ANILKUMAR GOPINATHANNAIR,PALAKKAD vs. ITO WARD 1, TPS, PALAKKAD

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ITA 519/COCH/2025Status: DisposedITAT Cochin11 August 2025AY 2017-18Bench: SHRI INTURI RAMA RAO (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the CIT(A) rejected the assessee's explanation that the cash deposit was from opening balance and cash sales, citing an abnormal increase in sales and debtors. However, the Tribunal found it necessary to remand the matter to the Assessing Officer.

What were the facts?

The appellant, a wholesale distributor of Fly Ash, filed a return of income for AY 2017-18. The assessment was completed, and later scrutiny revealed a significant cash deposit during the demonetisation period. The Assessing Officer treated a portion of this deposit as unexplained and brought it to tax under Section 115BBE.

What were the issues?

Whether the CIT(A) was justified in rejecting the assessee's explanation for the cash deposits made during the demonetisation period and if the matter requires remand for further examination.

Which sections of the Income-tax Act were involved?

Section 115BBE,Section 143(1),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH

Before: SHRI INTURI RAMA RAO, AM

For Appellant: Shri Padmanathan K.V
For Respondent: Smt. Leena Lal, Sr. D.R
Hearing: 06.08.2025Pronounced: 11.08.2025

Assessment Year: 2017-18 Anilkumar Gopinathan Nair .......... Appellant Sree Lakshmi, Hill View Nagar, Kanjikode Palakkad 678621 [PAN: AIAPG3415B] vs. The Income Tax Officer, WD-1 & TPS, Palakkad.......... Respondent Assessee by: Shri Padmanathan K.V. 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 National Faceless Appeal Centre, Delhi [CIT(A)] dated 20.06.2025 for Assessment Year (AY) 2017-18.

2.

Brief facts of the case are that the appellant is an individual engaged in the business of wholesale distributor of Fly Ash to different cement manufacturing companies. The return of income for AY 2017-18 was filed on 28.01.12018 declaring income of Rs. 10,63,34070/-. Against the said return of income, the assessment was completed by the ITO, Ward-1 & TPS, Palakkad (hereinafter called "the AO") vide order dated 21.12.2019 passed u/s. 143(1) of Anilkumar Gopinathan Nair the Income Tax Act, 1961 (the Act) accepting the returned income. Subsequently, the case was selected for scrutiny by issuing notices u/s. 143(2) of the Act on 05.08.2019 & 05.09.2019. On verification it was found that the appellant made cash deposit of Rs. 64,39,500/- into the bank account out of which a sum of Rs. 63,83,000/- was made in specified bank notes (SBN) during demonetisation period. Accordingly, the AO came to a finding that the appellant could deposit only Rs. 32,25,000/- and the balance of Rs. 32,14,500/- was treated as unexplained deposit and was assessed to tax u/s. 115BBE of the Act.

3.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

4.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

5.

The learned counsel for the assessee submits that he CIT(A) confirmed the addition made by the AO based on assumptions and presumptions. The cash deposits made during the demonetisation period were made out of cash sales and opening balance as on 11.11.2016.

6.

The learned Sr. DR submits that the CIT(A) had passed a reasoned order after making considering the explanations of the appellant. Therefore, no interference is called for by this Tribunal.

Anilkumar Gopinathan Nair 7. I heard the rival contentions and perused the material available on record. 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 deposit in SBN was 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.

8.

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.

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