THIRUVASAGAM SATHIYAMOORTHY,MADURAI vs. ACIT, NON CORPORATE CIRCLE,MADURAI, MADURAI

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ITA 2954/CHNY/2025Status: DisposedITAT Chennai30 April 2026AY 2011-1219 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal upheld the deletion of additions related to unexplained investment in property (Rs. 4,23,12,933). It found that Rs. 2.82 crore was directly advanced by Shri Murugan Enterprises to the vendor, substantiated by bank records and third-party confirmation. The remaining Rs. 1.40 crore was held to be sourced from the assessee's estimated current year income, applying the telescoping principle. The Tribunal dismissed the Revenue's ground of appeal on this issue. Regarding unsecured loans (Rs. 2,58,56,000) and cash credits (Rs. 58,81,300), the judgment indicates these were part of the assessee's appeal, which was allowed for statistical purposes, implying these additions were not fully upheld or were to be re-examined. The specific findings on these two issues are not fully detailed in the provided excerpt, but the overall result suggests partial relief for the assessee.

What were the facts?

The case involves cross-appeals by the assessee and the Revenue for Assessment Year 2011-12. The assessee, Mr. Thiruvasagam Sathiyamoorthy, did not file an income tax return for the relevant financial year. The Assessing Officer (AO) reopened the assessment and made several additions, including unsecured loans (Rs. 2,58,56,000), sundry creditors (Rs. 3,07,92,589), unexplained investment in property (Rs. 3,82,60,000), and cash credits (Rs. 58,81,300). The Commissioner of Income Tax (Appeals) granted partial relief, deleting additions related to sundry creditors and unexplained investment in property, but confirming additions for unsecured loans and cash credits. The assessee appealed against the confirmed additions, while the Revenue appealed against the deletions.

What were the issues?

1. Whether the addition of Rs. 2,58,56,000/- on account of unsecured loans is sustainable under Section 68 of the Income Tax Act, 1961, despite the assessee providing creditor confirmation, ledger accounts, and bank statements. The assessee argued that sufficient evidence was provided to substantiate the nature and source of the loans. The Revenue contended that the assessee failed to substantiate the source. 2. Whether the addition of Rs. 58,81,300/- on account of cash deposits made from withdrawals from other bank accounts is sustainable under Section 68 of the Income Tax Act, 1961. The assessee argued that a reconciliation statement showing a nexus between withdrawals and deposits was provided. The Revenue argued that there was a time gap undermining the claim of a direct nexus. 3. Whether the deletion of additions of Rs. 3,07,92,589/- towards sundry creditors and Rs. 4,23,12,933/- towards unexplained investment in property was justified, despite alleged non-cooperation and failure to produce complete books of account. The Revenue relied on Supreme Court decisions in Roshan Di Hatti and Kale Khan Mohammed Hanif, emphasizing the assessee's onus to prove the source of funds.

Which sections of the Income-tax Act were involved?

Section 68,Section 69,Section 194C,Section 194A,Section 147,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, *C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 09.02.2026

Heard together (2 matters)

ITA No.2954/Chny/2025
ITA No.3325 /Chny/2025

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अधिकरण, ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI श्री एबी टी. वर्की, न्यायिर्क सदस्य एवं सुश्री पद्मावती. एस., लेखा सदस्य के समक्ष BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND MS. PADMAVATHY. S, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2954/Chny/2025 ननिाारणवर्ा/Assessment Year: 2011-12 Mr. Thiruvasagam v. The ACIT, Sathiyamoorthy, Non Corporate Circle, No.50, Kalai Nagar First Main Madurai. Road, Thapal Thanthi Nagar, Madurai-625 017. [PAN: APPPS4213K] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) आयकर अपील सं./ITA No.3325 /Chny/2025 ननिाारणवर्ा/Assessment Year: 2011-12 The ACIT, v. Mr. Thiruvasagam Non Corporate Circle, Sathiyamoorthy, Madurai. No.50, Kalai Nagar First Main Road, Thapalthanthi Nagar, Madurai-625 017. [PAN: APPPS4213K] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) Assessee by : Mr.B. Ramakrishnan, CA Department by : Mr.Bipin C.N., CIT सुनवाईकीतारीख/Date of Hearing : 09.02.2026

घोर्णाकीतारीख /Date of : 30.04.2026 Pronouncement आदेश / O R D E R PER ABY T. VARKEY, JM: These are cross-appeals preferred by the assessee as well as the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 2 :: 30.09.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2011-12.

