MUTHIYAH RAMAKUMARAPPAN ,SIVAKASI vs. ITO , WARD - 2 , VIRUDHUNAGAR

This appeal by the assessee is arising out of the order passed of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) in Order No.ITBA/NFAC/S/250/2022- 23/1048004426(1) dated 14.12.2022. The assessment was framed by the Income Tax Officer, Ward-2, Virudhunagar for the - 2 - ITA No.1112/Chny/2022 assessment year 2013-14 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.03.2016.

The first issue in this appeal of assessee is as regards to the order of the CIT(A)-NFAC confirming the action of the AO and sustaining the addition to the tune of Rs.98,48,795/- being unexplained cash deposits in three different bank accounts u/s.69A of the Act.

Brief facts relating to the above issue are that the assessee is engaged in money lending business in the name of Valathy Bankers at Naranapuram, Thruchuli & Paraipatti. He is also a dealer of electrical goods in the name of Valathy Enterprises. The AO during the course of assessment proceedings noted that the assessee has not disclosed in his books of accounts the following bank accounts, where assessee has total cash deposit of Rs.1,29,85,036/-. Total amount A/c. holder’s Nature of credited in Name of bank Account No. name account bank account (Rs.) Shri M. Karur Vysya …..14012 SB a/c 6579369 Kumarappan Bank, Sivakasi Shri M. City Union 725252 SB a/c 1158146 Kumarappan Bank, Sivakasi Shri M. HDFC, …..1011 SB a/c 5247521 Kumarappan Sivakasi Grand Total 12985036

We have heard rival contentions and gone through facts and circumstances of the case. Before us, the ld.counsel for the assessee filed peak credit working in his paper-book at page 94 and the cash flow statement from pages 95 to 126. The assessee also filed paper-book consisting of pages 215. The ld.counsel tried to explain the peak credit from each entry but at this stage, it is not possible to examine these peak credit entries because the assessee has to explain each entry of withdrawal with that of the deposit and nexus of the same. The onus is on the assessee for this. Hence, for better examination and verification, the AO can enquire into the same and hence, we restore this issue to the file of the AO by setting aside the order of AO and that of the CIT(A)-NFAC. The AO will examine the peak credit working of the assessee and also examine and verify the - 5 - ITA No.1112/Chny/2022 nexus between the withdrawal and that of the deposits made by the assessee. Hence, this issue of assessee’s appeal is set aside to the file of the AO and allowed for statistical purposes.

The next two issues, which are identical, is as regards to the order of CIT(A) sustaining the addition being unexplained cash deposit u/s.69A of the Act being an amount of Rs.3,29,000/- in City Union Bank and an amount of Rs.13,90,200/- in South Indian Bank.

Brief facts relating to these issues are that the AO required the assessee to explain the deposits made in current account No.70510 with City Union Bank by Valathy Bankers Naranapuram, Sivakasi on three dates in aggregate amounting to Rs.3,29,000/- and also required the assessee to explain the amount deposited in cash amounting to Rs.13,90,200/- in the current account maintained with South Indian Bank, P.K.N. Road, Sivakasi. As the assessee could not explain both the amount, the same were treated as unexplained cash deposits and added u/s.69A of the Act. Aggrieved, assessee preferred appeal before CIT(A).

The CIT(A)-NFAC also asked the assessee to explain the source of cash deposit in both the bank accounts. The assessee tried to explain from the withdrawals already made and asked for telescopic view in respect of these cash deposits made out of cash withdrawals. As the assessee could not correlate the nexus, the CIT(A)-NFAC also confirmed the action of the AO. Aggrieved, assessee preferred appeal before the Tribunal.

We have heard rival contentions and gone through facts and circumstances of the case. We noted that now the assessee has filed peak credit working including the peak credit working of earlier bank account maintained with Karur Vysya Bank wherein the first issue, the matter is restored back to the file of the AO in regard to addition of Rs.98,48,795/- being cash deposits added by AO u/s.69A of the Act. Since the main issue is going back to the file of the AO, this issue is also arising out of the same peak credit working by the assessee, we exactly on identical direction, restore this issue to the file of the AO. Accordingly, the order of AO as well as the CIT(A)- NFAC on this issue is set aside and matter remanded back to the file of the AO.

In the result, the appeal filed by the assessee in is allowed for statistical purposes.