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Facts
The assessee, an individual, had cash transactions of Rs. 15,01,000 in his bank account for AY 2012-13 and did not file a return of income. The AO treated these deposits as unexplained cash credit. The assessee claimed the money was from the sale of a plot through a power deed, out of which he constructed a new house.
Held
The Tribunal found that the CIT(A) confirmed the assessment order based on the remand report without giving the assessee an opportunity to rebut the findings. Therefore, the matter was restored to the CIT(A) for a fresh decision after providing the assessee with an adequate opportunity to be heard and produce necessary documents.
Key Issues
Whether the CIT(A) erred by not providing the assessee an opportunity to rebut the remand report findings before confirming the assessment order, and whether the cash deposits were properly treated as unexplained.
Sections Cited
147, 68, 144, 143(3), 271(1)(c), 271F, 148
AI-generated summary — verify with the full judgment below
This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] dated 14/10/2024 for the Assessment Year (AY) 2012-13 by raising following grounds of appeal:
“1. The Hon'ble CIT(A) failed to consider the submission and documentary evidence submitted by the appellant.
2. The Id AD failed to consider the fact that the appellant did not have income exceeding the taxable limit so as to attract penalty provision attracting 271F.
The power document was registered in the registrar office in local language as required and the powers of the powerholder was clearly mentioned in the page 5 of the document which includes right to deal with the property. The entire case which revolved on evidence about the sale of property is available in said purchase deed. Separate payment receipt was submitted for the receipt of consideration in line with the power deed which was submitted by the appellant but was rejected on technical ground and not on fact of the case.
The property was promoted for sale as plots after getting necessary approval from the respective authorities which was the responsibility of powerholder as per the 2 ITA1577/Chny/2025 Pachaiyappam Senthamarai Vs ITO deed. Secondly timing of sale was not known to appellant as the plot promoter has to make further development work and do marketing activities for identification of prospective buyers. In a nutshell, appellant connection to his land was ceased once after executing the power deed. Hence power deed is the base document for the appellant to establish the fact of the case i.e. transfer of property to powerholder to deal with and against which the receipt of consideration.
5. Once the power deed is executed and registered giving powers to powerholder to deal with said property, there must be a consideration flow which is basis of any commercial transaction. The proximity of the dates in which consideration received and execution of power deed is sufficient proof to hold the receipt of amount is against the said property.
6. The power deed document was executed on 1-11-2011 and the receipt of cash and deposit in his account was on 2nd November 2011 which is the sufficient proof which Honourable CIT(A) failed to recognize and appreciate.
The appellant could not translate the said power deed document in English based on remand report by Jurisdictional AO stationed at Cuddalore Income tax office in a given time since the translation of original deed should stand the legal scrutiny and appellant being a farmer is apprehensive about the same with regard to quality of translation.
8. The receipt of money was deposited in appellant bank account and frequently withdrawn thereafter and constructed own house for which Government Registered valuer/ Chartered Engineer's report and withdrawal of amount from the bank out of the receipt and invitation for the house warming function was appended. The certificate from VAO was also enclosed. But id AO and Honourable CIT(A) failed to recognize the evidence and passed the impugned order. For these reasons and other reasons to be adduced at the time of hearing the applicants pray that the addition made by the AO be deleted and Justice rendered
2. At the outset of hearing, we found from perusal of record that there is a delay of 150 days in filing this appeal before the Tribunal for which, the assessee has filed an application for condonation of delay along with affidavit by mentioning the facts as under:
“The order of the Commissioner of Income Tax (Appeals) NFAC, Delhi, dated 14.10.2024 was served on the Petitioner on 14.10.2024. The last day for filing the Appeal before the Income Tax Appellate Tribunal, Chennai, fell on 13.12.2024. However, the Appeal was actually filed on 30.05.2025 after a delay of 168 days. On receipt of the CIT(A)'s order, 14.10.2024, the appellant did not understand what is stated in the order and took the papers to his relative who can
3 ITA1577/Chny/2025 Pachaiyappam Senthamarai Vs ITO understand what is stated in the order. The appellant did not know that appeal has to be filed within 60 days on receipt of order from CIT(A). Appellant's relative handed over the papers to an advocate and as per his instruction appeal fee was paid on 19.02.2025. Advocate met the Chartered Accountant who has prepared submission before CIT(A), collected the details and submitted to his colleague who prepared appeal papers and forwarded to the Assessee for signature on 28.05.2025. The Assessee had taken copies of the enclosures, signed the appeal papers and forwarded the entire set to his Counsel on late evening of 28.05.2025 for filing the same before the Tribunal. The Counsel filed the appeal before this Hon'ble Tribunal on 30.05.2025. The Petitioner submits that the delay of 168 days was due to the above stated reasons and was not deliberate and neither willful nor wanton, It is therefore prayed that the delay of 168 days may be condoned and the Appeal admitted and disposed of on merits.”
