VASUDEVAN RAGHAVAN,CHENNAI vs. ACIT, NCC-10(1), CHENNAI

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ITA 2242/CHNY/2025Status: DisposedITAT Chennai18 August 2026AY 2016-174 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that tax can only be charged on real income, not notional or unreal income. Since the assessee neither received nor had a reasonable assurance of receiving the amount in question, it was not taxable.

What were the facts?

The assessee's return of income was scrutinized, revealing a discrepancy between declared income/TDS and information in Form 26AS. The AO reopened the assessment and made an addition of Rs. 46,88,740/- for alleged unoffered professional income.

What were the issues?

Whether the addition of Rs. 46,88,740/- was justified when the assessee had not actually received the professional income, and whether the reopening of assessment was valid.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 144B,Section 69A,Section 194J

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: 12.08.2026Pronounced: 18.08.2026

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. 2242/Chny/2025 यनिाारण वर्ा /Assessment Years: 2016-17 Vasudevan Raghavan, v. Assistant Commissioner of No.1, 22nd Cross Street, Indira Nagar, Income Tax, Adyar, Chennai-600 020. Non Corp Circle-10(1), [PAN: AABPR9444A] Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. V. Padmanaban, C.A, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Ms. Anshu Sharawat, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 12.08.2026 घोषणाकीतारीख /Date of Pronouncement : 18.08.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: 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 01.08.2025, for the Assessment Year (hereinafter referred as the ‘AY’) 2016-17.

GROUDS OF APPEAL 1 That the order of the learned Commissioner of Income Tax (NFAC), Delhi ("hereinafter referred to as Ld.CIT(A) dated 01.08.2025 is without jurisdiction and is opposed to the principles of law, weight of evidence, probabilities, equity, natural justice, fair play and the facts and circumstances of the case of the appellant. 2 That the Ld.CIT (A) has erred in Adjudicating the order of re-opening notice issued u/s. 148 by the Jurisdiction Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO) was bad in law.

ITA No.2242/Chny/2025 (2016-17) Vasudevan Raghavan 3 That the Ld.CIT(A) and the Ld. AO has erred reopening the assessment u/s 148 of the Income Tax Act, 1961 as the original assessment was completed by calling for relevant details regarding the Professional receipts credited in the profit and loss account and hence it lacks jurisdiction as it amounts to change of opinion. The reopening of assessment is not tenable as there were no fresh and tangible material available with the A.O. for the said reopening and hence, it is bad in law. The Appellant relying the Madras High Court decision in case of Cognizant Technology Solutions India Private Limited Vs ACIT, W.A. No.2521 of 2021. 3 That the Ld.CIT (A) and the Ld. AO has erred in made addition of Rs. 46, 88,740/- by treating the fictitious credit available in the Form 26AS has treated as unexplained investments under section 69A of the Income Tax Act, 1961. 4 On the facts and circumstances the appellant has not received the professional income of Rs. 46,88,740/- from Elite Distilleries Private Limited and consequently TDS credit was not claimed in return of income filed during the year. 5 For that the Learned CIT (Appeals) and A.O. failed to consider the confirmation letter and other documents furnished by the appellant during the course of appellant proceedings with regard to the professional service rendered during the year. 6 That the appellant craves for the permission of the Hon'ble Income Tax Appellate Tribunal to add, delete or amend the grounds of appeal hereinabove before or during the course of hearing of appeal.

2.

The brief facts of the case are that the assessee filed his return of income declaring total income at Rs. 68,81,320/-. The revenue was in possession of an information that total T.D.S. towards the assessee was Rs. 19,70,666/- and receipts were Rs. 1,95,46,667/-, whereas in the return of income the assessee has claimed T.D.S. of Rs. 13,83,999/- only on receipts of Rs. 1,48,57,927/-. Hence, it was observed by the AO that the assessee has not offered income of Rs. 46, 88,740/- and also not claimed T.D.S. of Rs. 5, 86,667/-. Based on the above a notice u/s. 148 of the Act vide dated: 31.03.2021 was issued, in response to the same the assessee filed his return of income on 05.04.2021 declaring total income at Rs. 68,81,320/-. Ultimately, the case of the assessee was assessed u/s. 147 r.w.s. 144B of the Act after making addition of Rs. 46,88,740/-.

3.

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 being further aggrieved preferred the present appeal before us. We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee alongwith

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ITA No.2242/Chny/2025 (2016-17) Vasudevan Raghavan grounds taken before us. It is observed w.r.t. the paper book filed by the assessee before us that the assessee was in receipt of Rs. 1.2 Cr. From M/s. Elite Distilleries Ltd. And M/s. AM Breweries Pvt. Ltd. chargeable to tax u/s. 194J of the Act. Against this receipt of Rs. 1.2 Cr. there was a T.D.S. of Rs. 12 Lacs, which was duly reflected in the form no. 26AS of the assessee and the assessee has also declared the income of Rs. 1.2 Cr. in his return of income.

4.

Before the AO, the assessee took a stand that the appellant had rendered services for merger of M/s. Elite Distilleries Ltd. with M/s. AM Breweries Pvt. Ltd. against a consideration of Rs. 1.2 Cr., post completion of the merger processes the assessee demanded an additional fee of Rs. 50 Lacs from the client as the work involved use of other experts including lawyers etc., however the same was never paid to him by either M/s. Elite Distilleries Ltd. or M/s. AM Breweries Pvt. Ltd. However, the same assessee claimed that M/s. Elite Distilleries Ltd. had inadvertently deducted additional sum of Rs. 5,86,667/- being 10% of Rs. 58,66,667/-, which was recorded in the books of the company as additional provision for professional fees. The assessee was not aware of this fact that M/s. Elite Distilleries Ltd. had inadvertently remitted excess T.D.S. credit for which the assessee never in receipt of the corresponding income.

5.

We have examined the documents before us submitted in paper book and observed that whatever may be stand of the assessee before the authorities below, but was never in receipt of the amount under consideration. We have gone through the page no. 17, i.e. Break-up of professional receipts as per Service Tax Return and income reported in Profit & Loss A/c. and page nos. 93 to 95, i.e. confirmation of professional fees paid by M/s. Elite Distilleries Ltd. with M/s. AM Breweries Pvt. Ltd. As per the self-certified paper book of the assessee, it is confirmed that the documents discussed above were filed before the authorities below, but the same were ignored.

6.

It is further observed that there is no material on record which substantiates that the assessee received the same in succeeding years or by any other mean.

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ITA No.2242/Chny/2025 (2016-17) Vasudevan Raghavan Simply, because the assessee has contradictory stands before the authorities below, still, notional/unreal income can’t be taxed. Tax can be charged only on the real income that is too either on receipt basis or with an assurance to receive the same. In this case the assessee neither received the same nor has any reasonable assurance about receiving the same, hence not taxable. In view of the above, grounds raised on merits are allowed and legal grounds left open, as the matter has already been discussed and decided on merits.

7.

In view of the above facts, discussion and observations (supra) grounds raised on merits are allowed and the AO is directed to delete the addition of Rs. 46,88,740/-. Orders of the authorities below are set-aside.

8.

In the result, the appeal of the assessee is allowed in above terms. Order pronounced on the 18th 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: 18th 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 5. गार्ड फाईल/GF K Digitally signed by K BABU BABU Date: 2026.08.24 14:45:59 +05'30'

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