PAVADAI ANBAZHAGAN,VILLUPURAM vs. ITO, WARD-1, VILLUPURAM

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ITA 1589/CHNY/2026Status: DisposedITAT Chennai15 October 2026AY 2020-216 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the additional evidence sought to be admitted by the assessee, comprising GST return details, confirmations, and bank statements, was relevant for determining the nature and source of bank deposits and had a direct bearing on the issues. Since these documents were not available before the AO and required factual verification, the Tribunal, in the interest of substantial justice, admitted the additional evidence. Consequently, the impugned order for the quantum addition was set aside, and the matter was restored to the file of the AO for fresh examination and adjudication after affording adequate opportunity to the assessee. The assessee was directed to cooperate and not seek unnecessary adjournments. Regarding the penalty appeals (ITA Nos. 1588 & 1589/CHNY/2026), since the quantum appeal was set aside to the AO for denovo adjudication, the Tribunal deemed it appropriate to set aside the penalty orders also to the file of the AO to be decided along with the corresponding quantum appeal. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Shri Pavadai Anbazhagan, filed three appeals (ITA Nos. 1587, 1588 & 1589/CHNY/2026) against orders of the Commissioner of Income Tax (Appeals), NFAC, Delhi, for Assessment Year 2020-21. The appeals challenge quantum additions and penalty orders. The assessment was completed under section 147 r.w.s. 144 and 144B of the Income Tax Act, 1961, on a best judgment basis. The Assessing Officer (AO) estimated business income at Rs. 16,94,285/- and treated cash deposits of Rs. 2,34,73,476/- as unexplained money under section 69A, as the assessee had not filed returns or complied with notices. The First Appellate Authority (FAA) confirmed these additions. The assessee's appeals also pertain to penalties levied under section 270A / 271AAC(1).

What were the issues?

1. Whether the Tribunal should admit additional evidence filed by the assessee under Rule 29 of the ITAT Rules, 1963, for the quantum addition issue (ITA No. 1587/CHNY/2026)? - Assessee's contention: The assessee argued that due to medical treatment, they could not fully respond to the AO and FAA. They sought admission of additional evidence, including GST returns, confirmations, and bank statements, to establish that cash deposits represented business receipts and to demonstrate the nexus between deposits and business turnover. They requested the matter be restored to the AO for fresh examination. - Revenue's contention: The revenue contended that adequate opportunities were provided to the assessee by the AO and FAA, and principles of natural justice were not violated. Therefore, the appeal should be dismissed. 2. Whether the penalty orders (ITA Nos. 1588 & 1589/CHNY/2026) should be set aside in light of the decision on the quantum appeal? - Assessee's contention: Not explicitly recorded, but implied by the request to set aside penalty orders if the quantum appeal is decided in their favour or restored. - Revenue's contention: Not explicitly recorded.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 69A,Section 270A,Section 271AAC(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO

Hearing: 13.10.2026Pronounced: 15.10.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: These appeals filed by the assessee are directed against three orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 03.02.2026 / 18.02.206, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2020-21.

- 2 - ITA Nos. 1587 to 1589 /CHNY/2026 Pavadi Anbazhagan 2. The assessee has filed appeals against the First Appellate Authority (FAA) orders in respect of quantum addition and penalty orders. First, let us deal with appellate order in respect of quantum addition in ITA No.1587/CHNY/2026.

ITA No.1587/CHNY/2026 3. At the very outset, we notice that the assessment was completed on a best judgment basis u/s.147 r.w.s. 144 and 144B of the Act by estimating the business income at Rs.16,94,285/- and treating cash deposits of Rs.2,34,73,476/- as unexplained money u/s.69A of the Act, since the assessee had neither filed the return of income nor complied with the notices issued by the AO. The FAA confirmed the additions, observing that the assessee had failed to furnish any nexus or reconciliation statement to substantiate his claim.

4.

The Ld. AR submitted that the assessee had furnished a partial response before the FAA, including the GST registration certificate, confirmations from Janani Cashew Industry and Mathivathani Cashews regarding business transactions and source of receipts, and medical records explaining the reasons for non-

- 3 - ITA Nos. 1587 to 1589 /CHNY/2026 Pavadi Anbazhagan compliance before the AO. She submitted that the assessee could not respond to the notices during the assessment proceedings as he was undergoing medical treatment. She further submitted that the assessee could not furnish all the relevant documents even before the FAA, as certain supporting records were required to be obtained from third parties. The Ld. AR further submitted that the cash deposits treated as unexplained money u/s.69A of the Act represented business receipts. In support of this claim, the assessee filed a petition under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, seeking admission of additional evidence comprising GST return details for six months, confirmation from Kumarasamy Industries, bank statements and details of bank credits. It was submitted that these documents have a direct bearing on the issues in dispute and establish the nexus between the bank deposits and the business turnover of the assessee. The Ld. AR, therefore pleaded that the additional evidences may be admitted and the matter may be restored to the file of the AO for fresh examination and adjudication after affording adequate opportunity to the assessee.

5.

The Ld.DR submitted that adequate opportunities were provided from the offices of the AO & FAA and there is no violation of

- 4 - ITA Nos. 1587 to 1589 /CHNY/2026 Pavadi Anbazhagan principles of natural justice. Therefore, it was submitted that the appeal of the assessee may be dismissed.

6.

We have heard the rival submissions and perused the material available on record. At the outset, we notice that the assessment was completed ex-parte, wherein the AO estimated the business income and treated the bank deposits as unexplained money u/s.69A of the Act. The assessee has filed a petition under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, seeking admission of additional evidence comprising GST return details for six months, confirmation from Kumarasamy Industries, bank statements and details of bank credits. On perusal, we find that the additional evidence is relevant for determining the nature and source of the bank deposits and has a direct bearing on the issues under consideration. Since these documents were not available before the AO and require factual verification, in the interest of substantial justice, we admit the additional evidences and deem it fit to restore the matter to the file of the AO. Accordingly, the impugned order is set aside on this issue and the matter is restored to the file of the AO for fresh examination of the evidences. The AO shall decide the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is directed to

- 5 - ITA Nos. 1587 to 1589 /CHNY/2026 Pavadi Anbazhagan cooperate with the Revenue and shall not seek unnecessary adjournment. It is ordered accordingly.

ITA Nos.1588 & 1589/CHNY/2026 7. The assessee has filed these appeals against the appellate order confirming the penalties levied u/s.270A / 271AAC(1) of the Act, by the AO. Since, we have already set aside the quantum appeal in ITA No.1587/CHNY/2026 to the files of the AO for denovo adjudication, we deem it appropriate to set aside the impugned penalty orders also to the files of the AO to decide along with the corresponding quantum appeal in accordance with law. It is ordered accordingly.

8.

In the result, the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in the open court on 15th October,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (इंटूर� रामा राव) (GEORGE GEORGE K) (INTURI RAMA RAO) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 15th October, 2026 RSR, Sr.PS

- 6 - ITA Nos. 1587 to 1589 /CHNY/2026 Pavadi Anbazhagan

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.10.16 17:07:14 +05'30'

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