SJB AUTOMOBILES PVT. LTD.,COIMBATORE vs. ACIT, CORPORATE CIRCLE-1,, COIMBATORE

ITA 316/CHNY/2025Status: DisposedITAT Chennai24 September 2026AY 2017-187 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessment was not bad in law as the assessment order clearly stated that notice under Section 143(2) was issued and duly served. Therefore, Ground No. 1 was dismissed. Regarding Ground No. 2, the Tribunal noted that in the remand proceedings, the AO accepted the cash sales and the cash balance available prior to demonetization. The AO's analysis in the remand report indicated that the cash sales as a percentage of total sales for the assessee-company lay within comparable limits, with the percentage of cash sales reducing during the relevant period compared to earlier years. The Tribunal found force in the assessee's argument that cash sales during the demonetization period were lower than in the previous year. Since the AO accepted the cash balance of Rs. 141.49 lakhs and the cash sales in the remand proceedings, the addition confirmed by the CIT(A) was deemed not justified. The order of the CIT(A) was set aside, and Ground No. 2 was allowed.

What were the facts?

The assessee, SJB Automobiles Pvt. Ltd., filed an appeal against the order of the CIT(A), NFAC, Delhi, for Assessment Year 2017-18. The appeal challenged the addition made by the Assessing Officer (AO) under Section 68 of the Income-tax Act, 1961. The assessee, engaged in the sale and service of vehicles, made cash deposits of Rs. 1,77,75,000/- during the demonetization period. The AO treated this as unexplained credit, as the assessee was not authorized to accept Specified Bank Notes (SBNs). The CIT(A) confirmed an addition of Rs. 1,16,63,063/-. The assessee contended that the cash was collected from rural executives and delayed remittance due to demonetization confusion. During remand proceedings, the AO accepted a cash balance of Rs. 141.49 lakhs and cash sales in old SBNs and new currency notes.

What were the issues?

1. Whether the assessment made by the AO is bad in law due to the alleged non-issuance of a notice under Section 143(2) of the Income-tax Act, 1961. - Assessee's contention: No notice under Section 143(2) was issued. - Revenue's contention: Not recorded. 2. Whether the addition made by the AO under Section 68 of the Income-tax Act, 1961, for cash deposits during the demonetization period is justified. - Assessee's contention: The cash sales were from customers paying in old SBNs, and the cash balance prior to demonetization was accepted by the AO. The percentage of cash sales during the demonetization period was within comparable limits. The delay in remittance was due to confusion and the need to reconcile cash from various branches. - Revenue's contention: The explanation offered by the assessee is not acceptable, and necessary evidence was not filed to support the contentions.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 68,Section 133(6)

AI-generated summary — verify with the full judgment below

Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha

Hearing: 01.07.2026Pronounced: 24.09.2026

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 19.12.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, for the assessment year 2017–18. 2. Ground No. 1 raised by the assessee relates to the alleged non- issuance of notice under Section 143(2) of the Act, and it is contended that the assessment made thereunder is bad in law. On perusal of the assessment order dat

The order continues below.

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