Sithuraj Ashok Vs ITO (ITAT Chennai)
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) / NFAC, Delhi dated 15.05.2024 for Assessment Year 2017-18. The assessee challenged additions of Rs. 3,77,100/- under Section 28 and Rs. 16,55,500/- under Section 69A read with Section 115BBE of the Income-tax Act, 1961.
The Revenue had information that the assessee deposited Rs. 29,82,000/- into his bank account. A notice under Section 142(1) was issued, but the assessee had not filed a return by 31.03.2018. The assessment was ultimately completed under Section 144, with additions of Rs. 3,77,100/- under Section 28 and Rs. 16,55,500/- under Section 69A. The CIT(A) dismissed the appeal.
The Tribunal first condoned the 555-day delay in filing the appeal after considering the assessee’s petition and affidavit. It then noted that the AO’s finding that no return had been filed was baseless because the assessee had produced a return filed under Section 139(4) on 04.10.2019, declaring income of Rs. 4,34,819/- before deduction of Rs. 57,719/- under Chapter VI-A. The Tribunal held that the income declared was sufficient to cover the business income estimated by the AO and directed deletion of the separate addition of Rs. 3,77,100/- under Section 28.
With regard to the Rs. 16,55,500/- addition concerning deposits of specified bank notes (SBNs), the Tribunal noted that the AO had relied on the Notification of the Ministry of Finance, Department of Economic Affairs dated 24.11.2016 under S.O. 3544(E), without recording a separate finding based on the facts or considering the nature of the assessee’s business. The assessment order itself recorded that the assessee’s financial statements and bank statements were available and that cash deposits made in the bank accounts by his clients were correspondingly debited to M/s. Aircel Limited in the Axis Bank account.
The Tribunal therefore found that the deposits were not deposits made by the assessee other than business transactions. On this basis, it held that the addition of Rs. 16,55,500/- could not be sustained under Section 69A and directed its deletion.
In reaching its conclusion, the Tribunal referred to Amar Sparklers Factory Vs ITO, ITA No.808/Chny/2023, order dated 11.10.2023. The supplied order reproduces the relevant reasoning in that case, including its consideration of M/s. Micky Fireworks Industries vs ACIT, ITA No. 264/Chny/2023, dated 26.07.2023, and references to Mrs. Umamaheswari Vs. ITO and Rahul Cold Storage Vs. ITO.
The appeal was accordingly allowed, and the Assessing Officer was directed to delete the additions other than income suo-moto declared by the assessee.
Cases Discussed
- Amar Sparklers Factory Vs ITO, ITA No.808/Chny/2023, order dated 11.10.2023 — relied upon by the Tribunal while considering the treatment of cash deposits during the demonetisation period and specified bank notes.
- M/s. Micky Fireworks Industries vs ACIT, ITA No. 264/Chny/2023, dated 26.07.2023 — considered in the reproduced decision in Amar Sparklers Factory on cash received from customers in specified bank notes and recorded business transactions.
- Mrs. Umamaheswari Vs. ITO — referred to in the reproduced decision in Amar Sparklers Factory as having deleted similar additions where the source of cash deposits was evidenced.
- Rahul Cold Storage Vs. ITO — referred to in the reproduced decision in Amar Sparklers Factory concerning business receipts recorded in books of account and Section 68 additions.
Assessee by:- Mr. S. R. Srikrishna
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’), Delhi dated 15.05.2024 for the Assessment Year (hereinafter referred as the ‘AY’) 2017-18.
GROUDS OF APPEAL
1. The impugned order of the Commissioner of Income-Tax (Appeals) is wrong, illegal, opposed to law, facts, judicial interpretation, principles, submissions made, details available on record, conventions and the additions sustained is to be cancelled.
2. ADDITION u/s 69A r.w.s. 115BBE IS INCORRECT: In Law, facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in confirming additions of Rs. 16, 55,500/- as unexplained u/s 69A r.w.s 115BBE of the Act.
