THANMAYA EGG CENTRE,NAMAKKAL vs. ITO, WARD-1,, NAMAKKAL

PDF · subscribers
ITA 1153/CHNY/2026Status: DisposedITAT Chennai20 July 2026AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal partially allowed the appeal, directing that the tax rate under Section 115BBE should be 30% and not 60%, as the higher rate was applicable from AY 2018-19. The quantum of addition was sustained.

What were the facts?

The assessee firm, engaged in egg trading, made significant cash deposits during the demonetisation period. The Assessing Officer made an addition of Rs. 19,81,500 under Section 69A as unexplained money, which was upheld by the CIT(A).

What were the issues?

The primary issue was the applicability of Section 69A for unexplained cash deposits and the correct tax rate under Section 115BBE for the assessment year.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

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: 20.07.2026

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. 1153/Chny/2026 ननिाारण वर्ा /Assessment Years: 2017-18 Thanmaya Egg Centre, v. Income Tax Officer, No.3/206, Mohanur Road, Ward-1, Kondichettipatti (PO), Namakkal, Namakkal Tamil Nadu-637 001. [PAN: AALFT0378F] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. N. Arjun Raj, Advocate, 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 : 20.07.2026 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), Addl. / JCIT(A), Aurangabad, (hereinafter referred as the ‘Ld. CIT(A)’) dated 03.12.2025, for the Assessment Year (hereinafter referred as the ‘AY’) 2017-18.

GROUDS OF APPEAL 1. The order of the ADDL/JCIT (A) Aurangabad dated 03.12.2025 vide DIN & Order No. ITBA/APL/S/250/2025-26/1083244790(1) for the above-mentioned Assessment Year is contrary to law, fact and in circumstances of the case. 2. The ADDL/JCIT (A) Aurangabad erred in sustaining the addition to the tune of Rs.19, 81,500/- being the cash deposits made during the assessment year under consideration in SBNs as unexplained money in terms of Section 69A in the computation of taxable total income without assigning proper reasons and justification.

Page 1 of 4

ITA No.1153/Chny/2026 (2017-18) Thanmaya Egg Centre 3. The ADDL/JCIT (A) Aurangabad failed to appreciate that provisions of Section 69A of the Act had no application to the present facts and in circumstances of the case and ought to have 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. 4. The ADDL/JCIT (A) Aurangabad failed to appreciate that the provisions of Section 115BBE of the Act had no application in view of the law declared by the Madras High Court on its applicability from Assessment Year: 2018-19 only, thereby negating the findings in relation thereto. 5. The ADDL/JCIT (A) Aurangabad failed to appreciate that having not examined the financials and explanation including the availability of the cash balance as on 08.11.2016, which were available before them, the presumption of unexplained money should be reckoned as wholly unjustified and not sustainable in law. 6. The ADDL/ICIT (A) Aurangabad failed to appreciate that having not rejected the explanation / financials as faulty, the presumption of unexplained money within the scope of Section 69 of the Act from the disputed cash deposits was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 7. The ADDL/JCIT (A) Aurangabad failed to appreciate that in any event having not independently examined the status of the cash deposits earned during the ordinary course of business engaged in trading/selling eggs, the consequential sustenance of the entire addition as unexplained money in terms of Section 69A of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 8. The ADDL/ICIT (A) Aurangabad failed to appreciate that having established the source for the cash deposits through business pursued by the appellant in the financials furnished before them, the sustenance of such sums as unexplained money in any event should be reckoned as bad in law. 9. The ADDL/JCIT (A) Aurangabad failed to appreciate that having shown the disputed sum as part of the turnover, assessment of the turnover once again as unexplained money was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 10. The ADDL/JCIT (A) Aurangabad 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. 11. The ADDL/JCIT (A) Aurangabad failed to appreciate that having not adhered to the prescription of faceless regime, the consequential appellate order passed should be reckoned as bad in law. 12. The ADDL/JCIT (A) Aurangabad failed to appreciate that the scrutiny assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 13. The ADDL/JCIT (A) Aurangabad 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.

Page 2 of 4

ITA No.1153/Chny/2026 (2017-18) Thanmaya Egg Centre 14. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 2. The brief facts of the case are that the assessee firm filed its return of income on 10.08.2018 declaring total income at Rs. 13,960/-. Case of the assessee was selected for complete scrutiny under CASS to verify “Cash Deposit during the Demonetisation Period”. Ultimately, the case of the assessee was assessed after making addition of Rs. 1981500/- u/s. 69A of the Act r.w.s. 115BBE of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. Addl./JCIT(A), Aurangabad, who in turn dismissed the appeal of the assessee. The assessee being further aggrieved preferred the present appeal before us.

3.

We have gone through the order of the AO, order of the Ld. CIT(A) and submissions of the assessee alongwith grounds taken before us. It is observed that the assessee firm is engaged in the business of trading in egg sales and made large cash deposits in its bank account during the demonetisation period. The assessee declared sales of Rs. 17.85 Lacs during the F.Y. 2015-16, Rs. 10.23 Crs. During the year under consideration and Rs. 7.50 Crs. During the F.Y. 2017-18. This trend in sales declared by the assessee certainly creates a reasonable doubt about the affairs of the assessee.

4.

As per the assessee the cash balance of Specified Bank Notes (SBNs) as on the day of demonetisation period, i.e. 08.11.2016 was Rs. 34,00,498/-. The same were deposited in the bank accounts of the assessee between 10.11.2016 to 16.12.2016 was Rs. 32.17 Lacs, i.e. total deposit of Rs. 32.17 Lacs completed in 36 days and average deposit was Rs. 89,361/-. In addition to above, we have gone through the financials of the assessee vide page nos. 61 to 63 of the paper book and observed that the sales of the assessee were Rs. 10,23,37,685/- and net profit before allocation of remuneration to partners was Rs. 1,13,955/-. Such a meagre amount of profit @ 0.11% is certainly beyond anyone’s understanding.

5.

But, as the assessing officer himself has not analysed the financials of the assessee in proper perspective and simply made an addition of Rs. 19.81 Lacs u/s. 69A of the Act, being amount of SBNs deposit after period of 10.11.2016 to 17.11.2016, we also can’t comment on the facts as enumerated in para 4 (supra).

Page 3 of 4

ITA No.1153/Chny/2026 (2017-18) Thanmaya Egg Centre Although, applying the theory of Real Income and Human Probability Test, after sustaining addition of Rs. 19.81 Lacs u/s. 69A of the meets the criteria of Real Income to some extent, hence the same is confirmed with a relief that Tax rate during the year under consideration u/s. 115BBE of the Act is 30% and not 60% as the same is applicable from A.Y. 2018-19. In view of the above, Ground No. 4 raised by the assessee is allowed and it is directed to charge tax u/s. 115BBE of the Act @ 30% and not 60%. Rest of the Grounds raised by the assessee are dismissed and orders of the authorities below are sustained on quantum. 6. In the result, the appeal of the assessee is partly allowed with above observations and findings. Order pronounced on the 20th day of July, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 20th July, 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 Digitally signed by 5. गार्ड फाईल/GF K BABU K BABU Date: 2026.07.27 11:28:16 +05'30'

Page 4 of 4

More judgments on Section 69A

All 15,297 judgments and leading authorities on Section 69A →

Recent GST High Court judgments

Search GST case law →