2.

The assessee has raised the following grounds of appeal in ITA No.2954/Chny/2025:

1.

The Learned Commissioner of Income-tax (Appeals), NFAC has erred in confirming the addition of Rs.2,58,56000/- made by the Assessing Officer on account of unsecured Loan even after submission of confirmation from the creditor viz. Ledger account copy of relevant portion of bank account in the books of Accounts of the creditor where the payments to the appellant are clearly mentioned along with the relevant portion of Bank Pass Sheet of appellant where the funds got credit for verification. 2. The Learned Commissioner of Income-tax (Appeals), NFAC has erred in confirming the cash payment made into the Bank Account to the tune of Rs.58,81,300/- which has been made by the appellant from out of withdrawal from his other Bank accounts u/s.68 of the I.T. Act in order to meet the cheque payments even after perusal of the reconciliation statement submitted showing a clear and proximate nexus between the withdrawals and subsequent deposits, most of which occurred on the same day by stating in his order under point No.12.4 as " in fact, there is time gap between withdrawal and redeposits, which undermines the claim of direct nexus". For these Grounds and such other grounds that might be adduced at the time of appeal hearing, Your appellant prays for deletion of additions of Rs.2,58,56,000/- and Rs.58,81,300/- and thus justice be rendered. 3. The Revenue raised the following grounds of appeal in ITA No.3325/Chny/2025:

(1) The order of the Ld. CIT(A) is opposed to law on the facts and in the circumstances of the case. (2) The Ld. CIT(A) failed to appreciate the fact that the addition u/s 69 was made since the assessee failed to substantiate the source for Rs.4,23,12,933/- with evidences. (3) The Ld. CIT(A) failed to appreciate the fact that the addition u/s 68 was made since the assessee failed to substantiate the source for Rs.3,07,92,589/- with evidences. (4) The Ld. CIT(A) failed to consider the decisions of Hon'ble Supreme Court in the cases of Roshan Di Hatti V. CIT (1977) 107 ITR 938(SC) and Kale Khan Mohammed Hanif V.CIT(1963) 50 ITR 1(SC) in which it was held that the onus of proving the source of sum of money found to have been received by an assessee is on him.

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 3 :: (5) The Ld. CIT(A) erred by deleting the additions of Rs.4,23,12,933/- and Rs.3,07,92,589/-despite upholding the findings of non-co-operation and failure to produce complete books of account or supporting vouchers. (6) For these and such other grounds that may be adduced at the time of hearing and it is prayed that the order of the Ld. CIT(A) may be reversed and that of the Assessing Officer be restored.

4.

Brief facts of the case are that the assessee is an individual, who didn’t file return of income (RoI/ITR) for the FY 2010-11 relevant to the subject AY 2011-12. The Assessing Officer (AO) received information that assessee had carried out various transactions during the FY 2010-11, viz purchased immovable property of value exceeding Rs.30,00,000/- (Rs.2.80 crores), sold immovable property of value exceeding Rs.5,00,000/- (Rs.1.61 crores), received contract payment of Rs.20,94,88,615/- for which tax has been deducted (TDS) u/s.194C of the Act and interest other than interest on securities for which tax has been deducted u/s.194A of the Income Tax Act, 1961 (in short “the Act”), but didn’t file his ITR. Hence the AO reopened the assessment on 28.03.2018 u/s.147 of the Act. In response, the assessee filed his return of income on 26.07.2018 declaring total income of Rs.96,47,790/- and furnished certain details called for by AO on 21.12.2018 and 26.12.2018. Thereafter, the AO issued summons to (i) Indian Overseas Bank, Arignar Anna Nagar Branch, Madurai and obtained the bank statements; (ii) Summons were also issued to the Sub-Registrar, Chokkikulam, Madurai and the Joint Sub- Registrar, Madurai North, seeking details of property transactions

