Income Tax Appellate Tribunal - Chennai
Balasundaram Rajaraman ... vs Ito, Ward, 1, Nagapattinam, ... on 18 March, 2026
आयकर अपीलीय अिधकरण "सी" ायपीठ चे ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL
CHENNAI BENCHES "C" :: CHENNAI
BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
AND
SHRI MANU KUMAR GIRI, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.3983/CHNY/2025
नधारण वष / Assessment Year: 2020-21
Balasundaram Rajaraman V The Income Tax Officer,
Thiruneelakandan, s Ward-1, Nagapattinam.
No.78/37, Pulugapet New Street,
Sirkali, Nagapattinam,
Tamilnadu - 609110
PAN: AQSPT1712E
Appellant/ Assessee Respondent / Revenue
Assessee by Mr. N. Arjun Raj - Advocate
Revenue by Ms. R Anitha - Addl.CIT
Date of hearing 19/02/2026
Date of pronouncement 18/03/2026
आदे श/ ORDER
PER INTURI RAMA RAO, AM :
This appeal filed by the Assessee directed against the order of The Learned Commissioner of Income Tax(Appeal)[NFAC], Delhi dated 27.10.2025 passed under section 250 of the Income Tax Act, 1961 for the A.Y.2020-21.
ITA No.3983/CHNY/2025 [A]
2. The Assessee raised the following grounds of appeal :
1. The order of the NFAC, Delhi dated 27.10.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1082020482(1) for the above-
mentioned Assessment Year is contrary to law, fact and in circumstances of the case.
2. The NFAC, Delhi erred in impliedly confirming the assumption of jurisdiction under Section 147 of the Act and consequently erred in impliedly confirming the passing of the re-assessment order under Section 147 of the Act without assigning proper reasons and justification.
3. The NFAC, Delhi failed to appreciate that the re-assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.
4. The NFAC, Delhi failed to appreciate that the assumption of jurisdiction under Section 147 of the Act was without sanction of law and ought to have appreciated that the consequential re-assessment order accordingly should be reckoned as bad in law.
5. The NFAC, Delhi failed to appreciate that having not followed the prescription of law/procedure for framing the re-assessment, the consequential re-assessment order passed should be reckoned as nullity in law for want of jurisdiction.
6. The NFAC, Delhi failed to appreciate that the passing of the order under Section 148A(d) of the Act by the JAO as against the passing of the such order by the FAO would completely defy the prescription of law / procedure in relation thereto and hence ought to have appreciated that in the absence of valid foundation for issuance of notice under Section 148 of the Act in view of issuance of such notice by JAO instead of FAO, the consequential re-assessment should be considered as nullity in law.
2 ITA No.3983/CHNY/2025 [A]
7. The NFAC, Delhi erred in sustaining the assessment of business income at 8% of the total turnover reported at Rs. 2,78,28,509/- amounting to Rs. 19,78,534/-excluding the income returned by the appellant at Rs. 2,47,747/-as business income of the appellant without assigning proper reasons and justification
8. The NFAC, Delhi failed to appreciate that the quantification of the business income of the appellant at 8% of the total turnover was arbitrary and wholly unjustified and further ought to have appreciated that having not taken note of the increase / decrease reflected in the immediately preceding and succeeding assessment years, the mechanical action in computing the taxable total income at 8% of such turnover reported should accordingly be reckoned as nullity in law.
9. The NFAC, Delhi erred in sustaining the addition to the tune of Rs.2,14,26,000/- being the cash deposits made during the assessment year under consideration as unexplained money in terms of Section 69A in the computation of taxable total income without assigning proper reasons and justification.
10. The NFAC, Delhi failed to appreciate that provisions of Section 69A r.w.s 115BBE of the Act had no application to the present facts and in circumstances of the case and ought to have further appreciated that the pre-requisite conditions required for making an addition in terms of Section 69A of the Act were absent in the present case, thereby negating the findings in relation thereto.
11. The NFAC, Delhi failed to appreciate that having substantiated the source for the cash deposits being made from the regular cash sales during the course of retail trade of groceries and general merchandise, the sustenance of such cash deposits already reported as income in the return of income should be reckoned as bad in law.
12. The NFAC, Delhi failed to appreciate that in any event having not independently examined the source & nature of the cash deposits during the assessment year under consideration, the consequential 3 ITA No.3983/CHNY/2025 [A] sustenance of the entire addition as unexplained money in terms of Section 69A of the Act event after estimating the business income of the appellant at 8% of the total turnover was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.
13. 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.
14. The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential re-assessment and appellate order passed should be reckoned as bad in law.
15. The NFAC, Delhi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.
16. The Appellant craves leave to file additional grounds/arguments at the time of hearing."
3. Briefly, the facts of the case are that the appellant is an Individual. The appellant had not filed return of income under the provisions of section 139 of the Act, for the Assessment Year 2020-21.
4. Based on the information that the appellant had made cash deposits of Rs.2,14,26,000/- in the bank account maintained with Indus Ind Bank and reported sales turnover with GST Authorities, the Jurisdictional Assessing Officer formed an opinion that the income got escaped assessment from tax. 4 ITA No.3983/CHNY/2025 [A] Accordingly, a notice u/s.148 of the Act, dated 27.02.2024 was issued after complying with the procedure laid down u/s.148A of the Act. In response to notice u/s.148 of the Act, the appellant filed Return of Income declaring income of Rs.2,47,750/-. Against the said return of income, the assessment was completed by e-Assessment Unit of the Department vide order dated 06.03.2025 passed u/s.147 read with section 144B of the Act, at a total income of Rs.2,34,04,534/-. While doing so, the Assessing Officer made additions in respect of following items :
a) Income as per Return of Income filed u/s.148 of the I.T.Act, 1961 : Rs.2,47,750/-
b) Variation in respect of business income : Rs.19,78,534/-
c) Variation in respect of unexplained money u/s.69 of the Act : Rs.2,14,26,000/-
5. Being aggrieved by the Assessment Order, appellant preferred an appeal before the ld.CIT(A) who vide impugned order dismissed the appeal by holding that the appellant had failed to furnish the evidence in the form of Cash Book, Confirmation from Suppliers, Purchase Bills, expenses claimed in support of the sources for cash deposits despite ample opportunities provided by the Assessing Officer.
6. Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal.
5 ITA No.3983/CHNY/2025 [A]
7. The ld.Counsel submits that NFAC grossly fell in error in sustaining addition under business income by estimating 8% of the turnover without giving any valid reasons. He further contended that NFAC ought to have appreciated the cash deposits were made out of the cash sales during the course of retail trade of groceries and general merchandise, the Assessing Officer having accepted the turnover disclosed by the appellant ought not to have made the addition on account of cash deposits in the bank account, as the same represents sale proceeds in cash.
8. On the other hand, the ld.Addl.CIT-Sr.DR opposed the above submissions and submits that the appellant has not filed any evidence establishing nexus between the cash deposit in the bank account and cash sales. He further submits that the ld.CIT(A) was justified in confirming the addition under Business Income by estimating income at 8% of the cash turnover disclosed by the assessee.
9. We heard rival submission and perusal the material on record.
10. The Grounds of appeal No.1 & 13 to 16 are general in nature, hence do not need any adjudication.
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11. The Grounds of appeal No.2 to 6 dismissed are not pressed at the time hearing, accordingly, Ground Nos.2 to 6 are dismissed as not pressed.
12. The Grounds of appeal No.7 and 8 challenges the correctness of decision of ld.CIT(A)/NFAC in sustaining estimation of income at 8% of the total turnover.
13. On careful perusal of the assessment order, it would reveal that the Assessing Officer has estimated the income @8% of the total turnover for the failure of the appellant to submit any documentary evidence in support of the expenses claimed. Even on appeal before ld.CIT(A)/NFAC, the addition was confirmed for the same reason. However, we find that the estimation of profit cannot be arbitrary and it should be based on past history of the appellant or the comparable cases in the similar line of business. Therefore, we are of the considered opinion that the matter requires remand to the file of Assessing Officer for de novo assessment in accordance with law after affording an opportunity of being heard to the appellant.
14. Accordingly, Ground of appeal 7 and 8 of the assessee stands partly allowed for statistical purpose.
7 ITA No.3983/CHNY/2025 [A]
15. Grounds of appeal no.9 to 12 challenges the decision of ld.CIT(A) sustaining the addition on account of cash deposits of Rs.2,14,26,000/-. There is no disputed about the fact that during the previous year relevant to the assessment year under consideration, the appellant made a cash deposits on Rs.2,14,26,000/- in the bank account maintained with Indus Ind Bank Ltd. During the course of assessment proceedings, when the appellant was called upon to explain the sources of the cash deposits, it was explained that these cash deposits were made out of the cash sales and realizations from credit sales. However, the Assessing Officer rejected the above explanation by holding that the appellant had failed to furnish documentary evidence in support of the explanation. Even the ld.CIT(A) confirmed the addition citing the same reasons.
16. However, on mere reading of the assessment order, it would reveal that the Assessing Officer had accepted the turnover disclosed by the appellant. The contention of the appellant that cash deposits in the bank accounts are made out of the cash sales and realizations from credit sales cannot be ruled out. Having accepted the turnover reported by the appellant, the Assessing Officer cannot summarily reject the explanation of the 8 ITA No.3983/CHNY/2025 [A] appellant. However, in order to meet ends of justice, these grounds of appeal are restored to the file of Assessing Officer for de novo assessment in accordance with law after affording an opportunity of being heard to the appellant.
17. Accordingly, grounds of appeal no.9 to 12 are partly allowed for statistical purpose.
18. To sum up, appeal of the assessee stands partly allowed for statistical purpose.
Order pronounced in the open Court on 18th March, 2026.
Sd/- Sd/- (MANU KUMAR GIRI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; दनांक / Dated : 18th March, 2026 SGR, Sr.PS आदे श क त ल प अ े षत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. यथ / The Respondent.
3. The CIT Chennai/Madurai/Coimbatore/Salem.
4. वभागीय त न ध, आयकर अपील य अ धकरण, "सी" बच, चे नई / DR, ITAT Chennai.
5. गाड फ़ाइल / Guard File.
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