INCOME TAX OFFICER WARD-6(1)(1), BANGALORE, BANGALORE vs. VIDEM SUNITHA, BANGALORE

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ITA 2726/BANG/2025Status: DisposedITAT Bangalore11 June 2026AY 2022-236 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal affirmed the deletion of the addition made under Section 69A. It held that the assessee had provided sufficient documentary evidence, including bank statements and confirmations, to demonstrate the source of funds through disclosed banking channels.

What were the facts?

The assessee, engaged in saree trading and opting for presumptive taxation under Section 44AD, made substantial advances. The Assessing Officer treated these advances as unexplained money under Section 69A, making an addition to income.

What were the issues?

Whether advances made by an assessee opting for presumptive taxation can be treated as unexplained money under Section 69A without disproving the documentary evidence and banking trail provided.

Which sections of the Income-tax Act were involved?

Section 69A,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

For Appellant: Shri Mahesh Kumar L, Advocate
For Respondent: Ms. Shruthi BL, Addl CIT (DR)
Hearing: 04.06.2026Pronounced: 11.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER

ITA No.2726/Bang/2025 Assessment Year: 2022-23 The Income Tax Officer, Vs. Videm Sunitha, 56, 3rd Cross, Ward – 6(1)(1), Bengaluru. Chowdeshwari Layout, Yelahanka, Jakkur B.O Naganahalli, Bengaluru – 560 064. PAN – DSLPS 1114 K APPELLANT RESPONDENT Assessee by : Shri Mahesh Kumar L, Advocate Revenue by : Ms. Shruthi BL, Addl CIT (DR) Date of hearing : 04.06.2026 Date of Pronouncement : 11.06.2026 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:

The present appeal filed by the assessee pertaining to A.Y. 2022- 23 is directed against the order of the learned Commissioner of Income Tax (Appeal) (hereafter- the learned CIT(A)) under section 250 of the Income Tax Act, 1961 (hereafter- the Act) vide order dated 25/09/2025.

2.

The issued raised by the Revenue is that ld. CIT-A erred in deleting the addition made by the AO ₹2,57,00,000 under section 69A of the Act

ITA No.2726/Bang/2025 Page 2 of 6 on account of alleged unexplained money in respect of advances made by the assessee during the year relevant to AY 2022–23.

3.

The assessee, an individual engaged in saree trading/manufacturing business, had filed her return of income under section 44AD of the Act declaring presumptive income. The case was selected for scrutiny to examine the source of substantial advances shown in the books/financial records. During assessment proceedings, the assessee furnished bank statements, ledger accounts, sales register, and confirmations from the concerned party, explaining that the advances were made out of business receipts routed through disclosed bank accounts. However, the Assessing Officer disregarded the explanation on the ground that the assessee failed to substantiate the immediate source of funds for such advances and treated the entire amount of ₹2.57 crore as unexplained money under section 69A of the Act, thereby making a consequential addition to the income of the assessee.

4.

Before the CIT(A), the assessee reiterated that the addition was legally unsustainable as the entire transaction flow was through disclosed banking channels and the source of funds was fully traceable from the bank statements and ledger accounts already placed on record. It was further submitted that since the assessee had opted for presumptive taxation under section 44AD, there was no statutory obligation to maintain regular books of account, and therefore the basic precondition for invoking section 69A of the Act itself was not satisfied. The assessee emphasized that the bank credits forming the basis of alleged investment were never doubted by the Assessing Officer and no adverse material was brought on record to disprove the explanation or the documentary evidence