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 4 :: undertaken by the assessee during the relevant year. Thereafter, the AO issued show-cause notice (SCN) dated 19.12.2018, proposing to complete the assessment under section 144 of the Act and then passed ‘best judgement assessment’ under section 144 of the Act, assessing the total income at Rs.63,30,06,155/- by making the following additions:

Nature of Addition Amount (Rs.) Unexplained Cash Credit: 1. Increase in Unsecured Loans 2,58,56,000/- 5. 2. Increase in Sundry Creditors 3,07,92,589/- Unexplained Investment: Purchase of Immovable 3,82,60,000/- Property Unexplained Money: 1. Cash credits 58,81,300/- 2. Contract Receipts 41,89,77,230/- 3. Interest 3,21,774/- Unexplained Expenditure 10,32,69,472/- Total of Additions 62,33,58,365/-

5.

Aggrieved by the above additions made in the assessment order, the assessee filed an appeal before the Learned Commissioner of Income Tax (Appeals) (“CIT(A)”) on 30.01.2019 and filed certain relevant documentary evidences, which he couldn’t file during assessment proceedings. Hence, Ld CIT(A) called for a remand report from AO, pursuant to it the AO submitted a remand report dated 28.10.2022, wherein the AO inter alia proposed (i) estimation of profit at 8% of total contract receipts, (ii) deletion of interest expense and (iii) deletion of disallowance of expenditure. The assessee accepted the estimation of

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 5 :: profit at 8% of the total contract receipts. And based on the same and submissions of the assessee, the Ld CIT(A) gave part relief to assessee, which is as follows: -

Unexplained Cash Credits: Unsecured Loans- Confirmed the addition of Rs.2,58,56,000/- o towards increase in unsecured loans stating that the Assessee failed to substantiate the nature and source of the said loans. Sundry Creditors- Deleted the addition of Rs.3,07,92,589/- towards o increase in sundry creditors holding as follows:  (b) Unexplained Investment – Deleted the addition of Rs.3,82,60,000/- towards alleged unexplained investment pertaining to purchase of property.  (c) Unexplained Money: o Cash Credits – Confirmed the addition of Rs.58,81,300/- stating that the Assessee failed to produce contemporaneous cash book, cash flow statement, or reconciliation to establish nexus between withdrawals and redeposits. 6. Aggrieved, both parties has preferred cross-appeals before this Tribunal viz Assessee against confirmation of additions relating to unsecured loans of Rs.2,58,56,000/- and cash deposits of Rs.58,81,300/-; and Revenue against deletion of additions relating to sundry creditors of Rs.3,07,92,589/- and unexplained investment of Rs.4,23,12,933/- towards purchase of property [in assessment order, the AO made addition of Rs.3,82,60,000/- in this regard].

7.

First, we will take up assessee’s Appeal, against addition sustained u/s.68 of the Act towards increase in unsecured loans amounting to Rs.2,58,56,000/-.

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 6 :: 8. Heard both parties and perused the records. It is noted that the AO is noted to have treated the increase in unsecured loans from an opening balance of Rs.3,76,200/- [as on 31.03.2010] to a closing balance of Rs.2,62,32,200/- [as on 31.03.2011] as unexplained cash credits alleging assessee’s failure to establish the nature and source of the credit. On appeal, the assessee is noted to have filed documents to substantiate the nature and source of credit in his books. Hence, the Ld CIT(A) called for remand-report from AO. During the remand proceedings, the assessee is noted to have provided a breakup of the creditors of impugned Rs.2,58,56,000/- as follows:

a) Ajentha Tea Co. Shenkottai - Rs.10,00,000/- b) C. Umarajan, Shenkottai - Rs.1,00,000/- c) S.K. Lakshmi Vinayagam, Shenkottai - Rs.2,00,000/- d) Advance from Velammal Educational Trust Rs.2,45,56,000/-

9.

