VELLINGIRI,TIRUPUR vs. ITO, WARD-2(1), TIRUPUR
What did the Tribunal hold?
The Tribunal held that the entire cash deposits could not be added as unexplained money, applying the rule of consistency. It estimated the net profit at 5% on the total cash deposits for both assessment years.
What were the facts?
The assessee, dealing in second-hand vehicles, deposited substantial cash amounts in his bank account. The Assessing Officer treated these entire deposits as unexplained money under Section 69A, as the assessee claimed to earn only a small commission.
What were the issues?
Whether cash deposits in the bank account, representing sale consideration for second-hand vehicles, can be treated as unexplained money in their entirety, or if the assessee's commission income should be estimated based on past assessments.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI ABY T VARKEY, HON’BLE & SHRI S. R. RAGHUNATHA, HON’BLE
आयकर अपीलीय अिधकरण, ‘बी’ �यायपीठ, चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI �ी एबी टी वक�, �याियक सद�य एवं �ी एस. आर. रघुनाथा, लेखा सद�य के सम� BEFORE SHRI ABY T VARKEY, HON’BLE JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.: 1456 & 1458/Chny/2023 िनधा�रण वष� / Assessment Years: 2013-14 & 2015-16 Income Tax Officer, Vellingiri, v. Ward -2(1), 55/79, Kuppanna Chettiyar Tirupur. Street, Palladam Road, Tirupur – 641 604. [PAN: AEKPV-1257-N] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri. S. Sridhar, Advocate (Erode) ��यथ� क� ओर से/Respondent by : Shri. D. Hema Bhupal, JCIT सुनवाई क� तारीख/Date of Hearing : 07.05.2024 घोषणा क� तारीख/Date of Pronouncement : 28.06.2024 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
These appeals by the assessee are filed against the common order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment years 2013-14 & 2015-16, vide order dated 16.10.2023. Since, the issues permeating in both the appeals are similar/identical, we take up the appeal for assessment year 2013-14 as the lead case which result will be followed for assessment year 2015-16.
:-2-: ITA. No: 1456 & 1458/Chny/2023 2. The main grievance of the case is against the action of the ld.CIT(A) in confirming the action of the Assessing Officer and dismissing the appeals of the assessee.
The brief facts are that, the assessee deals with the second hand sales of two wheelers and four wheelers on commission basis and according to the assessee customers who wishes to sell their vehicle, park it in his premises and then he gets the vehicles checked by technicians and gets it cleaned and repairs/replace the parts at his own cost and then sells the vehicle with a small profit. According to him, the buyer of the vehicle hands over cash as sale consideration which in turn he deposits in his bank account; and within one or two days, he withdraws and makes the payments to the owner of the vehicle. Thus, according to the assessee, he makes a small commission from such sale transactions. The Assessing Officer taking note that assessee has deposited cash of Rs.69,89,160/- for assessment year 2013-14 and Rs.75,25,900/- for assessment year 2015-16 reopened the assessment and he treated the entire cash deposits of Rs.69,89,160/- as unexplained money for assessment year 2013-14 and likewise added Rs.75,25,900/- for assessment year 2015-16 u/s. 69A of the Act. Aggrieved, the :-3-: ITA. No: 1456 & 1458/Chny/2023 assessee preferred an appeal before the ld.CIT(A), which was confirmed. Aggrieved, the assessee is before us.
At the outset, the ld.AR of the assessee placed the assessment orders of the assessee for the earlier assessment years 2011-12 and 2012-13 (immediately preceding years) passed by AO u/s. 143(3) of the Act dated 29.12.2018 and 26.12.2019 respectively. The ld.AR submitted that a perusal of the assessment orders would reveal that Assessing Officer reopened the assessments for those years by taking note of similar cash deposits in assessee’s bank account and after scrutiny and verification of the modus operandi of the business of the assessee accepted that assessee received only a small commission from purchase and sale of second-hand two wheelers and four wheelers and after having convinced himself, accepted net profit for assessment year 2011-12 at 1.69% on total deposits at Rs.94,10,150/- and accepted the return filed by the assessee at Rs.1,55,090/-, and likewise for assessment year 2012-13, the Assessing Officer accepted the profit of the assessee of Rs.1,59,390/-, wherein assessee had made deposit of Rs.32,65,520/- (net profit @4.88%). In light of the aforesaid facts, the main plea of the assessee is that since there is is no change in facts or law and the business remaining the same,
:-4-: ITA. No: 1456 & 1458/Chny/2023 as per the rules of consistency, the assessee’s income may be estimated at an average net profit for both the years.