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ITA No.2726/Bang/2025 Page 3 of 6 furnished. It was argued that the addition was made purely on presumption without any corroborative inquiry into the banking trail or confirmation filed from the concerned party. The ld. CIT-A, after considering the submission of the assessee deleted the addition made by the AO by observing as under: 7. Decision: 7.1 I have carefully considered the order of assessment, grounds of appeal, written submissions of the appellant, and the material placed on record. The sole dispute is with respect to the addition of Rs. 2,57,00,000/- made by the AO under section 69A of the Income-tax Act, 1961. Applicability of Section 69A 7.2 Section 69A is a deeming provision. It applies where the assessee is found to be the owner of money, bullion, jewellery, etc, which is not recorded in the books of account, if any, maintained by him and the assessee either offers no explanation or the explanation offered is not, in the AO's opinion, satisfactory. Page 13 of 15 OSLPST14KVI ar 1BMNFAG/S/2602025-26/1н 7.3 In the instant case, the appellant computed her income under the presumptive provisions of section 44AD. Once income is offered under section 44AD, the assessee is not required to maintain books of account under section 44AA. Thus, the very precondition for invoking section 69A - non-recording in books of accountdoes not arise. The Hon'ble Delhi High Court in CIT v. Hersh W. Chadha [2011] 336 ITR 210 (Del.) held that where the assessee is not required to maintain books of account, addition under section 69A cannot be sustained merely for want of such records. Burden of Proof 7.4 The appellant had furnished confirmation of account from Sree VVR Silks, sales register, bank statement, and ledger extract. These documents reflected that advances were made out of funds received from the same concern against opening balances and current year sales. The AO has not doubted either the turnover or the confirmation furnished. 7.5 The Hon'ble Supreme Court in CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC) held that the onus to prove that the apparent is not real lies on the Department. Similarly, in CIT v. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC), itwas held that once the assessee provides prima facie evidence regarding a transaction, the burden shifts to the Revenue to disprove it. Mere rejection of explanation without conducting further enquiry cannot justify addition. Discretion under Section 69A 7.6 The expression used in section 69A is that such money "may be deemed to be the income." The Hon'ble Supreme Court in CIT v. Smt. P.K. Noorjahan [1999] 237 ITR 570 (SC) has clarified that this provision is discretionary and not mandatory. Even where the explanation is not fully satisfactory, the AO is not bound to treat the amount as income; discretion has to be exercised judiciously having regard to facts and circumstances. 7.7 In the present case, the AO has 'ignored the confirmations and supporting documents furnished and made the addition purely on suspicion. No independent material has been brought on record by the AO to show that the advances represented unexplained money of the assessee.

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ITA No.2726/Bang/2025 Page 4 of 6 7.8 Considering the above judicial precedents and facts on record, I find that the addition of Rs. 2,57,00,000/- under section 69A is unsustainable and deserves to be deleted.

5.

Being aggrieved by the order of ld. CIT-A, the Revenue is in appeal before us.

6.

The learned Departmental Representative supported the assessment order and contended that the assessee had failed to properly explain the source of the substantial advances made during the year. It was submitted that mere production of bank statements and confirmations was not sufficient unless the source of deposits and availability of funds was independently established. The DR argued that the Assessing Officer was justified in treating the amount as unexplained in the absence of satisfactory explanation regarding the immediate source of funds, and therefore the addition deserved to be sustained.

7.

Per contra, the learned Authorised Representative before us further relied upon a detailed paper book running from pages 1 to 76, which included all relevant financial statements, ledger extracts, confirmations, and supporting documents. Particular reliance was placed on the bank statements placed at pages 65 to 72 of the paper book to demonstrate that the entire advance of ₹2.57 crore was routed through disclosed bank accounts and that the credits in such accounts had never been disputed or doubted by the Assessing Officer at any stage. It was argued that once the flow of funds was duly reflected in banking records and the credits remained unchallenged, the assumption of unexplained money was factually and legally untenable. The Authorised Representative contended

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ITA No.2726/Bang/2025 Page 5 of 6 that the AO had failed to appreciate the complete evidentiary trail and had proceeded merely on suspicion without discharging the burden of rebuttal.

8.

We have heard both the sides and perused the materials available on record. From the preceding discussion, we note that the assessee had discharged the primary burden by furnishing complete documentary evidence, including bank statements, ledger accounts, and confirmations, all of which clearly demonstrated that the impugned advances were made through disclosed banking channels. Likewise, the credits appearing in the bank accounts were never doubted or disbelieved by the Assessing Officer, and no adverse material was brought on record to contradict the explanation offered by the assessee.

8.1 Similarly, we note that the addition under section 69A of the Act could not be sustained on mere suspicion without any positive evidence to show that the funds represented undisclosed income. Accordingly, we affirm the deletion of the addition and dismissed the appeal filed by the Revenue.

9.

In the result, the appeal filed by the Revenue is hereby dismissed.

Order pronounced in court on 11th day of June, 2026

Sd/- Sd/ (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 11th June, 2026 / vms /

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ITA No.2726/Bang/2025 Page 6 of 6

Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order

Asst. Registrar, ITAT, Bangalore

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