VELAYUTHAM THIAGARAJ,MADHAVARAM vs. THE INCOME TAX OFFICER, NON CORP. WARD 6(1) CHENNAI, CHENNAI

आयकर अपीलीय अिधकरण, ’ ए’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी इंटूरी रामाराव, लेखा सद एवं �ी एस.एस. िव"ने$ रिव, �ाियक सद के सम% । BEFORE SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER AND BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 898/Chny/2026 िनधा'रण वष'/Assessment Year: 2020-21 Velayutham Thiagaraj, Vs. The Income Tax Officer, 4/243, Kamarajar Street, Non Corporate Ward -6(1), Nanjambakkam Madhavaram, Chennai. Chennai – 600 060. [PAN: ARJPT-3110-A] (अपीलाथ*/Appellant) (+,थ*/Respondent) अपीलाथ* की ओर से / Appellant by : Mr. R. Venkata Raman, CA +,थ* की ओर से/Respondent by : Mr. S. Manoj Prakash, JCIT सुनवाई की तारीख/ Date of hearing : 18.06.2026 घोषणा की तारीख /Date of Pronouncement 21.08.2026 : आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 12.12.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2020-21.

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of the ld.CIT(A) in confirming the addition made by the AO u/s. 69 of the

Income-tax Act, 1961 (hereinafter “the Act”).

return of income declaring a total income of Rs.5,32,200/- in response

to notice u/s. 148 of the Act. According to the AO, the said notice u/s.

148 of the Act was issued based on the information regarding the

purchase of immovable property by the assessee. It is noted that the

assessee explained the sources of such investment was out of his own

savings and amount received from his wife, mother and other relatives.

The AO held the said explanation not acceptable and completed the

assessment, inter alia, making addition to an extent of Rs.36,32,200/-

u/s. 69 of the Act vide its order dated 03.02.2025 passed u/s. 147 r.w.s.

144B of the Act. Before the ld.CIT(A) it was explained about the sources

of investment vide letter dated 28.01.2025. The ld.CIT(A), however,

confirmed the order of the AO. Having being aggrieved by the said

order, the assessee is before us.

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invoking section 69 of the Act is absent in the present case, since the

impugned property was duly recorded in the books of the assessee. He

argued that the assessee disclosed the said property under fixed assets

in the balance sheet as on 31.03.2020. He argued vehemently that there

was no undisclosed investment outside the books so as to attract the

deeming fiction contained in section 69 of the Act. He drew our attention

to the assessment order and submits that the AO did not dispute the fact

of purchase of property and its recording in the balance sheet. He

vehemently argued the mere questioning of the source of a recorded

investment cannot by itself, justify an addition of the entire investment

amount as unexplained investment u/s. 69 of the Act. He referred to

section 69 of the Act and submits that the provision u/s. 69 is attracted,

where an investment is made and such investment is not recorded in the

books of accounts. He submits the provision relating to unexplained

investment cannot be invoked merely because the AO is not satisfied

with explanation regarding the source and prayed to allow ground nos.

2,3 & 4 raised by the assessee.

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ld.CIT(A). He referred to para no. 6.1.1 of the impugned order and

submits that the assessee did not furnish the bank statements nor any

confirmations or evidences from the alleged contributors. Further, he

submits the assessee even did not file any proof for the claimed jewel

loan, compensation received by his father-in-law, withdrawals by family

members, or any traceable movement of money. He argued vehemently

in the absence of such basic evidentiary support, the AO had no material

to verify the truth, capacity and genuineness of transactions claimed by

the assessee and prayed to dismiss the grounds raised by the assessee.

record. We note that there is no dispute with regard to recording the

purchase of property under the head fixed asset in the balance sheet as

on 31.03.2020. We find the balance sheet at page no. 82 of the paper

book, wherein it is noted that the assessee made entries in respect of

land document no. 9931/2019 to an extent of Rs.33,16,500/-.