Per contra, the ld.DR opposed the prayer of the assessee and submitted that assessee has deposited cash of Rs.69 lakhs in bank account and neither files the return of income nor responds to the Assessing Officer’s notices. Therefore, addition was restored to by Assessing Officer and such action of assessee does not deserve any kind of leniency and therefore wants us to confirm the order of the ld.CIT(A).
We have heard both the parties, perused materials available on record and gone through orders of the authorities below. From the perusal of the material placed on record, we noted that the assessee is into the business of purchase and sale of two wheelers and four wheelers from which he earns a small commission. This fact has been verified and accepted by the Assessing Officer for the earlier two assessment years (AYs 2011-12 & 2012-13) after scrutiny assessments (supra). We note that in those two assessment years also the Assessing Officer had reopened the assessment taking note of the cash deposits in the bank account. We note that in assessment year 2011-12, there was a cash deposit
:-5-: ITA. No: 1456 & 1458/Chny/2023 of Rs.94,10,150/- and the Assessing Officer after verification of facts accepted the return, wherein the assessee showed net profit of 1.69% i.e. Rs.1,59,090/-. Likewise for assessment year 2012-13, the assessee had filed return showing net profit of 4.88% on the total cash deposits of Rs.32,65,520/- i.e., Rs.1,59,390/-, which also has been accepted by the Assessing Officer after scrutiny assessment u/s. 143(3) of the Act.
In the light of the aforesaid facts and since, there is no change in the business activity of the assessee and no change in facts or law could by pointed out by the Ld.DR, we apply the rule of consistency and is of the opinion that the entire cash deposits in the bank account cannot be added in the hands of the assessee as unaccounted money u/s. 69A of the Act. A perusal of the bank statements shows that immediately after the deposits there is withdrawal/payment which shows that the assessee was depositing the sale consideration from the buyers (of second-hand vehicles) and deposits the same in his bank account; and after one or two days withdraws the purchase cost of the vehicle, (after retaining the commission) and hands over same to the owner of the vehicle. Therefore, considering the facts and circumstances of the case, we are inclined to estimate the net profit of the assessee and taking
:-6-: ITA. No: 1456 & 1458/Chny/2023 note of the earlier assessment orders in the assessee’s own case as noted (Supra), we estimate the net profit @5% on total cash deposits for assessment year 2013-14 of Rs.69,89,160/- and similarly for assessment year 2015-16 @5% on total cash deposits of Rs.75,25,900/- and direct the Assessing Officer to delete the addition of Rs.69,89,160/- and Rs.75,25,900/- and estimate the income @5%.
More judgments on Section 69A
- Vishal Kumar Patel(HUF), Raipur vs DCIT, Circle-1(1), RaipurITA 595/RPR/2026[2017-18]Status: Heard21 Oct 2026AY 2017-18
- Adj Agri International LLP, Rajkot vs The Income Tax Officer, Ward-1(1)(1), RajkotITA 1198/RJT/2026[2018-19]Status: Disposed21 Oct 2026AY 2018-19
- Ashok Singh, Jaipur vs ACIT, Circle-2 Jaipur, JaipurITA 1540/JPR/2025[2015-16]Status: Disposed21 Oct 2026AY 2015-16
- Hemal Paresh Madeka, Rajkot vs Asst.Commissioner of Income Tax…ITA 955/RJT/2026[2020-21]Status: Disposed19 Oct 2026AY 2020-21
- Neepaben Sunnybhai Motwani, Rajkot vs Income Tax Officer, RajkotITA 875/RJT/2026[2021-22]Status: Disposed19 Oct 2026AY 2021-22
Recent GST High Court judgments
Search GST case law →- N.K Fashion Through It Proprietor Mr. Narender Agarwal vs. Assistant Commissioner Of Central Goods And Service Tax, Delhi EastDelhi · 14 Oct 2026
- J M Mhatre Infra PVT. LTD Thr. Authorized Chetanj Mhatre vs. Union Of INDIA Thr. Secretary And OrsBombay · 14 Oct 2026
- J M Mhatre Infra PVT. LTD Thr. Authorized Chetan J. Mhatre vs. Union Of INDIA Thr. Secretary And OrsBombay · 14 Oct 2026
- Namita Behera vs. Commissioner Of CT And GST, CuttackOrissa · 14 Oct 2026
- Ratul Boro vs. The Union Of INDIA And 4 OrsGauhati · 14 Oct 2026