SITARAM THRIKKUR SUBBARAMAN,THRISSUR vs. ITO, WARD 2(1), THRISSUR
Facts
The assessee, an individual deriving income from business, filed a return of income for AY 2014-15. The AO made additions for unexplained cash deposits and capital gains, which were confirmed by the CIT(A). The assessee's firm's bank account was frozen, and the properties were sold to pay firm debts, with the assessee having only a 2% share.
Held
The Tribunal held that the assessee provided a plausible explanation for the cash deposits which was not controverted by the Revenue, hence no addition was warranted for cash credits. For capital gains, the matter was remanded to the AO to compute the correct share of the assessee based on the family settlement deed.
Key Issues
Whether the addition for unexplained cash deposits is warranted, and whether the capital gains were computed correctly considering the assessee's share.
Sections Cited
69A, 147, 144, 144B
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SONJOY SARMA, JM ITA No. 398/Coch/2025 Assessment Year: 2014-15 Sitaram Thrikkur Subbaraman .......... Appellant XXXI 289 Lakshmi Nivas, Pushpagiri Thrissur - 680002 [PAN: AIOPS8626E] vs. The Income Tax Officer, WD-2(1), Thrissur .......... Respondent Appellant by: Shri Jai Krishna, Advocate Respondent by: Smt. Veni Raj, CIT-DR Date of Hearing: 11.06.2025 Date of Pronouncement: 31.07.2025
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 19.11.2024 for Assessment Year (AY) 2014-15.
Brief facts of the case are that the appellant is an individual deriving income from business. The return of income for AY 2014-15 was filed on 24.12.2021 declaring total income of Rs. 16,65,320/-. Against the said return of income, the assessment was completed by the National Faceless Assessment Centre (hereinafter called "the
2 ITA No. 398/Coch/2025 Sitaram Thrikkur Subbaraman AO") vide order dated 19.03.2022 passed u/s. 147 r.w.s. 144 & 144B of the Act at a total income of Rs. 16,27,12,980/-. While doing so, the AO made addition of Rs1,40,87,980/- treating the aggregate cash deposits in the bank account as unexplained money of the assessee rejecting the contention of the appellant that the said cash deposits were made out of business receipts of the partnership firm, M/s. Sitaram Auto Sales and Service in which the appellant was a partner, as the firm’s bank account was frozen by the bank for non repayment of loans. As regards the capital gains, it is submitted that the properties were sold in order to pay the debts of the firm and the share of the appellant in the property was only 2%. However, the AO rejected the above explanation and made addition of Rs. 14,86,25,000/-,
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO by holding that the appellant had failed to substantiate the source of cash deposits and also failed to prove that the property sold was jointly held along with family members.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
At the outset we find that there is a delay of 127 days in filing the present appeal. The appellant filed a petition along with an affidavit seeking condonation of delay in filing the appeal, wherein it
3 ITA No. 398/Coch/2025 Sitaram Thrikkur Subbaraman is stated that the delay had occurred as the appellant was suffering from severe back pain and was undergoing treatment. In support of this averment the appellant filed a medical certificate. Therefore, it is prayed that the delay in filing the appeal may be condoned and the appeal may be admitted for adjudication. Having regard to the averments made in the affidavit seeking condonation of delay, in the absence of any evidence contrary, we are of the considered opinion that the appellant society is prevented by sufficient reasonable cause in filing the appeal within the prescribed limit. Accordingly, we condone the delay and admit the appeal for adjudication.
The learned counsel for the assessee submitted that the appellant’s share in the property sold is only 2% as per the family settlement deed dated 25.11.2006, placed at page Nos. 38 to 58 of the paper book. Therefore, the entire sale consideration cannot be brought to tax in the hands of the appellant alone. The property was sold only for a consideration of Rs. 10,46,25,000/- in terms of the sale deed. As regards the cash deposits, he submitted that the cash deposits were made out of the business receipts of the partnership firm M/s. Sitaram Auto Sales and Service in which the appellant was a partner, as the bank account of the partnership firm was frozen.
On the other hand, ld. CIR-DR submits that the additions were made by the AO as confirmed by the CIT(A) for the failure of the assessee to substantiate the cash deposits. Similarly, he submits that
4 ITA No. 398/Coch/2025 Sitaram Thrikkur Subbaraman the issue of computation of capital gains in the hands of the appellant can be restored to the file of the AO to adopt the correct share of the appellant in the property.
We have heard the rival contentions and perused the material available on record. Ground of appeal Nos. 1-14 challenges the addition made u/s. 69A of the Act treating the cash deposits in the bank account as unexplained money of the appellant. It is undisputed fact that the appellant offered explanation in support of the source of said cash deposits by stating that the cash deposits were made out of business receipts of the partnership firm in which the appellant was a partner. This explanation was not controverted by the Revenue. However, the AO as well as the CIT(A) merely rejected the explanation without assigning any cogent reason. The appellant had offered plausible explanation of cash deposits and there was no material brought on record to rebut the above explanation. Therefore, we are of the considered opinion that no addition is warranted in respect of cash credits.
As regards addition on account of capital gains the appellant had filed a sale deed dated 05.02.2014 wherein the total consideration for the entire property is Rs. 10,46,25,000/-. The property was sold along with five co-owners. The appellant also filed a family settlement deed, wherein it is clearly mentioned that the share of the appellant is only 2%. In view of these submissions we are of the considered opinion that the matter requires remand to
5 ITA No. 398/Coch/2025 Sitaram Thrikkur Subbaraman the file of the AO to compute the correct amount of capital gain by adopting the correct share of the appellant in the property sold, based on the family settlement deed 25.11.2006. Accordingly, this ground of appeal stands partly allowed
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 31st July, 2025.
Sd/ Sd/- (SONJOY SARMA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 31st July, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order
Assistant Registrar ITAT, Cochin
