KATHIRVEL RAVIKUMAR,KANCHIPURAM vs. ITO, NCW-22(4), TAMBARAM

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ITA 1148/CHNY/2026Status: DisposedITAT Chennai13 August 2026AY 2020-215 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the cash deposits into gold loan accounts were satisfactorily explained by the assessee and directed the deletion of the addition under Section 69A. It also found the addition under Section 69C, based on a comparison of purchases and bank payments, to be baseless and directed its deletion.

What were the facts?

The assessee, an authorized gas distributor, failed to file an income tax return for AY 2020-21 despite significant cash deposits and sales. The Assessing Officer (AO) made additions under sections 69A and 69C for unexplained cash deposits and expenditure.

What were the issues?

Whether cash deposits into gold loan accounts are unexplained money, and whether the difference between book purchases and bank payments constitutes unexplained expenditure.

Which sections of the Income-tax Act were involved?

Section 69A,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: HONOURABLE SHRI ABY T. VARKEY & SHRI GAGAN GOYAL

Hearing: 14.07.2026Pronounced: 13.08.2026

आयकर अपीलीय अधिकरण ‘ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1148/Chny/2026 ननिाारण वर्ा /Assessment Years: 2020-21 Kathirvel Ravikumar, v. Income Tax Officer, No.2/192, Main Road, Mettu Thandalam, Non-Corp Ward-22(4) Thiruporur, Tamil Nadu-603 110. Tambaram. [PAN: AUXPR2121E] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. Abhishek Murali, C.A, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Ms. Anshu Sharawat, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 14.07.2026 घोषणाकीतारीख /Date of Pronouncement : 13.08.2026 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)’) dated 02.01.2026, for the Assessment Year (hereinafter referred as the ‘AY’) 2020-21.

GROUDS OF APPEAL 1. The order of the Learned AO / CIT (A) is bad in law, bad on facts and is also opposed to the principles of natural justice. Cash deposited from Sales Made Incorrectly Treated as Unexplained Money u/s. 69A- Rs. 16, 10,160/-. 2. The Learned AO / CIT (A) has incorrectly concluded that the cash deposits into the bank accounts have been made out of unexplained sources.

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ITA No.1148/Chny/2026 (2020-21) Kathirvel Ravikumar 3. The Learned AO/CIT(A) ought to have noted that the Appellant is an authorized distributor of Indane Gas Agency and has gross receipts of Rs. 1,97,75,193/- 4. The Learned AO / CIT (A) has failed to appreciate that the Gross receipts was received substantially in the form of cash and was deposited into bank accounts. 5. The Learned AO / CIT (A) failed to note that the entire cash received has been offered as sales and this addition is double taxation of the same income. Purchases (excluding GST) Compared with Bank Statement and Difference Determined to be Unexplained Expenditure Rs. 28, 65,587/-: 6. The Learned AO / CIT (A) has grossly erred by comparing the purchases as per Books of Accounts against payments made in bank statements, and treating the difference as unexplained expenditure. 7. The Learned AO / CIT (A) should have realized that it is impossible for the purchases (excluding GST) to match with payments as per bank statements, as the payment includes GST, Service charges, Deposits and others. 8. Any other grounds that may be raised during the course of the appeal. 2. The brief facts of the case are that the assessee was amongst the non-filers of return, as per information flagged in the case of the assessee for the relevant assessment year in accordance with the Risk Management Strategy, assessee has carried out transactions in the nature of huge cash deposits and sales reported under GSTR-3B during the financial year 2019-20, relevant to the assessment year 2020-21. Despite these huge transactions undertaken, no return of income is filed for the relevant year. In view of this, a notice u/s. 148 of the Act was issued on 26.03.2024. In response to the same, the assessee filed his return of income vide dated 29.10.2024 declaring a total income of Rs. 5, 21, 800/-. In his income tax return, the assessee also claimed loss under the head house property amounting to Rs. 5, 15, 850/- against which loss of Rs. 2 lakhs was adjusted and balance loss was carried forward.

3.

Ultimately, the case of the assessee was assessed after making addition of Rs. 16, 10, 160/- and Rs. 28, 65, 587/- u/s. 69A and 69C of the Act. The assessee being aggrieved preferred the appeal before the Ld. CIT (A), who in turn dismissed the appeal of the assessee. The assessee being further aggrieved preferred an appeal before us. We have gone through the order of the AO, the order of the Ld. CIT (A) and the submission of the assessee along with the grounds taken before us.

