RAMANATHAN RAVINDRAN,COIMBATORE vs. ACIT, NCC-2, COIMBATORE

आयकर अपीलीय अधिकरण, ‘सी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI

श्री जॉजज जॉजज के, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2810/Chny/2025 ननर्ाजरण वर्ज / Assessment Year: 2017-18

The Assistant Commissioner of Ramanathan Ravindran vs. Income-tax, 38, 8th Street, Tatabad Non-Corporate Circle – 2 Coimbatore – 641 012. Coimbatore. [PAN: AFDPR1728Q] (प्रत्यथी/Respondent) (अपीलाथी/Appellant)

अपीलाथी की ओर से/Appellant by : Shri. N.Arjun Raj, Advocate प्रत्यथी की ओर से/Respondent by : Smt.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 01.04.2026 घोषणा की तारीख/Date of Pronouncement : 05.05.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : The present appeal is filed by the assessee against the order dated 24.09.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “ld.CIT(A)”), dismissing the appeal filed by the assessee against the assessment order dated 23.12.2019 passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), pertaining to Assessment Year (A.Y.) 2017-18.

:-2-: ITA. No:2810/Chny/2025 2. The brief facts of the case emanating from the records are that the assessee is an individual engaged in the business of finance/refinance on pledge of jewellery. For the impugned Assessment Year 2017-18, the assessee filed his return of income on 13.10.2017 admitting an income of Rs.4,90,200/-. Subsequently, the assessee filed a revised return on 20.10.2017 declaring a total income of Rs.48,45,200/-. Thereafter, the case of the assessee was selected for scrutiny under CASS. Accordingly, statutory notices were issued upon the assessee who responded to the same from time to time with supporting documents. During the assessment proceedings, the assessee submitted that he carries on the business of pledge of jewellery to finance/refinance. The interest earned from the money lent to the business owners who carry on similar business activity. The assessee also admitted to having income from interest on bank deposits and dividend income out of investment of shares. He further submitted that a sum of Rs.43,54,500/- (which are SBNs) are sourced out of his business funds, interest income and savings and his closing cash balance on hand as on 08.11.2016 was at Rs.50,51,433/- . Owing to his nature of business, the assessee is required to maintain high cash liquidity for his business transactions. In support of his submissions, the assessee furnished his bank statement, cash book, list of creditors with ledger account of the creditors as in the books of the assessee and dividend warrants issued by the Karur Vysya Bank. However, the AO rejected the submissions of the assessee and stated that since the assessee has declared income u/s.44AD of the Act, the cash book cannot be accepted. 3. The Assessing Officer, subsequently, concluded the assessment vide assessment order dated 23.12.2019 u/s.143(3) of the Act wherein a sum of Rs.45,54,500/- was added as unexplained money u/s.69A of the Act and consequently, a demand of Rs.48,76,407/- was raised against the assessee. 4. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the ld.CIT(A) on 18.01.2020. Subsequently, various notices were issued upon the assessee who responded to the same from time to time with

:-3-: ITA. No:2810/Chny/2025 supporting documents. In the appellate proceedings, the assessee reiterated its earlier submissions and further contended that the Assessing Officer’s reason for rejecting the cash book on the sole ground that the assessee declared income under presumptive scheme is erroneous. It was also contended that Assessing Officer has erred in taking the cash deposits as Rs.45,54,500/- instead of the actual cash deposits of Rs.43,54,500/-. The assessee also submitted that addition u/s.69A is unwarranted due to the fact that the cash deposits are sufficiently explained with the necessary documents. In support of his submissions, the assessee submitted the license for pawn broking. But the ld.CIT(A) has rejected the plea of the assessee while stating that the assessee did not provide any documentary evidence for list of customers’ names, date, mode of loan, amount transacted and interest rate. Thereafter, the ld.CIT(A) passed an order u/s.250 of the Act on 24.09.2025 confirming the addition made by the Assessing Officer. 5. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. 6. Before us, the ld.AR for assessee filed a paperbook containing all the submissions and documents filed before the lower authorities along with financials of the assessee. Further, the ld.AR stated that the income declared during the impugned assessment year of Rs.48,45,200/- itself is sufficient to explain the source of cash deposit of Rs.43,54,500/- made during the demonetisation period. The ld.AR reiterated the submission made before the lower authorities and argued that the addition u/s.69A of the Act is unjustified and hence, it is liable to be deleted. 7. On the contrary, the ld.DR argued that the findings of the lower authorities are correct and submitted that the addition is justified and thus prayed that the appeal be dismissed. 8. We have heard the rival submissions, perused the material on record and gone through the orders of the authorities along with the paper book filed.

:-4-: ITA. No:2810/Chny/2025 Admittedly the assessee is an individual engaged in the business of finance/refinance on pledge of jewellery. For the impugned Assessment Year 2017-18, the assessee filed his return of income on 13.10.2017 admitting an income of Rs.4,90,200/-. Subsequently, the assessee filed a revised return on 20.10.2017 declaring a total income of Rs.48,45,200/-. The Assessing Officer rejected the cash book on the sole ground that the assessee had declared income u/s.44AD of the Act. This reasoning is not sustainable. The provisions of section 44AD only dispense with the requirement of maintaining books of account; they do not prohibit the assessee from maintaining books voluntarily. Therefore, if the assessee has maintained and produced a cash book, the same cannot be rejected solely on this ground without finding any defects. 9. In the present case, the assessee has explained the source of cash deposits as arising from business funds, interest income and past savings, which has been declared in the return of income. The assessee has also furnished supporting documents such as financial statements, bank records, and demonstrated a closing cash balance of Rs.50,51,433/- as on 08.11.2016, which is sufficient to cover the impugned deposits. Further, the pawn broking license substantiates that the assessee is engaged in a cash-intensive and legitimate business. The ld.CIT(A) confirmed the addition primarily on the ground of absence of detailed customer wise data, without disproving the primary explanation or the availability of cash balance. Thus, the source for the cash deposits, i.e., business source was not rejected either by the Assessing Officer or by the ld.CIT(A). In such a circumstance, the operation of section 69A loses its viability. Thus, in the absence of any contrary material brought on record by the Revenue to establish that the cash deposits represent unexplained money, the addition made u/s.69A is based on mere conjectures and surmises and hence untenable. 10. In the present facts and circumstances of the case, in our considered view the explanation offered by the assessee is reasonable and supported by evidence. Therefore, the addition made by the AO and confirmed by the

:-5-: ITA. No:2810/Chny/2025 ld.CIT(A) is not justified and hence we are setting aside the order of the ld.CIT(A) and we delete the additions made u/s.69A of the Act. Accordingly, the AO is directed to delete addition. 11. In this result, the appeal of the assessee is allowed.

Order pronounced in the court on 05th May, 2026 at Chennai.

Sd/- Sd/- (जॉजज जॉजज के) (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) (GEORGE GEORGE K) लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष /VICE PRESIDENT

चेन्नई/Chennai, ददनांक/Dated, the 05th May, 2026. Devadas आदेश की प्रतितलतप अग्रेतिि/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– NFAC 4. तिभागीय प्रतितनति/DR 5. गार्ज फाईल/GF

DEVADAS Digitally signed by DEVADAS GOPALANA GOPALANACHARY Date: 2026.05.11 CHARY 14:46:37 +05'30'