3. On the other hand, the ld. Sr. DR for the revenue on the application of condonation of delay, submitted that the Bench may take appropriate view as per law.
4. We have considered the rival submissions. The assessee stated in his condonation application that on receipt of the CIT (A)'s order on 14.10.2024, the appellant did not understand what is stated in the order. The appellant did not know that appeal has to be filed within 60 days on receipt of order from CIT (A). Thereafter he contacted to a Chartered Accountant and filed the appeal before the Tribunal.
The assessee stated that delay was not deliberate and occurred due to lack of proper guidance as mentioned in the condonation application. Thus, considering the facts and circumstances of the case and the contention made by the assessee, we condone the delay of 150 days in filing this appeal before the Tribunal and admit the same for hearing.
4 ITA1577/Chny/2025 Pachaiyappam Senthamarai Vs ITO
Now coming to the merit of the case, the brief facts of the case are that the assessee is an individual and has not filed his return of income for the assessment year under consideration i.e. A.Y. 2012-13. During the period, the assessee had made cash transactions to the tune of Rs. 15,01,000/- in his savings bank account maintained with State Bank of India Nellikuppam Branch. Since the assesee has not filed his return of income, the Assessing Officer after obtaining approval from the competent authority, reopened the case under Section 147 of the Act.
Statutory notices were issued by the Assessing Officer to the assessee asking the assessee to furnish relevant information but the assessee did not comply with any of the notices. The Assessing Officer, therefore, treated the entire cash deposits of Rs.15,01,000/- as unexplained cash credit under Section 68 of the Income Tax Act, 1961 (in short, the Act) and passed assessment order under Section 144 r.w.s. 143(3) of the Act. Penalty proceedings under Section 271(1) (c) of the Act for concealment of income and penalty proceedings under Section 271F of the Act for failure to furnish the return of income were also initiated by the Assessing Officer.
Aggrieved by the order of Assessing Officer, the assessee filed appeal before the ld. CIT(A) and submitted as under:
“Mr. R.Perumal Raja handed over the amount to me and obtained power of attorney with respect to the property. I do not know when the property was sold and registered in whose name. Since amount was received by me and receipt was also obtained by me I concluded the transaction as sale, Mr. R.Perumal Raja did not give the sale deed of the property to me subsequently. Further, he did not approach me after getting the power of attorney from me.”
5 ITA1577/Chny/2025 Pachaiyappam Senthamarai Vs ITO The ld. CIT(A), therefore, sent the submission of the assessee made as above to the Assessing Officer for his comments. The Assessing Officer in his remand report stated that the contention of the assessee cannot be accepted in view of the following reasons:
“1. The assessee has stated in his reply that Shri Perumal Raja handed over the amount and obtained power of attorney, but no such mention is available in the Power of Attorney bearing No.453/2011 dated 1.11.2011 furnished by the assessee. Moreover, it is also mentioned that the assessee has not received any amount on execution of the Power of Attorney. There is also no mention about the power to enter into any sale transaction on behalf of the assessee. The Receipt submitted by the assessee for receipt of cash of Rs.30 Lakhs R.Perumal Raja was only on plain paper without any Revenue Stamp. As per the Indian Stamp Act, 1899, Section 2(23) mandates the affixing of a stamp revenue on any receipt above Rs.5,000/- is necessary.
Since the statement that an amount of Rs.30 Lakhs was received by him on sale of property is itself not established, the same cannot be accepted as source for cash deposits in Bank Account. Moreover, as per proviso to Sec. 2695S of the Act, the person from whom the specified sum is taken or accepted and the person by whom the specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under the Income tax Act section 2695S shall not apply. In the case of the assessee, no documents/evidences furnished to show that the sum received of Rs.30 lakhs represents agricultural income. Further, on perusal of the Unstamped receipt dated 1.11.2011, Mr.Perumal Raja was engaged in business of plot promoter and hence the above proviso to Section 2695S shall not apply in the assessee's case.
