ASSISTANT COMMISSIONER OF INCOME TAX, TIRUNELVELI vs. SWATHIKHAS JEWELLERS, MARTHANDAM

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ITA 2298/CHNY/2025Status: DisposedITAT Chennai24 October 2025AY 2017-18Bench: SHRI S.BALAGANESH (Accountant Member), SHRI S.S. VISWANETHRA RAVI (Judicial Member)1 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the CITA violated Rule 46A of the Income Tax Rules by not giving the AO an opportunity to examine the additional evidence. Therefore, the issue was restored to the AO for fresh consideration.

What were the facts?

The Revenue appealed against the order of the NFAC for assessment year 2017-18. The AO added cash deposits of Rs. 3,16,69,270/- as unexplained cash credit. The assessee, a jewellery firm, claimed these deposits were from sale proceeds and provided additional evidence to the CITA.

What were the issues?

Whether the CITA's admission of additional evidence without giving the AO an opportunity to examine it violated Rule 46A of the Income Tax Rules.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 46A,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH,

Before: SHRI S.BALAGANESH & SHRI S.S. VISWANETHRA RAVI

Hearing: 23.10.2025Pronounced: 24.10.2025

आदेश/ O R D E R

PER M. BALAGANESH, AM:

1.

The appeal of the Revenue is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as Ld.NFAC, in short] in Appeal No. ITBA/NFAC/S/250/2025-26/1077922605 (1) dated 27.06.2025 for the assessment year 2017-18 against the order of 2 -: assessment passed u/s. 143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act) dated 23.12.2019 by the Assistant commissioner of Income Tax, Circle 1, Nagercoil (hereinafter referred to as Ld. AO).

2.

None appeared on behalf of the assessee. Hence, we proceed to dispose of this appeal on hearing the learned DR and based on materials available on record.

3.

The only effective issue raised by the revenue in this appeal is challenging the violation of Rule 46A of the Income Tax Rules by the learned CITA in not providing opportunity to the assessing officer with regard to the additional evidences filed by the assessee.

4.

We have heard the learned DR and perused the materials available on record. The learned AO had added the cash deposits made during the demonetization period in the sum of Rs. 3,16,69,270/- for want of evidences from the side of the assessee. The assessee is a partnership firm engaged in the jewellery business. The assessee furnished additional evidences and submissions before the learned CITA as under:-

The assessee had made cash deposit of Rs.3,16,69,270/- during the demonetization period from 10.11.2016 to 30.12.2016 into the assessee's cash credit account with Karur Vysya Bank Limited A/c No.1768223000000020. This Cash Credit Bank account in Karur Vysya Bank No. 1768223000000020 is duly reflected in assessee's audited Balance Sheet filed with you. The entire deposits represent sale proceeds of Jewellery and being deposited the same in the bank account. The assessee's total turnover for the assessment year 2017-18 is Rs.37.28 crores. The entire transactions can be proved item by item with the books of accounts of the assessee and is duly reflected in the audited accounts. Hence to assess the above bank deposits as unexplained cash credit u/s.68 is not tenable as the transactions are duly reflected in the books of accounts and audited statements filed with the Department. The assessee has furnished 1) List showing date wise cash deposits in to the bank account. 2) Copy of the above bank account for the period 10.11.2016 to 30.12.2016 and 3) Copy of extract of assessee's cash book for the period 10.11.2016 to 30.12.2016.

4 -: 5. These additional evidences were admitted by the learned CITA and contentions of the assessee that the source for cash deposits made in the bank account emanated out of cash sales was accepted, without providing any opportunity to the learned AO by calling for a remand report. The sole grievance of the revenue before us is not providing opportunity to the Learned AO by the Learned CITA. Hence, we hold that there was indeed violation of Rule 46A of the Income Tax Rules committed by the learned CITA. Hence, in the interest of justice and fair play, we deem it fit and appropriate, to restore this issue to the file of learned AO for considering the additional evidences furnished by the assessee before the learned CITA and pass an order in accordance with law qua the dispute before us. Accordingly, the grounds raised by the revenue are allowed for statistical purposes.

6. In the result, the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in the open court on 24th October, 2025 at Chennai.

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