Before the AO, the assessee is noted to have explained that the major component classified under ‘unsecured-loan’ relates to amount received from M/s Velammal Educational Trust, which was inadvertently classified under the heading ‘unsecured loan’, whereas, it represents ‘business advances’ received for executing construction work for it. To substantiate the contention, the Assessee is noted to have furnished the following relevant documents:

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 7 ::  Velammal Educational Trust’s Bank Book (Paper-book Page No.21)  Ledger Account of Velammal Educational Trust in the books of the Assessee (Paper-book Page No.22)  Assessee’s Bank Account Statement (Paper-book Page No.23)

10.

However, the AO in his remand-report, (without making any independent verification) is noted to have reiterated his earlier stand of holding the credit of Rs.2,58,56,000/- as unexplained, which was endorsed by Ld CIT(A). Assailing the action of AO during remand proceedings and the impugned action of Ld CIT(A), the Ld AR of the assessee submitted that assessee by producing the primary evidence albeit during remand proceedings, has discharged the burden of proving the nature and source of the credit/transaction in question. And hence the AO erred in reiterating the addition without conducting any enquiry or verification. In order to, prove nature and source of the amount advanced of Rs.2,45,56,000/- from M/s Vellamal Education Trust, the Ld. AR drew our attention to copy of the bank statement, ledger of Vellamal Education Trust found placed at Page No.21 PB wherein we find that Rs.2 crores and Rs.45,56,000/- was paid by cheque on 03.04.2010 & 13.04.2010 respectively to assessee’s proprietary concerned “Team Crust Construction”. The said fact is found corroborated by a perusal of copy of Vellamal Ledger in the books of assessee found placed at Page No.22 to 23 PB. Thus, we find that Assessee has discharged the burden to prove

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 8 :: the source of the amount originating from M/s Vellamal Education Trust, but failed to prove the nature of the amount received from M/s Vellamal Education Trust, which Assessee was bound to discharge. Since the assessee has placed evidence to prove the source of receipt, and claimed the same to be business-advance, then the AO ought to have carried out enquiry/verification regarding the veracity of the claim regarding the nature of Rs.2,45,56,000/-, which AO didn’t carry out. Before disbelieving the explanation offered by the assessee regarding the nature of the credit of Rs.2,45,56,000/-, the AO was expected to discharge his dual role of investigator as well as that of an adjudicator, which he failed to do. Hence, considering the overall facts and circumstance of the case, we are inclined to set aside the impugned addition of Rs.2,45,56,000/-, back to the file of JAO (Jurisdictional Assessing Officer) for verification of the assessee’s claim that the nature of Rs.2,45,56,000/- was advance received by the assessee for execution of contract/construction work for M/s Vellammal Education Trust. The assessee is expected to file relevant documents to substantiate the said claim before the JAO without fail and the AO to pass order in accordance to law after hearing the assessee on the impugned addition of Rs.2,45,56,000/- was classified under unsecured loan

11.

Coming to the balance amount of Rs.13,00,000/- from three (3) parties shown supra, we find that assessee didn’t adduce any evidence to

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 9 :: substantiate the claim that he received it as un-secured loan from the said parties, hence the addition of Rs.13,00,000/- is confirmed.

12.

Before parting we would like to deal with the assessee’s general proposition that since AO has estimated the profit of assessee from its business of construction at the @ 8% of Turn-Over, (which has crystallized, since assessee has not contested it) no further disallowance should be made under section 68 of the Act, which plea, we don’t countenance for the reason that AO hasn’t rejected the books as contemplated u/s 145 of the Act and then estimated the income u/s 144 of the Act, because, there was no occasion to reject books, reason being no books of account were furnished by assessee before the AO. Hence AO has estimated income considering the business of assessee and estimated the income at 8% of the turnover shown by the assessee. Hence, we are of the view that impugned additions/disallowances which are intrinsically connected with the business should be presumed to be subsumed, and then no disallowance/addition should be sustained on those issues. Unlike the same, when assessee claims to have taken loan, or amount for purchase of immovable property as in this case, then assessee has to prove the nature and source of loan/investment. As noted though Rs.2,45,56,000/- was classified under ‘unsecured-loan’, when asked by AO to prove the nature & source of it, assessee explained to AO that it was advance received from M/s Velammal Educational Trust, which was

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 10 :: inadvertently classified under the heading ‘unsecured loan’, whereas, it represents ‘business advances’. And proved the source, but, failed to prove the nature of the same. Hence, we remanded it back to JAO to adduce evidence to prove the nature of transaction. And, if assessee is able to show that Rs.2,45,56,000/- was business advance, then no disallowance is warranted.