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ITA No.1148/Chny/2026 (2020-21) Kathirvel Ravikumar 4. It is observed that the assessee is an authorized dealer of IOC gas network. The additions in the case of the assessee are two-fold i.e. sales admitted in GSTR was Rs. 1, 97, 75, 193/- whereas the amount deposited in various Gold Loan Accounts as mentioned below Rs. 16, 10, 160/- (cash deposited in various bank accounts as per para 3.4.3 of the assessment order). The total cash deposited was Rs. 1, 28, 56, 051/-, out of this, Rs. 16, 10, 160/- found to be unexplained by the AO. We have gone through the table as presented vide para 3.4.3 of the assessment order and observed that other than account number 16110100000339, saving account all other 12 accounts are in the nature of loan accounts against gold. For the sake of clarity, we are reproducing the relevant table as under:

Sl. Account No. Type of Cash deposit Status of account No. Account 1. 16116400081663 (Gold Loan) Other 34,341/- Closed 2. 16116400090490 (Gold Loan) Other 1,02,259/- Closed 3. 16110100000339 Saving A/c. Savings 1,12,91,169/- Active 4. 16116400094617 (Gold Loan) Other 23,037/- Closed 5. 16116400084196 (Gold Loan) Other 1,47,000/- Closed 6. 16116400107203 (Gold Loan) Other 2,50,000/- Closed 7. 16116400098618 (Gold Loan) Other 1,70,058/- Closed 8. 16116400096497 (Gold Loan) Other 1,67,952/- Closed 9. 16116400089666 (Gold Loan) Other 1,74,000/- Closed 10. 16116400098592 (Gold Loan) Other 51,737/- Closed 11. 16116400089336 (Gold Loan) Other 1,35,093/- Closed 12. 16116400084378 (Gold Loan) Other 1,55,472/- Closed 13. 16116400087728 (Gold Loan) Other 1,53,933/- Closed Total 1,28,56,051/- 5. In view of the above table, the total amount deposited in gold loan accounts was Rs. 16,10,160/-, whereas the total sales as claimed and accepted by the AO was Rs. 1, 97, 75, 193/-. Hence, in our considered opinion, the assessee

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ITA No.1148/Chny/2026 (2020-21) Kathirvel Ravikumar succeeded in demonstrating the source of cash deposits in various bank accounts mentioned (supra) in tabular form. Albeit, it is not clear from the order of the AO, order of the Ld. CIT (A) and even the submissions of the assessee that what was the purpose behind taking these 12 gold loans. As the limited issue before us is to examine whether the amount deposited in all the bank accounts are fully explained or not? Answer to this in our opinion goes in the favour of the assessee and it is observed that the amounts deposited in all these 12 bank accounts are satisfactorily explained by the assessee and consequently the AO is directed to delete the addition of Rs. 16,10,160/- made u/s. 69A of the Act.

6.

Next issue pertains to addition made u/s. 69C of the Act amounting to Rs. 28, 65, 587/-. It is observed that during the assessment proceedings the AO compared the purchases as per books of accounts vis-a-vis payments as shown in bank statement, difference was treated unexplained expenditure. On this issue also, it is observed that total payment through SB account No.16110100000339 and OD account No.16115600000127. The assessing officer found that payments aggregating to Rs. 2, 00, 86,550/- were made to Indian Oil Corporation from these accounts during the relevant financial year, whereas the assessee claimed purchases in the books of account of Rs. 1, 72, 20, 963/- only. So, where is the question of excessive claim of purchase or undisclosed purchases in the case of the assessee. Rather, the action of the AO which is further confirmed by the Ld. CIT (A) is found to be baseless and without application of mind, hence, set aside and the AO is directed to delete the addition of Rs. 28, 65, 587/- made u/s. 69C of the Act. In view of the above observations and directions, relevant grounds raised by the assessee are allowed.

7.

In the result, the appeal of the assessee is allowed in above terms.

Order pronounced on the 13th day of August, 2026, in Chennai. Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER

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ITA No.1148/Chny/2026 (2020-21) Kathirvel Ravikumar

चेन्नई/Chennai, ददनाांक/Dated: 13th 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 Digitally signed K BABU by K BABU Date: 2026.08.24 14:31:14 +05'30'

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