3. CIT ( A) HAS FAILED TO NOTE THAT THERE IS DOUBLE ADDITION: The Learned CIT (Appeals) has failed to note that the Assessing officer having accepted business in come, cannot make additions of the same transaction u/s 69A of the Act
4. CIT (A) FAILED TO NOTE THAT HIGHER RATE OF TAX U/S 115BBE IS ONLY FROM AY -2018- 19: The Ld. Commissioner of Income Tax (Appeals) has failed to note that amendment applying higher rate of tax u/s 115BBE of the Act will apply only from AY-2018- 19 and not for the year under appeal.
5. PRAYER: The appellant craves leave to file additional grounds of appeal / Additional evidences, if any at the time of hearing and it is prayed that the co ntested addition be deleted, tax demand.be cancelled
2. The brief facts of the case are that the assessee was amongst the non- filers of return during the year under consideration, but the Revenue was in possession of an information that the assessee has deposited Rs. 29, 82,000/- into his bank account. Based, on this information a notice u/s. 142(1) of the Act was issued but even till the last date, i.e. 31.03.2018 the assessee has not filed any return. Ultimately, the case of the assessee was assessed u/s. 144 of the Act by making additions of Rs. 3, 77,100/- and Rs. 16, 55,500/- u/s. 28 and 69A of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT ( A), who in turn dismissed the appeal of the assessee. The assessee b eing further aggrieved preferred the present appeal before us.
3. We have gone through the order of the AO, order of the Ld. CIT ( A) and submissions of the assessee alongwith grounds taken before us. It is observed that the appeal filed by the assessee be fore us was time barred by 555 days, on this issue the assessee filed a petition for condonation of delay alongwith a duly attested affidavit vide page nos. 5 to 12 of the paper book. We have gone through the contents of the same and find the same to be ac cepted. Hence, the delay of 555 days in filing of the appeal is hereby condoned. 4. It is observed that the finding of the AO that the assessee has not filed any return of the income is found to be baseless, as the assessee has submitted a copy of the re turn filed before us u/s. 139(4) of the Act vide page no. 70 of the paper book, wherein the assessee has declared an income of Rs. 4,34,819/- on 04.10.2019 (before claiming deduction of Rs. 57,719/- under chapter VI- A of the Act), i.e. before passing the o assessee in the return filed in pursuance of the notice issued u/s. 142(1) of the Act is sufficient to cover the business income estimated by the AO, hence the separate addition of Rs. 3,77,100/- made by the AO u/s. 28 of the Act is liable to be deleted. The AO is directed to delete the addition of Rs. 3, 77,100/- made u/s. 28 of the Act. 5. Next addition made by the AO pertains to deposit of SBNs amounting to Rs. 16, 55,500/- relying on the Notification of Ministry of Finance, Dept. Of Economic Affairs, dated: 24.11.2016 under SO 3544(E). Other than relying on the Notification mentioned (supra), no separate finding on the facts of the case is found to be there. The AO also did not conside r nature of the business of the assessee. While examining the issue under consideration, we gone through the para 11.1 of the assessment order, wherein the AO has confirmed the availability of the financial statements and bank statements of the assessee an d accepted that all the cash deposits made in the bank accounts by his clients were correspondingly debited to M/s. Aircel Limited in the Axis Bank Account, i.e. it is not the deposits made by him other than business transactions.
6. When such a speci fic finding is there and the AO simply relying on the Notification mentioned (supra), the addition of Rs. 16, 55,500/- can’t be sustained u/s. 69A of the Act, hence the same is directed to be deleted. In view of the above observations and directions, grounds raised by the assessee are allowed and the AO is directed to delete the additions other than income suo-moto declared by the assessee.
7. In the result, the appeal of the assessee is allowed in above terms.
Order pronounced on the 18th day of August, 2026, in Chennai.
