DURAISAMY VICTOR,CHENNAI vs. ITO, NCW-19(6), CHENNAI

ITA 851/CHNY/2026Status: DisposedITAT Chennai22 September 2026AY 2017-1813 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated under Section 147 of the Act were invalid. The Tribunal found that the reassessment order was passed without proper reasons and justification, and the procedure prescribed by law was not followed. Consequently, the reassessment order was deemed bad in law and a nullity. Regarding the additions under Section 69A, the Tribunal noted that the assessee had placed on record the identity, genuineness, and creditworthiness of the sums received as a Power of Attorney holder and had substantiated the fact of payment as an advance for property purchase. The Tribunal also acknowledged that the assessee had provided cogent explanations and documentary evidence for the cash deposits. Therefore, the Tribunal held that the presumption of unexplained money under Section 69A was unjustified and not sustainable. The Tribunal also observed that the applicability of Section 115BBE was a matter of dispute, with the assessee relying on Madras High Court pronouncements. The Tribunal found that the NFAC failed to independently examine the nature and source of the sums received/deposited. The Tribunal concluded that the reassessment order was contrary to law and facts. The appeal was allowed.

What were the facts?

The assessee, Duraisamy Victor, an individual carrying on business as a general commission agent, filed his return of income for Assessment Year 2017-18 declaring a total income of Rs. 22,31,810. The assessment was reopened under Section 147 of the Income-tax Act, 1961, based on information that the assessee received Rs. 1,25,00,000 in cash between July 19, 2016, and August 30, 2016, in connection with an immovable property transaction, and also deposited Rs. 66,00,000 in cash into his savings bank account. A notice under Section 148 was issued on March 29, 2021. The assessee responded, stating the Rs. 1,25,00,000 was received as a Power of Attorney holder for the sale of property and as advance for purchase of another property. The appeal is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated January 29, 2026, which arose from a reassessment order dated March 29, 2022, passed by the Assessment Unit, National Faceless Assessment Centre, Delhi.

What were the issues?

1. Whether the assumption of jurisdiction under Section 147 of the Act and the subsequent reassessment order are valid, legal, and sustainable, considering the assessee's arguments that the order was passed out of time, without proper reasons, justification, and sanction of law, and that the procedure was not followed, rendering it a nullity. 2. Whether the addition of Rs. 1,25,00,000, representing sale consideration received as a Power of Attorney holder and advance for property purchase, and the addition of Rs. 66,00,000, representing cash deposits in the bank account, are sustainable as unexplained money under Section 69A of the Act, given the assessee's contention that the identity, genuineness, and creditworthiness of the sums were substantiated, and the source of cash deposits was explained with documentary evidence. 3. Whether the provisions of Section 69A read with Section 115BBE of the Act are applicable to the present facts, considering the assessee's argument that the prerequisite conditions for addition under Section 69A were absent and that Section 115BBE is applicable only from Assessment Year 2018-19 as per Madras High Court pronouncements. 4. Whether the assessee was provided with an effective and proper opportunity to be heard, including a personal hearing, before the impugned order was passed, and whether the order passed in violation of principles of natural justice is a nullity. Assessee's Contentions: The assessee argued that the reassessment proceedings were invalid due to lack of jurisdiction, improper reasons, and procedural irregularities. They contended that the additions under Section 69A were unjustified as the sums received and deposited were explained with documentary evidence, and the identity, genuineness, and creditworthiness were established. The assessee also argued that Section 115BBE was not applicable for the AY 2017-18. Furthermore, the assessee claimed a violation of natural justice due to the denial of a personal hearing. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(2),Section 142(1),Section 69A,Section 115BBE,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA

Hearing: 07.08.2026Pronounced: 22.09.2026

PER S. R. RAGHUNATHA, AM : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [hereinafter referred to as “the CIT(A)”] dated 29.01.2026, passed u/s.250 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for the Assessment Year 2017-18, arising out of the order of reassessment dated 29

The order continues below.

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