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Facts
The assessee, a distributor of Muthoot Finance, filed his return for AY 2018-19. The AO made an addition of Rs.7.07 crores as unexplained money under Section 69A for cash deposits, after finding that some parties from whom cash was received did not respond to notices.
Held
The Tribunal condoned the delay in filing the appeal and, considering the reasons provided for non-response from three sub-dealers (death, change of address) and the assessee's request, decided to remand the issue to the CIT(A) for limited verification.
Key Issues
Whether the addition made by the AO as unexplained money under Section 69A is justified when the assessee provided reasons for non-response from certain parties and requested for remand for further verification.
Sections Cited
69A, 133(6), 143(3)
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA
अपीलाथ� की ओर से/Appellant by : Shri. R.Vijayaraghavan, Advocate ��थ� की ओर से/Respondent by : Shri. Keerthi Narayanan, JCIT सुनवाई की तारीख/Date of Hearing : 24.04.2025 घोषणा की तारीख/Date of Pronouncement : 15.05.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-19, dated 20.08.2024.
The assessee has raised the following grounds of appeal:-
The order of the CIT (Appeals) National Faceless Appeal Centre (NFAC) is contrary to law, facts and circumstances.
2. The CIT(A) /NFAC erred in confirming the addition of Rs.2,05,15,798/- under Section 69A of the Income Tax Act, 1961.
3. The CIT(A) / NFAC ought to have appreciated that in respect of Sri R.Perumal, Sri A.Muruganandam and Ms.Sivakami, the appellants had furnished the address of the person. This was provided by your appellant for the purpose of confirmation of the amounts paid by these persons to your appellant for in turn making the payment to :-2-: ITA. No.:3039/Chny/2024 M/s.Muthoot Vehicle and Asset Finance Limited as in other cases accepted by CIT (A) / NFAC.
4. The CIT(A) /NFAC ought to have appreciated that Sri Perumal had deceased, and Sri A.Muruganandam and Ms.K.Sivakami had changed their address and hence the parties could not confirm the amounts in reply to the notice u/s 133(6) dated 11/1/2024 issued.
The appellant submits that they have the confirmation from the legal heirs of Late Sri Perumal as well as confirmation from the Sri A.Muruganandam and Ms.K.Sivakamai and hence the additions require to be deleted.
At the outset, we find that there is a delay of 28 days in appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that after receipt of the order, he kept the order to get the instruction from his Auditor and because of the bereavement of his Grandmother, he forgot to inform his Auditor. Hence, there was a delay in filing the appeal by the assessee. After considering the Affidavit filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the assessee for adjudication.
The brief facts of the case are that the assessee is an individual filed his return of income on 20.12.2018 for the A.Y. 2018-19 by declaring an income of Rs.4,93,220/-. The assessee is one of the distributors of Muthoot Finance and number of retail distributors are appointed by the assessee. The case was selected for limited scrutiny under CASS for the reason to verify cash deposit made during the A.Y. 2018-19. The AO issued statutory notices to the notices to the assessee by calling for information. It is noticed that the assessee had deposited cash of Rs.7,07,21,600/- in Andhra bank and City Union bank. Based
:-3-: ITA. No.:3039/Chny/2024 on the Cash book submitted the AO found that the assessee had received cash from 13 parties to the tune of Rs.7,09,58,132/- having details of their PAN and addresses. The AO issued notices to the following 3 parties out of 13 parties calling for details of nature of business, nature of transactions with the assessee, copy of agreement executed and the ledger account for the F.Y. 2017-18 of the assessee. - Sivakami PAN - CLKPS 2433 Q - Palanisamy Murugananthan PAN – ANNPM 5447 R - Raman Alangaram Kannan PAN – ARXPK 2546 F Since none of the above parties responded for the notices and assessee also did not respond to the show cause notice to prove the genuineness of the cash deposit, the AO passed an order u/s.143(3) of the Act dated 03.08.2021 by making an addition of entire cash deposit of Rs.7.07 crores as unexplained money u/s.69A of the Act.
5. Aggrieved by the order of the AO assessee preferred an appeal before the ld.CIT(A),NFAC, Delhi.
On perusal of the replies, details and documents furnished by the assessee along with the remand report submitted by the AO the ld.CIT(A) sustained the addition of Rs.2,05,15,798/- in respect of the following sub dealers of the assessee who did not respond to the notices of the AO by passing an order dated 20.08.2024. - Ramasamy Perumal Rs.62,63,500/- - Murugananthan Rs.72,72,230/- - Sivakami Rs.69,80,068/-
:-4-: ITA. No.:3039/Chny/2024 7. Aggrieved by the order of the ld.CIT(A), NFAC the assessee preferred an appeal before us.
The ld.AR for the assessee submitted that the said three parties i.e. Sub dealers of the assessee did not respond to the notices of the lower authorities for the following reasons; - Ramasamy Perumal: Since Sri R Perumal had deceased, he could not respond to the notices and now the assessee has obtained the details of the legal heir of Sri Perumal, the notices may be sent to them. - Murugananthan and Sivakami had changed their address and hence the parties could not respond to the notices u/s.133(6) of the Act. Now the details of the new address are furnished to send the notices.
In light of the above, the ld.AR prayed for remanding the issue to the ld.CIT(A) for verification.
Per contra, the ld.DR fairly accepted to send it back the issue to the ld.CIT(A).
We have heard the rival contentions and gone through the orders of lower authorities. We note that the ld.CIT(A) has deleted the additions made by the AO on account of the sub dealers who furnished the details as the source of cash deposit has been explained by sustaining the addition in respect of the sub dealers who have not responded to the notices issued by the department. We find that the ld.AR of the assessee has provided the address and other details of the other 3 parties also and has prayed for remitting the file back to the ld.CIT(A) for limited verification of the source of cash deposit made by the above said 3 parties. In view of the above, in the interest of natural justice, we
:-5-: ITA. No.:3039/Chny/2024 remit the issue back to the file of the ld.CIT(A) for limited purpose of verification of the above said 3 sub dealers’ details by providing proper opportunity to the assessee and to pass the orders in accordance to law. Needless to say, that the assessee to be diligent in presenting the details and documents before the ld.CIT(A) as and when called for to complete the proceedings.
In the result the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 15th May, 2025 at Chennai.