13.

Next, addition sustained u/s.68 towards unexplained Cash- Deposits amounting to Rs.58,81,300/-

14.

The AO treated the ‘cash deposits’ made in assessee’s bank account maintained at Indian Overseas Bank Account No.65102000006666 an amount of Rs.58,81,300/- which was added by the AO as unexplained u/s 68 of the Act on the ground that the Assessee failed to furnish any relevant documentary evidence, to prove the nature and source of such deposit. The Assessee, during the remand proceedings and appellate proceedings, submitted that the cash deposits of Rs.58,81,300/- represents redeposit of amounts withdrawn from other bank accounts (SBI Madurai Account No.30719015113 and IOB Trichy Account No.5382 and IOB SB Account No.32485) for the purpose of meeting cheque payments and furnished details of the said transactions i.e. source for the said cash deposits along with the relevant bank statements for verification refer Paper book Page No.29 to 30. However, neither the AO in the

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 11 :: remand-report nor the Ld CIT(A) accepted the explanation of assessee and confirmed the impugned addition by observing as under; -

12.

Ground No. 12: Addition on Cash Deposits under Section 68. 12.1 In the assessment order, the Assessing Officer treated cash deposits of Rs. 58,81,300/- in the appellant's bank accounts as unexplained cash credits under Section 68. The AO noted that these deposits were not reconciled with the books of account, which were not produced, and therefore concluded that the same represented unexplained income of the appellant. 12.2 In the remand proceedings, the Assessing Officer reiterated that in the absence of books of account, the cash deposits could not be linked with recorded income. It was further noted that the assessee had not furnished a satisfactory explanation with documentary evidence at the time of assessment. The remand report, therefore, recommended that the addition be sustained. 12.3 The appellant, in rejoinder, has argued that the cash deposits represented redeposit of amounts withdrawn from other bank accounts for the purpose of meeting cheque payments. It was submitted that complete bank statements were flied establishing a direct trail of withdrawals followed by redeposits, and thus there was no element of unaccounted income. Reliance was placed on judicial pronouncements including CIT v. Bhaichand H. Gandhi (141 ITR 67, Bom HC), CIT v Glocom Impex (P.) Ltd (299 ITR 39, Del HC), and S. Hastimal v. CIT (49 ITR 273, Mad HC), which hold that where there is a plausible and verifiable nexus between cash withdrawals and redeposits, Section 68 cannot be invoked. The appellant has further submitted that since income has already been estimated under Section 44AD, no separate addition of cash deposits is permissible, as it results in duplication of income. 12.4 I have carefully considered the submissions of the appellant, the findings of the Assessing Officer, and the remand report. The law is well settled that the initial onus under Section 68 rests upon the assessee to explain the nature and source of the credit in his books. While the appellant has argued that cash deposits represent redeposit of earlier withdrawals, no contemporaneous cash flow statement, day-wise cash book, or reconciliatory statement has been produced. The bank statements alone, without a supporting cash book, cannot establish that withdrawals and deposits are co-related and intended for banking accommodation. In fact, there is a time gap between withdrawals and redeposits, which undermines the claim of a direct nexus.

15.

Aggrieved, the assessee is before us. The Ld AR asserted that the assessee established the direct trail of withdrawals followed by redeposits, and drew our attention to Page No.29 to 30 PB from which we note that the amount in question i.e. Rs.58,88,300/- was deposited in two bank accounts of the assessee i.e. (break-up) in IOB Anna Nagar Madurai

