DAMODARAM SURESH,GOBICHETTIPALAYAM vs. ITO, WARD 1(1), ERODE, ERODE

आयकर अपीलीय अधिकरण ‘सी’ न्यायपीठ, चेन्नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI
माननीय श्री मनु कुमार गिरि, न्याययक सदस्य एवं
माननीय एस. आि. िघुनाथा, लेखा सदस्य के समक्ष
BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI HON’BLE S.R. RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ ITA No.2715/Chny/2024
ननिाारण वर्ा /Assessment Year: 2017-18

Damodaran Suresh,
Prop. Sumy Electronic,
No.52, Main Road,
Gobichettipalayam
Tamil Nadu - 638 452. [PAN: AIJPS3460M]

Vs.
The Income Tax Officer,
Ward-1(1),
Erode.

(अपीलार्थी/Appellant)

(प्रत्यर्थी/Respondent)

अपीलार्थी की ओर से/ Appellant by :
Mr.Girish Kumar, Advocate
प्रत्यर्थी की ओर से /Respondent by :
Mr.Bipin, C.N, CIT

सुनवाई की तारीख/Date of Hearing
:
08.09.2025
घोर्णा की तारीख /Date of Pronouncement
:
05.12.2025

आदेश / O R D E R

PER MANU KUMAR GIRI (Judicial Member): The captioned appeal filed by the assessee is directed against order of the Ld. Principal Commissioner of Income Tax, Coimbatore-1 [PCIT] dated 09.02.2024 for Assessment Year 2017-18. 2. There is a delay of 198 days in filing this appeal. The assessee has filed petition along with affidavit for condonation of delay stating Damodaram Suresh

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therein the reasons for belated filing of the appeal. On perusal of the aforesaid reasons in the condonation application, we are of the view that there is sufficient cause for belated filing of this appeal. Hence, we condone the delay in filing this appeal and proceed to dispose of the appeals on merits.

1
25.10.2017
Return of income filed

2
31.12.2019
Scrutiny assessment order passed under Section 143(3) of the Act
3
25.03.2022
Revision order of the PCIT – Coimbatore in setting aside the scrutiny assessment order dated 31.12.2019 (1st Round arising from revisionary proceedings)
4
23.03.2023
Effect giving assessment order passed under Section 143(3) r.w.s 263 of the Act (1st Round arising from revisionary proceedings)
5
28.07.2023
Order of the Income Tax Appellate Tribunal in ITA No.
469/CHNY/2023 (1st Round arising from revisionary proceedings in setting aside the revision order dated
Damodaram Suresh

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the cash book of the concern M/s.Sumy Electronics, in which the aforesaid assessee is the proprietor. In the absence of any reply forthcoming for the show cause notice issued, the proceedings under section 263 of the Act was completed on 25/03/2022 by setting aside with a direction to the Assessing Officer to redo the assessment afresh.
Aggrieved by the aforesaid order u/s 263 of the Act, the assessee preferred appeal before the Hon'ble Tribunal, who, by an order in ITA
No.469/CHNY/2023 dated 28.07.2023 has directed the PCIT as under:-
"3......... The Id. counsel urged that the matter can be restored back to the PCIT for redoing the revision order after allowing reasonable opportunity of being heard to the assessee. When this was pointed out to Ld. Senior DR, he could not controvert the above fact situation...........

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the Act by filing relevant bills/vouchers. On final notice dated
05.01.2024 none appeared. After considering material on record, the ld.PCIT passed the following order:
4. The submissions of the assessee supra, the facts of the case and the impugned assessment order have been carefully perused. The only issue that was required to be adjudicated in the present proceedings is the violation of provisions of section 40A(3) of the Act as the assessee has made payment in cash in excess of Rs.20,000/- to various parties amounting to Rs.85,03,246/-. Apparently, as per assessee's own admission, there exist certain discrepancies in the data uploaded during the course of assessment proceedings with regard to the cash book etc.
Nonetheless, what is to be looked into in the present proceedings is whether or not, the impugned assessment order is erroneous in as much as the same renders it prejudicial to the interest of revenue. Perusal of the facts of the case, the assessment order and the submissions made during the assessment proceedings and the present proceedings, there exists prima facie a case where the entire issue of applicability of provisions of section 40A(3) of the Act requires fresh adjudication and proper investigation. The provisions of section 40A(3) of the Act are trite law and the assessee ought to have made those payments in modes otherwise than cash payments so as to escape from the rigors of disallowance u/s 40A(3) of the Act. As the same is not done in accordance with law, the impugned assessment order so made is held to be consisting of errors rendering it an erroneous assessment order in as much as it is prejudicial to the interest of revenue, requiring an intervention to cure the order so made. In the present proceedings also, had the assessee proved beyond doubt that there did not exist any violation of the said section, the issue could have been considered in accordance with law. Unfortunately, the assessee had not proved beyond doubt that there did not exist any violation of the said provision and therefore, left with no other option, I deem it fit to hold that the impugned assessment order is erroneous in as much as the same is prejudicial to the interest of revenue.

