INCOME TAX OFFICER, WARD 1, NAGAPATTINAM, NAGAPATTINAM vs. BALASUNDARAM RAJARAMAN THIRUNEELAKANDAN, SIRKALI

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ITA 1391/CHNY/2024Status: DisposedITAT Chennai27 November 2024AY 2017-18Bench: HON’BLE SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND HON’BLE SHRI MANU KUMAR GIRI (Judicial Member)4 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to tax cash deposits during the demonetization period under Section 69A and to tax other cash deposits at 8%, considering it a reasonable estimation.

What were the facts?

The assessee, an individual, made significant cash deposits during the demonetization period and the financial year, but did not file a return of income. The Assessing Officer treated cash deposits as unexplained income and estimated profit on other deposits.

What were the issues?

Whether cash deposits made during demonetization and other periods can be treated as unexplained income, and the appropriate method for taxing such deposits.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL & HON’BLE SHRI MANU KUMAR GIRI

Hearing: 06.11.2024Pronounced: 27.11.2024

(िनधा�रणवष� / Assessment Year: 2017-2018) The Income Tax Officer, Vs. Balasundaram Rajaraman Ward 1, Thiruneelakandan, Nagapattinam. No.78/37, Pulugapet New Street, Sirkali, Nagapattinam 609 110. [PAN AQSPT 1712E] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri ARV Srinivasan, IRS, Addl. CIT. ��यथ� क� ओर से /Respondent by : None सुनवाई क� तार�ख/Date of Hearing : 06.11.2024 घोषणा क� तार�ख /Date of Pronouncement : 27.11.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)

This appeal by the Department is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2023-24/1063717429(1) dated 30.03.2024. The assessment was framed by the Income Tax Officer, Ward 1, Nagapattinam for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’), vide order dated 06.11.2019.

2 Brief facts of the case are that the assessee is an individual. The assessee had made cash deposits to the tune of Rs.30,95,500/- during the demonetization period i.e. from 09.11.2016 to 30.12.2016 and total cash deposits of Rs.2,20,38,000/- during the financial year. The appellant had not filed his return of income for AY 2017-18. Notices were issued to the assessee. Even though sufficient time has been allowed, the appellant did not respond to the notices. Therefore, the AO passed order u/s 144 of the Act on 06.11.2019 determining total assessed income at Rs.2,22,50,499/- by making additions/disallowances as under:-

Sl.No Nature of Addition/Disallowance Amount in Rs. 1 On account of unexplained money u/s 69A 2,20,38,000/- 2 On account of profit as 8% of non-cash credits 2,12,499/- Totaling 2,22,50,499/- Aggrieved, assessee preferred an appeal before the ld. Commissioner of Income Tax (Appeals).

3.

Before the ld. CIT(A), the ld. Authorized Representative submitted that assessee is carrying on the business of Retail Trade in Groceries for more than a decade and filing the return of income since 2010. According to the ld. AR, the ld. Assessing Officer himself stated that the deposit of cash during the demonetization period is at Rs.30,95,000/- only and he further estimated the income on other deposits at 8% of the deposits, however he assessed the entire cash deposits as the income of the appellant besides adopting a Net Income at 8% on other deposits. According to the ld.CIT(A) the Assessing Officer has added entire cash deposit of Rs.2,20,38,000/- u/s 69A of the Act. The assessee did not file return of income for A.Y. 2017-18 but was otherwise filing Return for all other years since 2010. As per the ld. CIT(A) it would be wrong to treat cash deposits as unexplained and non cash credit entries as emanating from business. Cash deposited during the demonetization period totaling Rs.30,95,000/- has been rightly added u/s 69A of the Act. The ld. CIT(A) opined that other cash deposits during the year (excluding the period 9.11.2016 to 30.12.2016) should also be taxed @ 8% like other non cash credit entries. Aggrieved, by the order of the ld CIT(A), the Revenue is in appeal before us.

4.

Before us, the ld. Senior Departmental Representative has reiterated the contentions raised in the array of grounds and prayed for allowing the appeal. None appeared on behalf of the assessee.

5.

We heard the Senior Departmental Representative and perused the material available on record. Assessee is regularly filing Return of income for all other years since 2010 except for assessment year 2017-2018. The ld. Assessing Officer stated that the deposit of cash during the demonetization period is at Rs. 30,95,000/- only and AO himself estimated the income on other deposits at 8% of the deposits and the same was rightly added u/s 69A of the Act. We are of the opinion that ld. CIT(A) has rightly taxed 8% on other cash deposits during the year excluding the period 9.11.2016 to 30.12.2016. This estimation, in our considered opinion, is quite reasonable and the same, therefore, would not require any interference on our part.

Hence, we affirm the order of the ld. CIT(A) and dismiss the appeal of the Revenue.

Order pronounced in the open court on 27th day of November, 2024 at Chennai.

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