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2025 Supreme(Online)(ITAT) 3167
INCOME TAX APPELLATE TRIBUNAL (CHENNAI BENCH)
Shri George George K, VP, Shri S.R. Raghunatha, ACM
THENRAJ CHENNAI – Appellant
Versus
ITO NCW-8(2) CHENNAI – Respondent
ITA 3123/CHNY/2024
Shri N.Arjun Raj, Advocate; Ms. Gouthami Manivasagam, JCIT
The court held that cash deposits during demonetization were legitimate business income, and the addition under Section 69A was unjustified due to lack of evidence from the assessing officer.
Headnote:(A) Income Tax Act, 1961 - Section 69A - Addition of unexplained cash deposits during demonetization period - The NFAC sustained an addition of Rs.35,32,500/- as unexplained money, which the assessee contended was from legitimate business transactions. The court found that the assessee had maintained proper books of accounts and provided sufficient evidence to substantiate the source of cash deposits. The court ruled that the addition was unjustified as the cash deposits were backed by sales recorded in the books. (Paras 4, 5, 7, 11)
(B) Burden of Proof - The burden of proving the source of cash deposits lies with the assessee, but once evidence is provided, the onus shifts to the assessing authority to disprove the claims made. (Paras 7.1, 7.2)
(C) Principles of Natural Justice - The NFAC failed to provide adequate opportunity for personal hearing, which is a violation of principles of natural justice. (Paras 12, 13)
Facts of the case:
The assessee, engaged in retail trading of inverters and batteries, had cash deposits during the demonetization period which were questioned by the assessing officer as unexplained. The assessee argued that the deposits were from legitimate business income and provided various documents to support this claim.
Findings of Court:
The court found that the assessing officer did not adequately consider the evidence provided by the assessee and upheld the claim that the cash deposits were legitimate.
Issues: The main issues were whether the cash deposits were unexplained under Section 69A and if the assessing officer's addition was justified.
Ratio Decidendi: The court ruled that the assessing officer's addition was not justified as the assessee had provided sufficient evidence to support the source of cash deposits, and the principles of natural justice were violated by not allowing a personal hearing.
Result: Appeal allowed.
आदेश /ORDER
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, dated 15.10.2024.
2. The assessee has raised the following grounds of appeal:
1. The order of the NFAC, Delhi dated 15.10.2024 vide DIN & Order No.ITBA/NFAC/S/250/2024-25/1069673613(1) for the above mentioned Assessment Year is contrary to law, fact and in circumstances of the case.
2. The NFAC, Delhi erred in sustaining the addition of Rs.35,32,500/- being the cash deposits in SBNs during demonetisation period as unexplained money in terms of Section 69A in the computation of taxable total income without assigning proper reasons and justification.
3.The NFAC, Delhi to appreciate that provisions of Section 69A of the Act had no application to the present facts and in circumstances of the case, thereby vitiating the findings in relation thereto.
4. The NFAC, Delhi failed to appreciate that the pre-requisite conditions required for making an addition in terms of Section 69A of the Act were absent in the present case and in circumstances, thereby negating the findings in relation thereto.
5.The NFAC, Delhi failed to appreciate that having not examined the books of accounts, which were made available at every stage of proceedings, the presumption of unexplained money should be reckoned as wholly unjustified and not sustainable in law.
6. The NFAC, Delhi failed to appreciate that having not rejected the audited financial statements as faulty, the presumption of unexplained money within the scope of Section 69A from the disputed cash deposits was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
7. The NFAC, Delhi failed to appreciate that having impliedly accepted the explanation offered for the cash deposits by reducing such sum from the computation of income under the head "Income from Business" by making a standalone addition in terms of Section 69/A of the Act for want of explanation for nature and source should accordingly be reckoned as bad in law.
8. The NEAC, Delhi failed to appreciate that having not taken no certificate issued by the Banks with regard to the cash deposits in SBNs was only to the tune of Rs. 25,47,500/- as against the total sum reckoned by the Assessing Officer at Rs.35,32,500/, the consequential addition made and sustained should accordingly be reckoned as bad in law.
9. The NFAC, Delhi failed to appreciate that in any event having not independently examined the nature of the cash deposits made earned from the sale of inverters, UPS, batteries, the consequential sustenance of the entire addition as unexplained money in terms of Section 69A of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
10. The NFAC, Delhi failed to appreciate that the findings from para 5 of the impugned order were wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law
11, The NFAC, Delhi failed to appreciate that the entire re-Computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
12. The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless appellate regime, the consequential appellate order passed should be reckoned as bad in law.
13. The NFAC, Delhi failed to appreciate that there was no effective/proper opportunity given before passing the impugned order including non granting of personal hearing and any order passed in violation of the principles of natural justice is nullity in law.
14. The Appellant craves leave to file additional grounds/arguments at the time of hearing,
3. In brief the sole ground before us raised by the assessee is the ld.CIT(A) has erred in confirming the addition of Rs.35,32,500/- u/s.69A of the Income-tax Act, 1961 (hereinafter referre
