RAMASWAMY AKILANDESWARI,CHENNAI vs. ITO, NON CORP WARD 15(1), CHENNAI, CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 27.10.2023 for assessment year 2017-18.

Brief facts of the case are that the assessee filed the return of income for the assessment year 2017-18 on 28.03.2018 admitting income of ₹.5,00,620/-. The case was selected for scrutiny assessment under CASS. The Assessing Officer issued statutory notices followed by 2 questionnaires which were duly served on the assessee. There were no compliances on part of the assessee to such notices. Thereafter, one more notice under section 142(1) of the Income Tax Act, 1961 [“Act” in short] was issued by the Assessing Officer to the assessee on 17.09.2019. In response to the notice under section 142(1) of the Act dated 17.09.2019, the assessee furnished VAT returns, bank statements, financial statements etc. After considering the assessee's submissions, the Assessing Officer issued a show cause notice to the assessee. In response to the show cause notice, the assessee submitted his reply before the Assessing Officer. The assessee has provided details to reconcile the sale and purchases shown in the P&L account with that of VAT Return. On verification of the VAT returns, the Assessing Officer found that the total purchases were ₹.8,56,39,101/-, whereas in the P&L A/c the assessee had shown purchases at ₹.8,73,11,348/-, the difference being ₹.16,72,247/- had been shown as other purchases by the assessee. The assessee had produced invoice for purchase of ₹.10,60,174/- which were omitted to be included in the VAT return. Hence, the Assessing Officer added the difference of ₹.6,12,073/- to the total income of the assessee. The Assessing Officer further noticed that the assessee had made cash deposits in the banks during the period post announcement of demonetization i.e., from 09.11.2016 to 30.12.2016 aggregating to ₹.58,24,490/- in the Corporation Bank, Shastri Nagar Branch. Out of the sum of ₹.58,24,490/-, the assessee had deposited SBN (demonetized) notes of Rs.1000/- and Rs.500/- on various dates which totalled to ₹.18,36,500/-. The Assessing Officer added the sum of ₹.18,36.500/- to the total income of the assessee under section 69A of the Act as the assessee had failed to furnish source of cash deposited in SBN of ₹.18,36,500/- treating the same as unexplained money.

The assessee carried the matter in appeal before the ld. CIT(A). After considering the grounds of appeal and supporting materials uploaded along with Form 35 as well as written submissions dated 25.10.2023, the ld. CIT(A) decided the issues on merits and confirmed the assessment order passed by the Assessing Officer.

On the other hand, the ld. DR supported the order passed by the authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the additions made in the assessment order, the assessee preferred an appeal before the ld. CIT(A). Against the notice issued by the ld. CIT(A), the assessee has filed written submissions dated 25.10.2023. After considering the written submissions of the assessee, the ld. CIT(A) has decided the issues by confirming the additions made by the Assessing Officer. Since the ld. counsel has prayed for affording one more opportunity to substantiate the claims of the assessee, to meet the ends of natural justice, we remit the matter back to the file of the ld. CIT(A) with a direction to afford one more opportunity of being heard to the assessee and after considering the submissions/explanations of the assessee, the ld. CIT(A) shall decide the issues on merits in accordance with law.