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 12 :: Current Account No. 65102000006666 of Rs.48,31,300/- and IOB Main Branch Madurai SB Account No.0049010000032485 an amount of Rs.10,50,000/-. Assessee has placed before us copy of the cash withdrawal/cash deposit details of the relevant year, from which it was brought to our notice that assessee has withdrawn cash from its SBI Madurai account, IOB Trichy account, IOB SB account (in assessee’s name) an amount of Rs.84,39,000/- and deposited the same in both the bank account stated supra. The Ld.AR submitted that the Ld.CIT(A) erred in finding that the assessee failed to file cash-book, whereas assessee had filed the same along with reconciliatory statement before the AO albeit during the remand proceedings. He also brought to our notice that assessee had filed the following documents before the AO to substantiate his said claim:-

(i) Detailed cash withdrawal from bank and remittance into the Bank. (ii) Details of cash remittance into the IOB 32485 and IOB MDU 6666. (iii) Cash-book pertaining to Madurai, Trichy, Chennai and T. Sathyamoorthy (TSM) along with relevant bank pass sheets.

16.

Thus, according to assessee, the Ld.CIT(A) erred in not accepting the assessee’s contention that the cash deposit represent redeposit of earlier withdrawals in the absence of cash-book, etc. According to the Ld.AR assessee had demonstrated with the aid of cash-book and bank

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 13 :: statement that the impugned cash deposits were made out of cash withdrawals and there is no element of unaccounted income. Hence Ld AR pleaded for deleting the addition. However, we note that assessee didn’t file a copy of the cash-book, etc before this Tribunal. However, considering the assertion made by the assessee before us that despite furnishing cash-book, and bank statements before AO/CIT(A), they erred in not accepting assessee’s claim that the impugned cash-deposits represent redeposit of earlier withdrawals, we are of the view that assessee should be given one more opportunity before the JAO to prove its claim. Hence, for the interest of justice and fair play we are inclined to set aside the issue back to the file of JAO (Jurisdictional Assessing Officer) for verification of the assessee’s claim that the cash deposits are made only out of cash withdrawals. And if the assessee is successful in showing that the cash deposits represent redeposit of earlier withdrawals with support of cash-book, reconciliatory statement and the bank statements, then AO may delete the addition or else the same may be confirmed. This issue is allowed for statistical purposes.

17.

Coming next to Revenue’s Appeal, regarding deletion of Rs.3,07,92,589/-.

18.

The AO is noted to have treated the increase in sundry creditors from opening balance of Rs.5,01,36,235/- as on 31.03.2010 to closing

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 14 :: balance of Rs.8,09,28,824/- and added a sum of Rs.3,07,92,589/- as on 31.03.2011 as unexplained cash credit u/s.68 of the Act. On appeal, the assessee brought to the notice of the Ld.CIT(A) that the same was from several parties, details were furnished before Ld CIT(A).

19.

The Ld.CIT(A) is noted to have called for Remand Report from the AO and the AO after going through the relevant documents submitted by the assessee has acknowledged that assessee has furnished the breakup of details of sundry creditors showing name, address and PAN, opening balance, receipts and payments during the year and closing balance vide letter dated 03.02.2020, 26.11.2021 & 10.12.2021 by observing at Page No.8 Para No.4.2 of the Remand Report which is reproduced as under: 4.2. The assessee has also furnished the break up details of sundry creditors showing name and address and PAN available, opening balance, receipts and payments during the year and closing balance vide letter dated 03.02.2020, 26.11.2021 & 10.12.2021

20.

Based on the aforesaid Remand Report, the Ld.CIT(A) has deleted the addition by observing as under at Para No.11.4 Page No.34 of the impugned order, which is reproduced as under: 11.4 However, with respect to sundry creditors, I find merit in the appellant's contention. The remand report itself acknowledges that the appellant furnished a breakup along with names, PAN and addresses of the parties. A substantial portion of the sundry creditor balance relates to Rs. 2,82,35,000/- from Sri Murugan Enterprises, routed directly to the seller of property, Shell India Markets Pvt. Ltd. The assessee has produced confirmation from Sri Murugan Enterprises and supporting bank statements evidencing this transaction. Once such evidence is placed on record, the onus shifts to the Department to make further enquiry. The Assessing Officer has not carried out any independent verification and has summarily

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 15 :: rejected the explanation. Further, it is well settled that when business income is determined on estimation basis, no separate addition for sundry creditors is warranted, as it leads to duplication of income. In view of these facts and settled legal position, I hold that the addition on account of sundry creditors cannot be sustained.

