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Facts
The assessee's appeal is against the order of the CIT(A) confirming the addition of ₹42,50,200/- as unexplained income. The AO noted a difference between the cash in hand declared in the election affidavit and the return of income. The CIT(A) confirmed the addition, stating that the assessee failed to provide specific documents.
Held
The Tribunal observed that the assessee inadvertently declared a lesser cash balance in the return of income, believing it was already accounted for. While the assessee submitted documentary evidence before the CIT(A), it was not formally submitted under Rule 46A. Considering the peculiar facts and in the interest of natural justice, the Tribunal decided to give another opportunity.
Key Issues
Whether the addition of ₹42,50,200/- as unexplained income is justified, given the assessee's explanation of cash availability from various sources and presumptive taxation, and whether a fresh opportunity should be granted.
Sections Cited
69A, 44AD
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI GEORGE GEORGE KAND MS. PADMAVATHY.S
Jamal Mohamed Haroon Hassan The Income Tax Officer, Moulana, Vs. Non Corporate Ward-1(1), No.15/7, Vijayaragava Road, Chennai. First Street, T. Nagar, Chennai – 600 017. PAN: ABIPH 1671F (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Appellant by : Mr. Raghav Rajeev Menon & Mr. Poojesh.J, Advocates प्रत्यर्थी की ओर से /Respondent by : Ms. Gouthami Manivasagam, Addl. CIT सुिवाई की तारीख/Date of Hearing : 08.01.2026 घोर्णा की तारीख /Date of : 13.01.2026 Pronouncement आदेश / O R D E R PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 15.07.2025 for Assessment Year (AY) 2021-22. The grounds of appeal raised by the assessee are as under:
Jamal Mohamed Haroon Hassan Moulana. :- 2 -: 1. The order of the National Faceless Appeal Centre for the assessment year 2021-22 is erroneous, contrary to law, equity, facts and circumstances of the present case and the materials available on record.
The National Faceless Appeal Centre erred in upholding the addition of ₹42,50,200/- made by the Learned Assessing Officer (AO) under section 69A of the Income Tax Act, 1961, without properly appreciating the facts, explanations, and evidences placed on record.
The National Faceless Appeal Centre failed to appreciate that the appellant had duly explained the availability of cash as arising from (i) rental income, (ii) agricultural income, and (iii) retail business in fish and fish products (conducted primarily in cash) and from past savings, which were disclosed in the election affidavit.
4. The National Faceless Appeal Centre erred in rejecting the cash flow statement and submissions of the appellant without pointing out any specific defect therein.
The National Faceless Appeal Centre erred in holding that the election affidavit has no evidentiary value, whereas the same forms a contemporaneous declaration corroborating the appellant's disclosure of cash availability.
The National Faceless Appeal Centre erred in law and on facts in disregarding the nature of fish trade business, which is predominantly cash-based and conducted through auctions at seashore markets and re- auctions, thereby naturally resulting in accumulation of cash.
The National Faceless Appeal Centre failed to consider that agricultural income of ₹7,50,000/-was exempt under the Income Tax Act and could not be disregarded for the purpose of explaining cash availability.
The National Faceless Appeal Centre erred in dismissing the appellant's reliance on the fact that he is registered with FSSAI and Corporation for the business of fish and crab trading, which establishes the genuineness of the business.
The National Faceless Appeal Centre erred in sustaining the addition solely on the ground of absence of books of account, ignoring that the appellant had declared income under presumptive taxation u/s 44AD, where maintenance of detailed books is not mandatory.”
2. The assessee is an individual and the major source of income is from rentals. The assessee is also partner in M/s. Green Cardmom Trading Co. and Jamal Mohamed Haroon Hassan Moulana. :- 3 -: is doing retail sale fish and fish products. The assessee filed the return of income belatedly for A.Y 2021-22 on 31.03.2022 declaring total income of Rs. 19,37,840/-. The case was selected for scrutiny and statutory notices were duly served on the assessee. The A.O. issued various notices to the assessee and the assessee responded partially to only one of the notices. The A.O. noticed that there is a difference in the cash in hand declared by the assessee in the election affidavit and as per the return of income to the tune of Rs. 42,50,200/-. Since, the assessee did not file any details, as called for by the A.O in this regard, the A.O treated the amount as undisclosed income u/s. 69A of the Act. Aggrieved, the assessee filed further appeal before the CIT(A). Before the CIT(A), the assessee submitted various details and documentary evidences in support of the source for the cash treated as unexplained by the A.O. However, the CIT(A) has confirmed the addition without considering the submissions/evidences by the assessee and by holding that the assessee failed to furnish certain specific documents such as the rental agreement etc. The assessee is in appeal before the Tribunal against the order of the CIT(A).
3. We have heard the parties, and perused the material available on record. The A.O has made the addition towards unexplained income since the assessee did not furnish any details explaining the source for the difference in cash balance between the election affidavit and the return of income. The CIT(A) has also confirmed the addition on the same ground the assessee failed to furnish the required documents substantiating the source for cash. The Ld. AR during the course of hearing submitted that in the return of income the assessee has inadvertently declared a lesser cash balance under the bonafide belief that the cash balance is already declared as part of the income and therefore, no separate disclosure is required. The Ld. AR further Jamal Mohamed Haroon Hassan Moulana. :- 4 -: submitted that the assessee has submitted the documentary evidences explaining the source of cash before the CIT(A) though no petition under Rule 46A was submitted. The Ld. AR therefore prayed for one more opportunity to represent the case properly before the lower authorities. Considering the facts and circumstanced peculiar to the assessee's case, we are inclined to give one more opportunity to the assessee in the interests of natural justice and fair play. Accordingly, we remit the appeal to the A.O to consider the impugned issue afresh by calling for necessary details as may be required to allow the claim of the assessee in accordance with law. The A.O is directed to submit the details as may be called for by the A.O without seeking unnecessary adjournments and cooperate with assessment proceedings. It is ordered accordingly.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 13th day of January, 2026 at Chennai.