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obtained from the assessee and after examining the same, the AO may satisfy himself in accordance with law and proper application of the latest judicial pronouncements made and relied upon by the assessee shall be examined and shall proceed with the assessment and pass appropriate orders in the assessee's case. The Assessing Officer shall give adequate opportunity of being heard to the assessee in this regard before passing the fresh assessment order. The assessee shall provide all the material available to substantiate its claim before the AO.

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facts and circumstances of the case. This error vitiates the revision order. Ld. AR submitted that the ld.PCIT failed to appreciate that the applicability of Section 40A(3) of the Act had already been examined during the assessment proceedings. The JAO had verified the corrected cash book and found no violation of Section 40A(3). This should have been duly considered. He asserted that the ld.PCIT did not recognize the distinction between an incomplete cash book and the full version of the cash book. The complete cash book had been examined during the assessment, but this was ignored in paragraph 4
of the impugned order. The ld.PCIT erred in remanding the matter back to the AO to re-examine Section 40A(3) without identifying any specific violation in the cash book already reviewed by the AO. The ld.AR furthermore contended that the ld.PCIT failed to consider that all relevant facts had already been thoroughly scrutinized by the JAO in the original assessment. Hence, he submitted that directing the JAO to revisit issues already verified is legally untenable and also failed to appreciate that the revision order is time-barred, invalid, passed without juri iction, and unsustainable in law and on facts.
8. We have heard the rival submissions and perused the record and application for additional evidence filed under Rule 29 of the Income
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Tax (Appellate) Tribunal Rules, 1963. We find from the original order that the issue of applicability of provisions of section 40A(3) of the Act was never questioned during original assessment proceedings. There is also a conflict regarding the veracity of the cash book. Before us, the assessee has filed additional evidence under Rule 29. The admitted facts show cash payments aggregating to Rs.85,03,246/- exceeding statutory limits. Discrepancies in cash book acknowledged by the assessee. No demonstration by the assessee that such payments fell under Rule 6DD exceptions. There is no evidence on record of AO having examined bills/vouchers. No speaking order or reasoning or discussion exists in assessment order regarding applicability of Section 40A(3). It is also not a case that the AO has taken one of view.
In fact, no view has been taken by the AO on the applicability of Section 40A(3). The mere filing of a purported cash book does not constitute enquiry. The law is settled that “no enquiry” amounts to an error prejudicial to the Revenue, empowering the ld.PCIT to invoke
Section 263 of the Act. Thus, the ld.PCIT had material to form prima facie satisfaction that the assessment order was erroneous and prejudicial. In such circumstances, the AO was required to make detailed enquiry.
Damodaram Suresh

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The present order is passed pursuant to an order of the Tribunal remand. It is well-settled that when the earlier order is set aside for fresh adjudication, the ld.PCIT obtains fresh limitation from the date of Tribunal order for passing a revised order. Hence, the order dated
09.02.2024 is within limitation. Accordingly, we find no reason to interfere with the revisionary order.
9. In the result, the appeal of the assessee is dismissed.
Order pronounced on 5th day of December, 2025 at Chennai. (एस. आि. िघुनाथा)
(S.R. Raghunatha)
लेखा सदस्य /Accountant Member

(मनु कुमार गिरि)
(Manu Kumar Giri)
न्याययक सदस्य / Judicial Member
चेन्नई/Chennai, ददनांक/Dated: 5th December, 2025. KB/-

आदेश की प्रनतललपप अग्रेपर्त/Copy to:
1. अपीलार्थी/Appellant
2. प्रत्यर्थी/Respondent
3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem
4. पवभागीय प्रनतननधि/DR
5. गार्ा फाईल/GF