21.

Aggrieved by the aforesaid action, the Revenue is before us. We find that the assessee during the remand proceedings has furnished the name, PAN and address of the parties; and in his Remand Report as noted supra, the AO has acknowledged that the assessee has submitted the relevant details and has not made any negative observation regarding the veracity of the same; and hence no infirmity can be imputed against the list of sundry creditors supra. In such a scenario, assessee is noted to have discharged the burden of proving the nature and source of the amount reflected against sundry creditors, and therefore, the addition made u/s.68 of the Act, according to us, has been rightly deleted by the Ld.CIT(A). In any case, the AO has estimated the profit of assessee’s business from construction at 8% of Turn-Over, which estimation of income has crystallized, [since assessee is not in appeal], hence, no separate addition of sundry creditor needs to be separately saddled on assessee. On the aforesaid reasons, the impugned action of Ld CIT(A) doesn’t call for any interference from our part and therefore, we confirm the same and dismiss this ground of appeal of the Revenue.

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 16 :: 22. Next, regarding deletion of addition of Rs.4,23,12,933/-, (originally the AO made addition on this issue of Rs.3,82,60,000/-). In this regard, it is noted that the AO while framing the original assessment order has made an addition of Rs.3,82,60,000/- on the ground that assessee could not prove the nature and source of the investment made in purchase of immovable property. On appeal, the Ld.CIT(A) is noted to have called for Remand Report from the AO; and in his remand-report the AO is noted to have acknowledged that assessee has produced relevant documents to prove the investments to the tune of Rs.4,23,12,933/-. But the AO doubted the source for making such investments and hence, he was of the view that assessee couldn’t explain the source for investment of Rs.4,23,12,933/- in place of original addition he made of Rs.3.82,60,000/- as unexplained investment. In this regard, the Ld.CIT(A) has noted that the assessee has explained the source of Rs.2.82 crores, which was loan taken by assessee from M/s.Shree Murugan Enterprises Pvt. Ltd for purchasing an immovable property, which amount was paid directly by M/s.Shree Murugan Enterprises Pvt. Ltd. to the vendor (M/s Shell India), which fact was substantiated by the bank statement and party’s confirmations. Such an explanation being supported by relevant materials, Ld CIT(A) is noted to have accepted the source of Rs.2.82 crores out of total investment in properties of Rs 4.23 crores. In respect of the balance amount of approximately Rs.1.40 crores, the Ld.CIT(A) taking note of the

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 17 :: current year income of the assessee which was estimated income by AO at Rs.1,79,33,668/- (i.e. 8% of Rs.22,41,70,849/-) telescoped the same and held same [ i.e. source of Rs.1.40 crores was out of the current year income]. Thus, the Ld.CIT(A) accepted the explanation of the assessee’s source of Rs Rs.4,23,12,933/- by observing as under: “9. Grounds 5 and 6: Addition on Immovable Property under Section 69. 9.1 In the assessment order, the Assessing Officer recorded that the assessee had purchased immovable property worth Rs. 3,82,60,000/-. However, the computation was inconsistent, as at one stage the AO noted property purchases of Rs. 2.80 crore and sales of Rs. 1.61 crore, but while making the addition he adopted Rs. 3.82 crore without disclosing the nature, particulars, or details of the properties. The AO concluded that the same constituted unexplained investment under Section 69. 9.2 In remand proceedings, the AO reiterated that the assessee had not produced proper books of account or agreements for property purchases. However, the assessee subsequently furnished ledger copies, bank statements, and confirmation from Shri Murugan Enterprises, showing that Rs. 2.82 crore was directly advanced by Shri Murugan Enterprises to Shell India Markets Pvt. Ltd. towards the property purchase, and only Rs. 1.40 crore was invested from business receipts. The AO. however, recommended sustaining the addition for want of contemporaneous corroboration. 9.3 In rejoinder, the assessee submitted that Shri Murugan Enterprises is a duly assessed concern, and the advance of Rs. 2.82 crore was reflected in their balance sheet as sundry debtors. It was further clarified that the balance Rs. 1.40 crore came out of business income already offered to tax, and thus telescoping principle would apply. Reliance was placed on CIT v K.M. Gopala (2014) 369 ITR 115 (Kar HC) and CIT v. Bhaichand H. Gandhi (141 ITR 67, Bom HC), contending that when sources are traceable through banking channels, no addition under Section 69 can be made. 9.4 I have carefully considered the rival contentions. It is a settled position that under Section 69, the onus is on the assessee to prove the nature and source of investments with cogent evidence. The assessee has demonstrated that Rs. 2.82 crore was not an investment out of his own unexplained funds but was a direct payment by Shri Murugan Enterprises to the vendor. This fact is substantiated by bank records and third-party confirmation, which discharges the assessee's initial burden. Once such evidence is produced, the AO cannot make an addition merely by rejecting the explanation without conducting further enquiry. 9.5 As regards Rs. 1.40 crore invested from business receipts; I note that the assessee's income from contracts has already been estimated at Rs.