3. No Valid evidences to establish that construction of house was made only in the relevant year out of sale proceeds received has been furnished. The 6 ITA1577/Chny/2025 Pachaiyappam Senthamarai Vs ITO
assessee furnished only copy of House Warming Ceremony invitation and a Valuation Report of Approved Valuer estimating the cost of construction as on 2012 as Rs.8,15,000/- No other details such as Panchayat Approval for construction, Property lax receipt, EB Receipt, etc. were furnished to establish his statement.
4. The assessee had been asked to submit English translation of his submission before the CIT(Appeals) However, the assessee expressed his inability to translate the documents in local language to English. The appellant has not furnished the English translation of the submission.”
7. The ld. CIT (A), after considering the remand report submitted by the Assessing Officer, dismissed the appeal of the assessee on the ground that the assessee has failed to establish the genuineness of the transaction with proper evidence.
Aggrieved by the impugned order of ld. CIT (A), this appeal has been preferred before us. During the appellate proceedings, the ld. AR of the assessee submitted as under:
“The appellant is an individual doing agricultural farming activity in a remote village in Cuddalore district. During the subject assessment year AO issued notice u/s 148 on the presumption that deposit of Rs 1,501,000/- made in appellant account has escaped the assessment. The said deposit was made out of the sale of plot which was owned by him and appellant constructed new house out of the funds received. The notice u/s 148 was issued by AD on 26.03.2019 and appellant did not respond to the notice as he is illiterate. Subsequently notices were issued on 17.10.2019 & 05.12.2019 but assessee did not know how to respond. The Assessment order was passed on 09/12/2009 treating the deposit amount as unexplained cash credit u/s 68. Against this order appellant filed appeal with first appellate authority. Subsequently penalty notice was issued u/s 271F for not filing return of income for the said assessment year and passed the penalty order. Though appellant did respond to the notice on 5 August 2021, without considering the same ld AO passed the impugned order on 07/09/2021 levying penalty of Rs 5000/-. The appellant income from sale of 7 ITA1577/Chny/2025 Pachaiyappam Senthamarai Vs ITO plot and subsequent investment in construction of new house did not attract capital gain tax and also it is well within the basic limit exempted from Income tax hence return was not filed. For the above mentioned points based on which appeal was filed. During the appellate proceedings, remand report was called for by the Jurisdictional Assessing officer ward 4 Cuddalore vide DIN & Letter No: ITBA/COM/F/17/2023- 24/1057994723(1) dated 16-11-2023 and the reply to the letter was duly filed by appellant vide letter dated 29-11-2023 submitted relevant particulars as asked for. The registered power deed was submitted which gives absolute authority to sell and the consideration in cash was received by the appellant. Once power deed was given, appellant does not have any hold over the property and subsequent act of powerholder was not known to the appellant. The consideration received for the said power deed was closely connected to the execution of power deed. The construction was done in village and in appellant own land, and proof of appellant owning a house and engineers valuation report was appended during the remand report. Further translation of purchase deed in English was asked for which the appellant did not have any resource in this part which should stand the legal scrutiny for translated document in case. The Honourable CIT(A) passed the impugned order based on remand report of AO, without reckoning the submission made.”
The ld. Sr. DR On the other hand supported the orders of the lower authorities.
We have considered the rival submissions and it is found that though, the ld. CIT (A) has confirmed the assessment order on the basis of the remand report submitted by the Assessing Officer, no opportunity was given to the assessee by ld. CIT (A) for rebuttal of the findings of the Assessing Officer given in the remand report. Therefore, in the interest of justice, the matter is restored back to the file of ld. CIT (A) with a direction to provide the assessee adequate opportunity of being heard before deciding the issue. The assessee is also directed to produce all necessary documents including the translated copy of the evidence before the Ld.
8 ITA1577/Chny/2025 Pachaiyappam Senthamarai Vs ITO CIT (A) to enable him to take a considered view. In the result, grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, this appeal of the assessee is allowed for statistical purposes only.
Order pronounced in the open court on 26/09/2025.