Admittedly, the said balance sheet was available with the AO during the

course of reassessment proceedings. We find the said sale deed is at

page no. 71 of the paper book, the value being at Rs.31,00,000/- on

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which the stamp duty and registration charges were paid by the

assessee. As rightly pointed by the ld.AR that the AO made no dispute

nor any adverse reference to that effect in the assessment order. We

find the only dispute by the AO with regard to the sources of funds for

purchase of said property. On perusal of the assessment order, we note

that the AO asked the assessee to furnish the brief note regarding its

nature of work and other commercial activities carried out during the

year, a copy of computation of income, copies of bank account

statements of bank accounts held by the assessee, copy of purchase

deeds along with the copies of documentary evidences in respect of

source of investment made in purchase of above said property, details

of gift received from relatives, identity, creditworthiness and

genuineness of transactions of persons. Further, the AO observed that

the assessee furnished its reply on 09.08.2024 along with the copy of

computation of income of bank account in SBI, copy of letter dated

26.07.2024 issued by the SRO with reference to purchase deed of one

property. We find the reply of the assessee on 05.02.2024 at page no.4

of the paper book, wherein the assessee clearly stated that the land was

purchased with his own savings and gifts from its relatives. Further, he

also mentioned the reason for not filing return of income for the year

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under consideration, since no taxable income for year under

consideration. The acknowledgment for filing the said reply is at page

no.3 of the paper book, which clearly establishes that the assessee has

offered explanation to the AO about the sources of investment. Further

on perusal of the reply dated 28.01.2025, which was uploaded on

29.01.2025 to ITBA Portal vide acknowledgement, we find the

explanation offered by the assessee regarding source for current year

income/savings at Rs.4,51,411/- and the accumulated capital at

Rs.17,56,259/-. Further, unsecured loans from relatives i.e. mother,

wife, father-in-law and sister to an extent of Rs.11,30,000/- together the

source for the investment for the above said property stands at

Rs.33,37,670/-. Therefore, we find the assessee explained sources of

such investment by the assessee, but however, the said explanation was

not found acceptable to the AO. Thus, we find force in the arguments of

the ld.AR that provisions u/s. 69 of the Act involving unexplained

investment cannot be invoked merely as the AO is not satisfied with

explanation offered by the assessee in respect of the sources for the

purchase of subjected property. Further, the relevant balance sheet

particulars at page no.82 of the paper book clearly demonstrate that the

specific source wise reconciliation was also furnished in the

7 ITA No. 898/Chny/2026

reassessment proceedings before the AO. Further, we find force in the

arguments of the ld.AR in this regard that without first establishing that

the purchase of property was outside the books and without properly

appreciating the source wise explanation along with balance sheet, in

our opinion, treating entire recorded investment as unexplained

investment u/s. 69 of the Act cannot be sustained. Therefore, we hold

that the subjected property was duly recorded in the balance sheet and

the sources of such subjected property was duly explained by the

assessee during the relevant assessment proceedings as well as before

the ld.CIT(A). Therefore, making an addition treating the same as

unexplained investment u/s. 59 of the Act, in our opinion, is not justified

and requires to be deleted. Thus, order of the ld.CIT(A) is set aside and

ground nos.2, 3 & 4 raised by the assessee are allowed.

the issue raised in ground no.1 requires no adjudication.

8 ITA No. 898/Chny/2026

Sd/- Sd/- (INTURI RAMA RAO) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Chennai, Dated: 21.08.2026 JPV आदेश की +ितिलिप अ3ेिषत/Copy to: 1. अपीलाथ*/Appellant, 2.+,थ*/ Respondent, 3. आयकर आयु4/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय +ितिनिध/DR & 5. गाड' फाईल/GF.

Digitally signed by PRASANNA PRASANNA VANI JETTY VANI JETTY Date: 2026.08.24 17:37:55 +05'30'