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Facts
The appellant, an individual engaged in textile trading, filed a return of income for AY 2017-18. The AO completed the assessment by making an addition of Rs. 8,85,000/- for cash deposits in specified bank notes (SBN) during demonetization, as the source was not substantiated.
Held
The CIT(A) confirmed the AO's action, rejecting the appellant's explanation based on a comparative analysis of financial data from preceding years, noting abnormal increases in sales and debtors. The Tribunal found the matter required further examination.
Key Issues
Whether the CIT(A) was justified in rejecting the appellant's explanation for cash deposits in SBN during demonetization.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
Assessment Year: 2017-18 Divakarapanicker Rajaniprabha .......... Appellant Rajaniprabha Kedarm House, Mill House Road, Perumbavoor 683542 [PAN: ABHPR5806R] vs. Asst. Commissioner of Income Tax, Circle-1, Aluva....... Respondent Assessee by: ------- None ------- Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 06.08.2025 Date of Pronouncement: 11.08.2025 O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-3, Chennai [CIT(A)] dated 30.05.2025 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual engaged in the business of trading in textiles. The return of income for AY 2017-18 was filed on 29.10.12017 declaring income of Rs. 12,82,070/-. Against the said return of income, the assessment was completed by the ACIT, Circle-1, Aluva (hereinafter called "the AO") vide order dated 21.12.2019 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 21,67,070/-. While Divakarapanicker Rajaniprabha doing so, the AO made addition of cash deposits made in specified bank notes (SBN) during demonetisation period of Rs. 8,85,000/- for the failure of the assessee to substantiate the source of said cash deposit.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO rejecting the explanation of the appellant of comparative analysis of financial data of the appellant for preceding years.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR.
The learned Sr. DR submits that the CIT(A) had passed a reasoned order after making analysis of the financial data of the preceding years. The sale figures shown for FY 2016-17 are not in line with the trade for the previous year 2015-16. Therefore, the CIT(A) had rightly rejected the explanation.
The issue that arises for my consideration is whether the CIT(A) was justified in rejecting the explanation of the appellant that the cash deposits made in SBN during demonetisation period or not. The appellant offered an explanation by stating that the cash Divakarapanicker Rajaniprabha deposits in SBN were made out of the opening cash balance on 09.11.2016 as available as per the books of account. However, the CIT(A) had noticed abnormal increase in the sales and debtors on 09.11.2016 as compared to the preceding year on the same day. Therefore, the explanation offered by the appellant was rejected. In the circumstance, I am of he considered opinion that the matter requires remand to the file of the AO to examine validity of the explanation offered by the appellant by taking into consideration the GST return, and comparative data of the proceeding years, etc.
In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.
Order pronounced in the open court on 11th August, 2025.