GOPALAN VIJAYSUDHA,COIMBATORE vs. ITO, NON CORP WARD-4(3), COIMBATORE
Facts
The appellant, a small trader, filed a return for AY 2018-19 declaring an income of Rs. 4,58,860. During reassessment, the AO noted cash deposits in bank accounts exceeding reported sales by Rs. 20,01,166, which were treated as unexplained money under Section 69A. Further disallowances were made for sundry creditors and depreciation, leading to significant additions to income.
Held
The Tribunal considered the rival submissions and perused the orders of the CIT(A) and AO. In the interest of justice, the Tribunal decided to grant the assessee a final opportunity to present evidence and submissions before the CIT(A).
Key Issues
Whether the addition of cash deposits as unexplained income under Section 69A and disallowances for sundry creditors and depreciation were justified. Whether the assessee was given adequate opportunity of hearing before the CIT(A).
Sections Cited
147, 144, 144B, 148, 69A, 32
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
This captioned Appeal filed by the Assessee is directed against
the orders of the Ld. Commissioner of Income Tax (Appeals), NFAC,
Delhi, [CIT(A)] dated 06.12.2024 for Assessment Year 2018-19.
The appellant is an individual and a small trader engaged in the
pharmaceutical business. The impugned assessment order dated
ITA No 3884/Chny/2025 (AY 2018-19) Gopalan Vijaysudha (Vs) ITO NCW 4(3) :: 2 ::
21.03.2023 was passed u/s. 147 read with 144 and 144B of the
Income-tax Act, 1961 by the Assessment Unit of the Income Tax
Department.
In response to the notice issued under Section 148, the appellant
filed his return of income for A.Y. 2018–19 on 13.06.2022
(Acknowledgement No. 666449890130622), declaring a total
income of Rs.4,58,860/- and paid tax of Rs.15,126/-, including TDS
of Rs.1,236/-.
During the reassessment proceedings, the Assessment Unit
observed that the appellant had deposited cash amounting to
Rs.17,85,380/- in his account with Karur Vysya Bank Ltd. and
Rs.34,85,872/- in his account with South Indian Bank Limited.
According to the Assessing Officer (AO), the cash deposits exceeded
the sales reported in the ITR by Rs.20,01,166/-, which was treated
as unexplained money under Section 69A of the Act and added to
the income.
Further, the AO made disallowances of Rs.3,39,012/- (being 20% of
sundry creditors amounting to Rs.16,95,060/-) and Rs.4,12,593/-
towards depreciation. Thus, total additions of Rs.7,51,605/- were
made apart from the addition under Section 69A. The aggregate
ITA No 3884/Chny/2025 (AY 2018-19) Gopalan Vijaysudha (Vs) ITO NCW 4(3) :: 3 ::
addition amounted to Rs.27,52,771/-, resulting in a tax demand of
Rs.35,67,098/-.
The appellant contends that the addition under Section 69A is
unsustainable and beyond jurisdiction, and that it violates principles
of natural justice. Without prejudice, it is submitted that the bank
statements obtained by the department indicate that sales through
bank transactions amounted only to Rs.5,85,791/-, and the
remaining turnover of Rs.52,70,086/- represented cash sales. It is
claimed that any discrepancy arose due to a typographical error by
the representative who filed the return.
It is further submitted that the outstanding balance of
Rs.68,81,397/- in the bank cash credit account formed part of the
sundry creditors totaling Rs.84,75,300/-, and the remaining
Rs.15,93,903/- pertained to business loan creditors. The appellant
also states that the depreciation statement had already been filed
along with the return under Section 32 of the Act. Therefore,
according to the appellant, Section 69A is not applicable, and the
creditors’ balances and depreciation claims are duly explained in the
return of income.
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Aggrieved by the assessment order, the assessee preferred an
appeal before the ld. CIT(A). The ld. CIT(A) passed an ex parte
order, allegedly without providing adequate opportunity of hearing,
and confirmed the additions made by the AO on account of non-
compliance with notices. The assessee contends that he did not
receive the notice of hearing.
The assessee has now filed an appeal before this Tribunal,
seeking one more opportunity to substantiate the turnover,
creditors’ balances, and other claims made in the return of income.
The ld. Departmental Representative (DR), on the other hand,
supported the order of the ld. CIT (A) and prayed for dismissal of
the appeal.
We have considered the rival submissions and perused the orders
of the ld. CIT(A) and the AO. In the interest of justice, we are of the
view that the assessee should be granted a final opportunity to
present the necessary evidence and submissions before the ld.
CIT(A). Accordingly, the impugned order is set aside and the matter
is restored to the file of the ld. CIT(A) for fresh adjudication on
merits. The ld. CIT(A) shall afford the assessee a reasonable
opportunity of being heard. The assessee is directed to diligently
ITA No 3884/Chny/2025 (AY 2018-19) Gopalan Vijaysudha (Vs) ITO NCW 4(3) :: 5 :: prosecute the appeal and actively participate in the appellate
proceedings.
In the result, appeal filed by the assessee is allowed for
statistical.
Order pronounced on the 20th day of February 2026, in Chennai. Sd/- Sd/- (इंतूरी रामा राव) (मनु कुमार िग�र) (INTURI RAMA RAO) (MANU KUMAR GIRI) लेखा सद)य/ACCOUNTANT MEMBER �या�यक सद)य/JUDICIAL MEMBER चे�नई/Chennai, *दनांक/Dated: 20th February, 2026. SNDP, Sr. PS आदेश क� ��त+ल,प अ-े,षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF
