CHITRA PAZHANIVEL,CHIDAMBARAM vs. ITO, INTL TAXN. WARD-2(1), CHENNAI

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ITA 673/CHNY/2026Status: DisposedITAT Chennai20 August 2026AY 2020-215 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee's explanation was not sufficiently substantiated with proper identification of debtors and their sources of repayment. Therefore, the matter was restored to the AO for a de-novo assessment.

What were the facts?

The assessee, a non-resident, deposited Rs. 35.83 lakhs in cash into her bank account. She claimed this was from earlier withdrawals and cash advances made to relatives, which were later repaid. The Assessing Officer (AO) treated this as unexplained money.

What were the issues?

Whether the cash deposits in the bank account were adequately explained as repayment of earlier advances to relatives, and if not, whether the addition as unexplained money was justified.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 148,Section 144C,Section 282,Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: HONOURABLE SHRI S.S. VISWANETHRA RAVI & SHRI GAGAN GOYAL

Hearing: 03.08.2026Pronounced: 20.08.2026

आयकर अपीलीय अधिकरण, ‘ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI माननीय श्री यस. यस. विश्वनेत्र रवि, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 673/Chny/2026 यनिाारण वर्ा /Assessment Years: 2020-21

Chitra Pazhanivel v. Income Tax Officer, Old No.2, New No.41, Vaipu Lane, International Taxation, Chidambaram, Tamil Nadu-608 001. Ward-2(1), [PAN: BIWPP2618E] Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. T. Vasudevan, Advocate. Ld. AR प्रत्यर्थी की ओर से /Revenue by : Ms. R. Anitha, CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 03.08.2026 घोषणाकीतारीख /Date of Pronouncement : 20.08.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of AO, Int. Tax. Ward 2(1), Chennai in compliance to the DRP-2, Bangalore-2 Directions (hereinafter referred as the AO and DRP) dated 18.12.2025 and 17.12.2025 respectively, for the Assessment Year (hereinafter referred as the ‘AY’) 2020-21.

GROUDS OF APPEAL 1. The order of the Income Tax Officer, International Taxational Ward making the addition of Rs. 35,83,500/- under sec. 69A r.w.s.115BBE of the I.T. Act 1961 is contrary to law, erroneous and unsustainable on the facts of the case. 2. The ITO erred in merely adopting the observations of the Dispute Resolution Panel, sans any independent finding and hence the addition u/s. 69A of the I.T. Act 1961 as unexplained money is wholly unjustified and untenable in law and facts of the case.

ITA No.673/Chny/2026 (2020-21) Chitra Pazhanivel 3. The ITO failed to appreciate that the amounts deposited in the bank account were the withdrawals made earlier to help the relatives with cash for their utilization, who had later returned the amounts and hence the source for cash deposits is fully explained. 4. The ITO further failed to appreciate that the salary income of the assessee earned in Singapore as a Nurse was remitted to India through the bank account which was used for advancing to the relatives and the entire transaction is borne out of records and therefore the addition was unjustified. 5. The ITO further failed to appreciate that all the evidence for the remittance, withdrawals and the re-deposit of the amounts in the bank account were placed on record and there was clear non-appreciation of the evidence leading to the addition. 6. The ITO was not justified in making the addition as unexplained money by merely rejecting the evidence and explanations of the assessee and that no addition can be made as unexplained money. 7. The ITO, in any event, ought to have duly considered the entire documentary evidence in a holistic manner and concluded that no addition was warranted in the hands of the assessee.

2.

The brief facts of the case are that the assessee was amongst the non-filer of the return and was a non-resident for the assessment year under consideration. Based on certain information, i.e., time deposits of Rs. 60.52 lakhs with HDFC and Indian Bank and cash deposits of Rs. 35.83 lakhs with Indian Bank, case was reopened by issuing a notice u/s. 148 of the Act on 29.03.2024. In response to the notice, u/s. 148 of the Act, the assessee filed its return of income on 29.11.2024 declaring a total income at Rs.1.53 lakhs. The AO passed a draft order u/s. 144C (1) of the Act on 04.03.2025 with an addition of Rs. 35.83 lakhs u/s. 69A of the Act. This order of the AO was challenged by the assessee before the DRP. The DRP confirmed the draft order and issued directions vide order dated 17.12.2025 u/s. 144C (5) of the Act, consequently, final order was also passed vide order dated 18.12.2025 u/s. 147 r.w.s. 144C (13) of the Act.

3.

The assessee being aggrieved with the same preferred the present appeal before us. We have gone through all the orders of the authorities below as mentioned (supra) along with submissions of the assessee and grounds taken before us. It is observed that the assessee under consideration was a non-resident for the assessment year under consideration and deposited cash of Rs. 35, 83, 500/- in her bank account maintained with the Indian Bank. In her explanation, the

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ITA No.673/Chny/2026 (2020-21) Chitra Pazhanivel assessee claimed that the source of this cash deposit was her earlier withdrawals from Indian Bank and receipt of advances made to her relatives during the Financial Years 2017-18 to 2019-20. She further claimed that advances were realized in cash during the year under consideration and the same were deposited in her bank account. 4. The details of cash deposits and cash withdrawals from her Indian Bank Account No. 961313443 are as follows: - Cash Deposits Cash withdrawals Sr. No. F.Y. (In Rs.) (In Rs.) 1. 2017-18 3,25,000/- 16, 72, 000/- 2. 2018-19 9.08,500/- 21,30,000/- 3. 2019-20 35,83,500/- 15,67,000/- Total 48,17,000/- 53,69,000/-

In addition to the above, it is pertinent to mention that the assessee herself has claimed that being non-resident she did not have any income in India during the years under consideration and no foreign inward remittance is found in her bank statement. Although, the matter before us pertains to the deposit of Rs. 35.83 lakhs during the year under consideration, which as per the assessee explained out of the previous cash withdrawals and receipt of advances given to the relatives.

5.

On this contention of the assessee, it is observed that the assessee claimed that Rs. 16.72 lakhs and Rs.21.30 lakhs were withdrawn during the Financial Years 2017-18 and 2018-19. Meaning thereby total amount is Rs. 38.02 lakhs were given as loan out of withdrawals mentioned (supra). We deem it fit to reproduce the table as submitted by the assessee before us to demonstrate the amount of withdrawal, name of the debtor, amount received back in cash and deposited in Indian Bank account as mentioned (supra) as under: -

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ITA No.673/Chny/2026 (2020-21) Chitra Pazhanivel

Date Amount Name of debtors Amount Total Date Amount withdrawn advanced received back in cash (In Rs.) (In Rs.) (In Rs.)

03.04.2017 490000/- Ramesh (Husband) 300000/-(out of 300000/- 29.07.2019 200000/- 4.90 lakhs)

03.04.2017 Pitchaikutti 150000/-(out of 150000/- 30.01.2020 150000/- Nachiappan (Family 4.90 lakhs) friend)

07.06.2017 50000/- G. Rakkammal 50000/- 50000/- 28.05.2019 50000/- (Mother-in-law)

31.08.2017 Kumarappan 500000/- (Out 500000/- 23.12.2019 200000/- Palanivel (Brother) of 8.40 lakhs) 24.12.2019 200000/-

26.12.2019 100000/-

31.08.2017 G. Rakkammal 75000/- (out of 75000/- 28.05.2019 7500/- (Mother-in-law) 8.40 lakhs) 29.05.2019 40000/-

22.08.2019 20000/-

13.11.2019 7500/-

20.03.2018 292000/- G. Rakkammal 275000/- (Out 275000/- 13.11.2019 108500/- (Mother-in-law) of 292000/-) 1600000/- 22.11.2019 150000/-

18.08.2018 500000/- S. Rakkammal 500000/- 500000/- 22.11.2019 500000/- (Sister)

27.08.2018 1600000/- Murugappan (Brother) 500000/- (Out 500000/- 22.08.2019 300000/- of 16 lakhs) 27.08.2019 200000/-

27.08.2018 Azhagammal (mother) 300000/-(out of 300000/- 29.05.2019 100000/- 16 lakhs) 26.12.2019 100000/-

26.12.2019 100000/-

27.08.2018 Azhagappan 400000/- (Out 400000/- 13.11.2019 400000/- Ponnaiya (Uncle) of 16 lakhs)

27.08.2018 Karthick Alagappan 400000/- (Out 400000/- 13.11.2019 400000/- of 16 lakhs)

TOTAL 37,00,000/- 35,83,5000/-

6.

The above table submitted by the assessee is a self-serving document till the time the persons to whom loan was given and received back were not properly identified and they also confirm the receipt of the money as well as repayment of

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ITA No.673/Chny/2026 (2020-21) Chitra Pazhanivel money in cash. In this case other than husband none of the debtors declared their PAN Numbers, source of they are earning to repay the loan taken from the assessee. In view of the above, as the assessee positively participated before the authorities below, we deem it fit to give another opportunity to substantiate her case by restoring the matter back to the file of the AO with a direction for de-novo assessment of the amount and transaction under consideration, i.e., cash deposit of Rs. 35,83,5000/- after giving a proper opportunity of being heard to the assessee as prescribed in section 282 and 131 of the Act. The assessee is also directed to participate in the proceedings before the AO and comply with this order in terms of identification of the people concerned and their sources of repayment, without seeking any adjournment. In the result, the grounds raised by the assessee are allowed for statistical purposes only with the above observations and directions. 7. In the result, the appeal of the assessee is allowed for statistical purposes only. Order pronounced on the 20th day of August 2026, in Chennai.

Sd/- Sd/- (यस. यस. विश्वनेत्र रवि) (गगन गोयल) (S.S. VISWANETHRA RAVI) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 20th August, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR K Digitally signed 5. गार्ड फाईल/GF by K BABU BABU Date: 2026.08.24 15:03:24 +05'30'

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