OLAKARA SAMSUDDIN ABDULLA KUTTY,KERALA vs. ITO, INTL TAXN. WARD-2(2), CHENNAI

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

The captioned appeal by the assessee for Assessment Year (AY' in short) 2020-21 arising out of final assessment order dated 31.12.2025 passed by Assessing Officer, u/s.143(3) r.w.s. 144C(13) of the Income Tax Act [‘Act’ in short] pursuant to the directions of Ld. Dispute Resolution Panel-2, Bengaluru-1 (‘DRP' in short) u/s.144C(5) of the Act dated27.12.2025.

ITA No. 949/Chny/2026 (AY 2020-21) Olakara Samsuddin Abdulla Kutty Vs AO W 2(2) :: 2 :: 2. The assessee, an individual, was engaged in the business of running a supermarket under the name "Quality Mart" during the relevant previous year. The business was discontinued with effect from 01.02.2020 owing to continuous losses and was followed by the COVID-19 lockdown. The assessee filed the original return declaring income u/s.44AD however, due to an inadvertent error by the tax consultant, the return was filed in ITR-1 instead of ITR-4, resulting in incorrect reporting of business income. Upon receipt of notice u/s. 148, the assessee filed a fresh return in the prescribed form declaring presumptive income u/s. 44AD and paid the differential tax along with applicable interest. The Assessing Officer (AO) completed the assessment u/s. 147 read with section 144C(13), treating the assessee as a non-resident, making an addition of Rs.66,25,198/-u/s. 69C in respect of cash withdrawals from the disclosed business bank account, taxing the same u/s. 115BBE of the Act and not granting certain statutory deductions.The AO recorded the assessee's status as a non-resident without examining the provisions of section 6 or the passport evidencing stay in India. Though the business turnover of Rs.1,68,43,723/- as reflected in the GST returns and bank statements was accepted and income was computed on a presumptive basis u/s. 44AD, the AO treated cash withdrawals of Rs.66,25,198/- from the disclosed business bank account as unexplained expenditure u/s. 69C and taxed the same u/s. 115BBE of the Act. The AO also did not grant deductions claimed u/s. 24(b), 80C and 80TTA. 3. The DRP upheld the action of the AO without examining in detail the documentary evidence produced by the assessee regarding residential status, utilisation of cash withdrawals for business purposes, or the applicability of section 69C in the context

ITA No. 949/Chny/2026 (AY 2020-21) Olakara Samsuddin Abdulla Kutty Vs AO W 2(2) :: 3 :: of presumptive taxation u/s. 44AD of the Act. The objections of the assessee were rejected, leading to the final assessment order. Now assessee is in appeal before us. 4. The ld. Authorised Representative (AR) submitted that the assessee had permanently returned to India in 2017 and had stayed in India for more than 182 days during the relevant previous year, as evidenced by the passport produced before the AO and the ld.DRP. It was contended that the residential status was wrongly determined merely on the basis of PAN jurisdiction without any examination u/s. 6 of the Act. 5. On the addition u/s. 69C, it was submitted that the cash withdrawals were made from a fully disclosed GST-linked business account out of accepted business receipts and were utilised for business purposes such as purchase of stock, payments to suppliers, farmers and employees. It was argued that once income had been accepted u/s. 44AD, maintenance of detailed books was not mandatory and the same business receipts could not again be subjected to addition u/s. 69C, resulting in double taxation. It was further submitted that the AO had neither identified any specific unexplained expenditure nor dealt with the detailed explanations and documentary evidence furnished during the assessment proceedings. Reliance was placed on the decision of the Bombay High Court in PCIT v. Vaman International Pvt. Ltd.[422 ITR 520 Bom HC]. It was also contended that invocation of section 115BBE was merely consequential and that statutory deductions u/s. 24(b), 80C and 80TTA were wrongly denied without assigning any reasons. 6. The ld. Departmental Representative (DR) supported the orders of the lower authorities and submitted that the assessee had failed to substantiate the utilisation of the cash withdrawals with

ITA No. 949/Chny/2026 (AY 2020-21) Olakara Samsuddin Abdulla Kutty Vs AO W 2(2) :: 4 :: supporting documentary evidence. It was contended that, in the absence of books of account and supporting records, the AO was justified in invoking section 69C of the Act. The Revenue further submitted that the assessment had been completed after granting adequate opportunity and that the additions and consequential levy u/s. 115BBE of the Act were in accordance with law. 7. We have considered the rival submissions and perused the material available on record. It is noticed that the assessee had produced passport copies before the AO claiming to be a resident during the relevant previous year. However, there is no discussion in the assessment order regarding the examination of the provisions of section 6 or verification of the period of stay in India. Likewise, though the Assessing Officer accepted the turnover disclosed in the GST returns and computed income u/s. 44AD, the addition u/s. 69C has been made in respect of cash withdrawals from the same disclosed business bank account without recording a clear finding as to the nature of the alleged unexplained expenditure or examining the explanations furnished by the assessee regarding utilisation of such withdrawals. 8. It is further noticed that the assessee had filed detailed written submissions along with supporting documents before the AO as well as before the ld.DRP. However, the impugned orders do not indicate proper consideration of such material. The issue whether section 69C can be invoked after accepting the business turnover and applying section 44AD also requires proper examination in the light of the factual verification of the withdrawals and their utilisation. Similarly, the claim of deductions u/s. 24(b), 80C and 80TTA requires verification with reference to the supporting evidence.

ITA No. 949/Chny/2026 (AY 2020-21) Olakara Samsuddin Abdulla Kutty Vs AO W 2(2) :: 5 :: 9. In these circumstances, and in the interest of justice, we consider it appropriate to set aside the impugned order on the disputed issues and restore the matter to the file of the AO. The AO shall verify (i) the residential status of the assessee with reference to section 6 and the passport records; (ii) the nature and utilisation of the cash withdrawals from the disclosed business bank account after considering the explanations and documentary evidence furnished by the assessee; (iii) the applicability of sections 69C and 115BBE in accordance with law after such verification; and (iv) the allowability of deductions claimed u/s. 24(b), 80C and 80TTA of the Act. The AO shall afford adequate opportunity of being heard to the assessee and pass a fresh speaking order in accordance with law. Accordingly, the impugned order is set aside on the above issues and the matter is restored to the file of the AO for de novo adjudication after due verification. The grounds of appeal are allowed for statistical purposes. 10. In the result, appeal of the assessee is allowed for the statistical purposes. Order pronounced in the open court on the 29th of July 2026, in Chennai.

Sd/- Sd/- (इंतूरी रामा राव) (मनु कुमार िग�र) (INTURI RAMA RAO) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER चे�नई/Chennai, +दनांक/Dated: 29th July, 2026. SNDP, Sr. PS SANDEEP Digitally signed by SANDEEP KUMAR KUMAR Date: 2026.07.31 15:41:06 +05'30'

ITA No. 949/Chny/2026 (AY 2020-21) Olakara Samsuddin Abdulla Kutty Vs AO W 2(2) :: 6 ::

आदेश क! ��त,ल-प अ.े-षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF