ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, TRICHY, TRICHY vs. MARUTHUPANDIAN NEETHI DHEVAN, SIVAGANGAI

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ITA 4089/CHNY/2025Status: DisposedITAT Chennai09 July 2026AY 2019-208 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the AO erred in taxing the seized cash in AY 2019-20 because the seizure date of April 14, 2019, falls within AY 2020-21. Therefore, the assessment for AY 2019-20 was without jurisdiction.

What were the facts?

Cash of Rs. 12 lakhs was seized from the assessee's vehicle on April 14, 2019, during election surveillance. The Assessing Officer (AO) added this amount to the assessee's income for Assessment Year (AY) 2019-20 as unexplained money.

What were the issues?

Whether the AO correctly assessed the seized cash in AY 2019-20 when the seizure occurred in AY 2020-21. The key issue is the correct assessment year for taxing the seized amount.

Which sections of the Income-tax Act were involved?

Section 69A,Section 132A,Section 153A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI S.R. RAGHUNATHA

Hearing: 10.06.2026Pronounced: 09.07.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal), (hereinafter referred to

ITA No.4089/Chny/2025 (AY 2019-20) Maruthupandian Neethi Dhevan :: 2 :: as ‘Ld.CIT(A)’), Chennai-19, dated 30.09.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2019-20.

2.

The main grievance of the Revenue is against the action of the Ld.CIT(A) deleting the addition of Rs.12 lakhs made towards unexplained money u/s.69A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by observing that the seized cash of Rs.12 lakhs was wrongly assessed for AY 2019-20, whereas seizure of the cash was undisputedly on 14.04.2019, which is undisputedly an event happening in the subsequent AY.

3.

Brief facts is that the assessee an individual, whose vehicle was intercepted during the course of election related surveillance in the month of April 2019, and from that vehicle, cash amounting Rs. 12,00,000/- was found and seized. Consequent to the cash seizure, the assessee was subjected to search u/s 132 of the Act and during the course of search, a statement was recorded from the assessee on 14.04.2019 wherein he stated that the sources of the cash were from the deposits of Rs. 50,000/- per month made in SBI Melur branch and the sum of Rs. 10,000/- per month deposited with SBI Eriyar branch as monthly savings from his income. The AO on the basis of the findings of the search, initiated assessment proceedings by issuing notice u/s 153A of the Act on

ITA No.4089/Chny/2025 (AY 2019-20) Maruthupandian Neethi Dhevan :: 3 :: 27.02.2021. The assessee filed his return of income in response to notice u/s 153A of the Act by admitting a total income of Rs. 2,41,312/- on 06.03.2021. During the course of assessment proceedings, the AO issued a show cause notice requiring the assessee show cause as to why the cash amounting to Rs. 12,00,000/- seized should not be assessed as unexplained money for the AY 2019-20. In response to the show cause notice the assessee responded by filing submission dated 05.03.2021.The AO after considering the submission rejected the same for the reason that at the time of search, the assessee claimed the sources for the cash amounting Rs. 12,00,000/- constituted cash withdrawal of Rs. 6,00,000/- from SBI Melur Branch and Rs. 6,00,000/- received from uncle Selvam. The assessee did not produce any evidence for the claim made. Further, the assessee submitted an affidavit dated 08.03.2021 by changing his statement this time as Rs. 4,00,000/- being his own savings, Rs. 2,00,000/- as gift from mother and Rs. 6,00,000/- money belonging to uncle Shri Senthil. The AO observed that the assessee did not furnish any evidence for the new claim made. The AO held that the above working for Rs. 12,00,000/- is a "Capital Build Up case" which is unacceptable. The AO also held that the assessee did not produce any evidence to prove that his mother has any sources of income to give such cash gift to the assessee. As the assessee failed to explain the source for the amount of Rs. 12,00,000/- treated the same as unexplained money u/s 69A of the

ITA No.4089/Chny/2025 (AY 2019-20) Maruthupandian Neethi Dhevan :: 4 :: Act and added to the returned income for the AY 2019-20 and completed the assessment proceedings by passing order u/s 153A of the Act on 15.09.2021 by making addition of Rs.12 lakhs as unexplained money u/s.69A of the Act.

4.

Aggrieved the assessee preferred an appeal before Ld.CIT(A) wherein the assessee is noted to have raised inter alia ground No.10 before the Ld.CIT(A) which reads as under :- “10. The ACIT, in any event, ought to have seen that the proceedings for the asst. year 2019-20 were wrongly initiated since the seizure itself does not fall in the present asst year and also ought to have duly considered all the contentions of assesse in the proper perspective and thus not made the addition of Rs. 1200000/- (Twelve lakhs) in the hands of assesse for the assessment year 2019-20 and accepted the income returned by the assessee.” The Ld.CIT(A) is noted to have adjudicated this ground in favour of the assessee by taking note that the cash seized from assessee was on 14.04.2019 which falls in the AY 2020-21 and hence, he found the AO erred in taxing such seized amount of Rs.12 lakhs as unexplained money in the hands of assessee in AY 2019-20. The Ld.CIT(A) has adjudicated the aforesaid legal issue by holding as under :- 5. ADJUDICATION The undersigned after having carefully examined the assessment order, the written submissions made to substantiate the grounds raised and the arguments advanced by the AR during the course of appellate proceedings, the various grounds are adjudicated as under :- 5.1 On examination of the grounds unds raised raised in in the the groun grounds of appeal, it can be seen that the grounds are confined upon two issues i.e. upon legality and upon merits. The undersigned is of the view to adjudicate the issues raised ues raised upon legality first.

ITA No.4089/Chny/2025 (AY 2019-20) Maruthupandian Neethi Dhevan :: 5 ::

UPON LEGALITY 5.2 On examination of the grounds raised upon legality, it can be seen that the core contention of the appellant is that the AO has erred in making the addition as unexplained money invoking the provisions of section 69A of the Act for the year under consideration without considering the year in which the appellant was found to be in possession of the seized cash. The relevant ground raised in this regard is reproduced here as under. "3. The ACIT erred in making the addition in the asst. year 2019-20, while the seizure of the cash was effected on 14.04 2019 falling for consideration in the asst. year 2020- 21 and hence the notice for asst year 2019-20 and the addition made in this year are wholly invalid and untenable in law." 5.3 The AR, during the course of appellate proceedings has brought to the notice of the under signed that the search in the case of the appellant was carried out in the FY 2019-20 and explained the contradictory findings made by the AO in the assessment order itself. The undersigned on examination of the assessment order finds that the AO has brought on record that "a search within the meaning of section 132A of the Act was carried out in the case of the Appellant on 18.04.2020. Whereas, as per the findings brought out by the AO at page 2 of the assessment order, it is noted that the AO has observed in the notice issue u/s 142(1) of the Act as under. 4) Notice uls 142(1) issued dated 27-02-2021 to the assessen to explain the source for the cash seized during the course of Lok sabha election 2019 to the tune of Rs. 12,00,000/-. The letter is reproduced below: "During the course of election related surveillance in April 2019, & was found that you carrying cash amounting to Rs. 12,00,000/- in car with registration no. TN-49-DC- 4023 (Mahindra XUV) and subsequently in the absence of any valid or relevant documents in support of the cash found, the cash was seized. Proceedings u's 132A of the Income Tax Act, 1061 was initiated in your case. 5.4 As per the above findings, it is observed that the requisition under section 132A of the Act was issued in April 2019, pursuant to the interception of the appellant's vehicle by authorities during election-related surveillance operations. During the course of this interception, the appellant was found to be in possession of cash amounting to Rs. 12,00,000/-, for which he was unable to produce any supporting documentation or satisfactory explanation at that time. Consequently, the said amount was seized by the authorities and subsequently requisitioned by the Income Tax Department u/s

ITA No.4089/Chny/2025 (AY 2019-20) Maruthupandian Neethi Dhevan :: 6 :: 132A of the Act for further proceedings. In this regard a statement was also recorded from the appellant on 14.04.2019. 5.5 In view of the above findings, it is evident that the requisition u/s 132A of the Act was made during the FY 2019-20, which corresponds to the AY 2020-21. However, in the case of the appellant, the AO appears to have erroneously proceeded on the basis that the search and seizure u/s 132A of the Act was conducted on 18.04.2020, thereby initiating assessment proceedings u/s 153A of the Act for the AY 2019-20 by issuing a notice u/s 153A of the Act dated 27.02.2021. Consequently, the assessment was completed for AY 2019-20, and an addition of Rs. 12,00,000/- was made under the mistaken belief that the relevant assessment year for the requisition was AY 2019-20. This action, being based on an incorrect understanding of the date of requisition, is not in accordance with the provisions of the Act and renders the assessment for AY 2019-20 as without jurisdiction. 5.6 In view of the specific finding that the search u/s 132A of the act was effected in the FY 2019-20 relevant to AY 2020-21, the addition contemplated by the AO for the AY 2019-20 is invalid as the same was made without jurisdiction. Therefore, the ground raised by the appellant upon this issue is hereby treated as allowed and the order passed u/s 153A of the Act on 15.09.2021 for the AY 2019-20 is hereby annulled as the AO has assumed an invalid jurisdiction. Consequently, all the other grounds raised on merits of the addition are hereby treated as allowed.

5.

We agree with the impugned action of the Ld.CIT(A), since the undisputed fact is that the fact in issue i.e. Rs.12 lakhs was seized on 14.04.2019, which is an event which falls for consideration in AY 2020-21 and hence, the finding of the Ld.CIT(A) that the AO erred in bringing to tax the seizure dated 14.04.2019 (AY 2020-21) by framing the assessment for AY 2019-20 as invalid is correct in law. It is settled position of law that the AO has to tax the ‘right income’ in the ‘right hands’, in the ‘right year’. Reference in this regard can be placed on the

ITA No.4089/Chny/2025 (AY 2019-20) Maruthupandian Neethi Dhevan :: 7 :: decision of Hon’ble Supreme Court in the case of ITO Vs. Ch.Atchaiah [1996] 218 ITR 239 wherein it was held as under : “7. In our opinion, the contention urged by Dr. Gauri Shanker merits acceptance. We are of the opinion that under the present Act, the ITO has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By 'right person', we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression 'wrong person' is obviously used as the opposite of the expression 'right person'. Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the revenue. In our opinion, the language of the relevant provisions of the present Act is quite clear and unambiguous. Section 183 of the Act shows that where the Parliament intended to provide an option, it provided so expressly. Where a person is taxed wrongfully, he is, no doubt, entitled to be relieved of it in accordance with law but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the Assessing Officer[Income Tax Officer] has taxed the said income in the hands of another person contrary to law. We may proceed to elaborate.” 6. In the light of the undisputed fact that seizure of Rs 12 Lakhs took place on 14.04.2019, the AO erred in bringing it to tax in this AY 2019- 20. Hence the Ld CIT(A) rightly deleted it, which we concur and dismiss the appeal of Revenue. 7. In the result, appeal of Revenue is dismissed.

Order pronounced on the 09th day of July, 2026, in Chennai. Sd/- Sd/- (एबी टी. वक�) (एस. आर. रघुनाथा) (ABY T. VARKEY) (S.R.RAGHUNATHA) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated: 09th July, 2026. YS

YASHVI Digitally signed by YASHVIR SINGH R SINGH Date: 2026.07.20 15:09:33 +05'30'

ITA No.4089/Chny/2025 (AY 2019-20) Maruthupandian Neethi Dhevan :: 8 :: 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

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