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 18 :: 1.79 crore by the AO in the remand proceedings. Hence, telescoping of the investment against such estimated income is permissible, in line with judicial precedents. Therefore, there is no justification to sustain a separate addition under Section 69. 9.6 Accordingly, the addition of Rs. 4,23,12,933/- under Section 69 is deleted. These grounds are allowed.”

23.

Aggrieved the Revenue is before us. We have heard both the parties and we note that the assessee has brought to the notice of the AO that Rs.2.82 crores was directly advanced by M/s. Shree Murugan Enterprises Pvt. Ltd. to vendor M/s.Shell India Markets Pvt. Ltd. towards the property purchase by producing the bank statement which shows that payment directly being credited/remitted on 14.07.2010 by the M/s.Shree Murugan Enterprises to the vendor M/s. Shell India Markets Pvt. Ltd. which fact is found to be corroborated by perusal of copy of the letter of confirmation from M/s Shree Murugan Enterprises found placed at Page 24-25 PB and also from perusal of copy of the Shree Murugam Enterprises ledger in the books of the assessee found placed at Page No.26 to 28 PB. Further it is found that the assessee has given back Rs.90,00,000/- [out of Rs 2.82 cr] on 6th October, 2010 to Shree Murugan Enterprises. Hence, the total credit in favour of M/s Shree Murugan Enterprises during the F.Y.2010-11 stands reduced to Rs.1,92,35,000/- (Rs.2,82,35,000/- minus Rs.90,00,000/- is Rs.1,92,35,000/-), which is duly reflected in assessee’s financial. Hence the Ld CIT(A) accepted the source of Rs 2.82 cr. for purchase of property. And in respect of the balance amount of Rs.1.40

ITA Nos.2954 & 3325/Chny/2025 (AY 2011-12) Mr. Thiruvasagam Sathiyamoorthy :: 19 :: crores, the Ld.CIT(A) taking note of the current year income of the assessee which was estimated by AO at Rs.1,79,33,668/- (i.e. 8% of Rs.22,41,70,849/-) is noted to have telescoped the investment against the estimated income, and thus accepted the source of balance amount of Rs.1.40 crores. Thus, we find the Ld.CIT(A) accepted the explanation of the assessee’s source of Rs Rs.4,23,12,933/- to invest in purchase of immovable properties, which view is a plausible view, which cannot be termed as perverse and hence, we uphold the same and dismiss the ground of appeal of the Revenue.

24.

In the result appeal of the Revenue stands dismissed and assessee’s appeal is partly allowed for statistical purpose. Order pronounced on the 30th day of April, 2026, in Chennai.

Sd/- Sd/- (पद्मावती .एस) (एबी टी. वर्की) (PADMAVATHY. S) (ABY T. VARKEY) लेखा सदस्य/ACCOUNTANT न्यानयक सदस्य/JUDICIAL MEMBER MEMBER चेन्नई/Chennai, ददनांक/Dated: 30th April, 2026. KB आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकरआयुक्त/CIT, Chennai / Madurai / Salem / Coimbatore. 4. विभागीयप्रविविवि/DR 5. गार्डफाईल/GF

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