspicion, conjunction and surmises, hence, the same is not sustainable. In the result, the grounds raised by the assessee on merits are allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced on the 19th day of June, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 19th June, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. विभागीय प्रविविवि/DR 5. गार्ड फाईल/GF K Digitally signed by K BABU Date: BABU 2026.06.30 09:08:44 +05'30'

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