VISWANATHAN PRABHAVATHI,SALEM vs. THE INCOME TAX OFFICER, WARD 1(8), SALEM, SALEM

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ITA 927/CHNY/2025Status: DisposedITAT Chennai30 July 2025AY 2017-184 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 assessee should be granted one more opportunity to substantiate their case before the AO in the interest of justice and in accordance with the principles of natural justice. The AO had made an addition of Rs. 1,33,80,000/- on account of cash deposits, as the assessee had not explained their source. The assessee had submitted additional evidence before the CIT(A) to explain that the deposits were business receipts from the sale of prepaid vouchers and SIM cards. However, the CIT(A) did not admit this additional evidence and dismissed the appeal. The ITAT found merit in the assessee's plea for a further opportunity. Accordingly, the Tribunal set aside the order of the CIT(A) and remitted the matter back to the AO for verification of the source of cash deposits in accordance with law. The assessee was directed to appear before the AO on the hearing date and furnish all relevant details for fresh consideration. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Viswanathan Prabhavathi, is an appellant before the Income Tax Appellate Tribunal (ITAT), Chennai, for Assessment Year 2017-18. The respondent is the Income Tax Officer, Ward-1(8), Salem. The appeal arises from an order of the Learned Commissioner of Income Tax, Appeal, Addl./JCIT(A)-1, Mumbai, dated 23.01.2025, which upheld an assessment framed by the Assessing Officer (AO) under Section 144 of the Income-tax Act, 1961, on 12.12.2019. The AO made an addition of Rs. 1,33,80,000/- representing cash deposits in the assessee's bank account. The assessee, a dealer in prepaid vouchers and SIM cards, had not responded to notices or provided documentary evidence for the source of these deposits.

What were the issues?

1. Whether the Learned CIT(A) erred in not admitting additional evidence filed by the assessee to substantiate the source of cash deposits, thereby confirming the addition made by the AO? Assessee's Contention: The assessee argued that they were a dealer in prepaid vouchers and SIM cards and that the government had permitted the collection of Specified Bank Notes (SBNs) for prepaid mobile top-ups during the demonetization period. Additional evidence was filed before the CIT(A) to support the cash deposits, but it was not admitted. The assessee prayed for another opportunity to present their case before the AO. Revenue's Contention: The Revenue's representative relied on the orders of the lower authorities, stating that the assessment was ex-parte due to the assessee's failure to produce documentary evidence explaining the cash deposits made during the demonetization period.

Which sections of the Income-tax Act were involved?

Section 144,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI JAGADISH

Hearing: 18.06.2025Pronounced: 30.07.2025

आदेश / O R D E R

PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax, Appeal, Addl./JCIT(A)-1, Mumbai [hereinafter “CIT(A)”] dated 23.01.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 144 of the Income-tax Act,1961 (hereinafter “the Act”) on 12.12.2019.

2.

The assessee was a dealer in prepaid vouchers and SIM cards, and has made cash deposit of Rs 1,33,80,000/- in the bank account.

1.

The A.O in the order passed u/s 147 of the Act has made the addition of cash deposit as assessee has not responded to notices issued and submitted proper documentary evidence for source of cash deposit.

3.

The Ld. Authorized Representative (A.R) of the assessee, at the outset has submitted that assessee was a dealer in prepaid vouchers and SIM cards and the Government had permitted the collection of Specified Bank Notes (SBNs) towards the sale of prepaid mobile top- ups during demonetization period. The Ld. A.R further submitted that assessee has filed additional evidence in support of cash deposit before the Ld. Addl. CIT(A), but he has not admitted the additional evidence and confirmed the addition. The Ld AR, therefore, prayed that one more opportunity may be granted to substantiate his case before the A.O.

4.

On the other hand, the Ld. Departmental Representative (D.R) relied on the orders of the lower authorities and submitted that the lower authorities have passed ex-parte, as the assessee failed to produce documentary evidence to explain the cash deposits made during the demonetization period.

5.

We have heard the rival submissions and perused the materials available on record. The A.O has made the addition of cash deposit of Rs.1,33,80,000/- as assessee has not explained the source of cash deposit. The assessee has submitted additional evidences in support of cash deposit explaining source of cash deposit as business receipt from prepaid vouchers and SIM cards sales. The Ld. Addl. CIT(A) has not admitted the additional evidence and dismissed the appeal. We are of the view that the assessee should be given one more opportunity to substantiate his case before the A.O in the interest of justice and in accordance with the principles of natural justice.

1.

Accordingly, we set aside the order of the Ld. Addl. CIT(A) and remit the matter back to the file of the A.O to verify the source of cash deposits in accordance with law. We also direct the assessee to appear before the A.O on the date of hearing without fail and furnish all relevant details for fresh consideration.

6.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced on 30th day of July, 2025 at Chennai.

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