RANGANATHAN SUGUMAR,CHENNAI vs. ITO, NCW-15(1), CHENNAI

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)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 28.08.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2018-19.

ITA No. 113 /Chny/2026 (AY 2018-19) Ranganathan Sugumar :: 2 :: 3. Brief facts are that assessee is an individual who did not file his return of income for the relevant assessment year (AY.2018-19). And the AO received information inter alia that assessee has purchased an immovable property for Rs.5.25 crore, but didn’t file his return of income. Hence, the AO reopened the assessment on 04.04.2022 by issuing notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as “Act”); and pursuant to it, assessee furnished the return of income declaring an income of Rs.4,01,330/- and filed Profit & Loss Account admitting a sum of Rs.16,46,525/- as gross receipts from the business and submitted books along with the cash-book. When asked by the AO regarding purchase of immovable property, he informed the AO that he did not purchase the immovable property, but it was the Firm wherein he is a partner has purchased the property. Explaining the said fact, assessee submitted that he is a partner in partnership Firm namely M/s Om Shakthi Enterprise, and in the relevant year, the Firm purchased the property in question, which was documented in the name of assessee along with his other partner namely Sundaravelu (PAN No.CVKPS6705B) and the source of fund for purchase of the said property was term-loan taken by the Firm of Rs.1.75 crore from Indian Bank, which fact is duly shown in the fixed- asset schedule of the Firm. Assessee brought to the notice of the AO that the Firm (PAN No.AAFFO2212H) files its return of income regularly, but didn’t file return of income in the relevant AY because it was the first

ITA No. 113 /Chny/2026 (AY 2018-19) Ranganathan Sugumar :: 3 :: year, and didn’t commence its operation. Hence, Firm filed the ITR only from the AY 2019-20 onwards. Assessee filed the balance-sheet of the Firm before AO. On perusal of which the AO noted that the fixed asset schedule of the firm shows Rs.2,81,65,442/- and that assessee firm has availed loan from the bank only Rs.1,69,38,504/-. According to AO, the assessee accepted that investment made for land was Rs 5.25 Crores. Hence the AO found discrepancy in investment made for land i.e. Rs.5.25 crores, whereas the fixed asset of the Firm was shown at Rs.2.81 crore, and alleging omission on the part of assessee not filing the copy of sale- deed, ITR of Firm, etc the AO disbelieved the assessee’s submission that the property purchased belonged to the Firm and made an addition of Rs.5.25 crores u/s.69 of the Act in the hands of assessee.

ITA No. 113 /Chny/2026 (AY 2018-19) Ranganathan Sugumar :: 4 :: erroneous addition of Rs 5.25 crores. In other words, based on erroneous Specified Financial Transaction (SFT) entries in Form-26AS, as against single transaction of purchase of property, entries were generated 6 (six) times [i.e. Rs.87.50 lakhs multiplied by 6 i.e. Rs.5.25 crores], the AO presumed that investment in property was Rs.5.25Crores and wrongly assumed that assessee accepted the investment made was to the tune of Rs 5.25 crores. Hence, according to Ld AR, the AO erred in making an addition of Rs.5.25 crores, whereas the assessee purchased the property as a partner in the Firm M/s Om Shakthi Enterprises, which took loan of Rs.1.75 crores for purchase of the property, at a cost of Rs 1.75 crores, which fact is duly reflected in the balance-sheet of the Firm. The Ld CIT(A) brushed aside the assertion made by the assessee merely on the ground that AO has recorded that investment value of Rs 5.25Crores was accepted by assessee himself; and without bothering to examine the veracity of the erroneous SFT entries in Form-26AS [duplication of entries, as against the property transaction amounting to Rs 87.50 lakhs, it generated entry six (6) times (totaling Rs 5.25 Crores)], the Ld CIT(A) is noted to have dismissed the appeal of the assessee by passing a cryptic order.

ITA No. 113 /Chny/2026 (AY 2018-19) Ranganathan Sugumar :: 5 :: support of copy of sale-deed that he along with the other partner of the Firm has purchased the property in question for Rs 1.75 crores and the share of the assessee works out to Rs.87.50 lakhs. The total consideration for land and building was Rs.2,19,19,494/-. The Ld AR has reconciled the break-up of Rs.2,19,19,494/- which is noted as under;- Particulars Amount Total Amount Land Registered Value : Rs.1,75,00,000/- Stanp Duty 100 x 17 = 1700 12,30,600 Rs.12,32,300/- Registration Fess : Rs.1,76,190/- Rs.1,89,08.490/-

Building 500 Sqrf. X 500: Rs,25,00,000/- Furniture Interior Computers Rs.5,11,004/- Rs.30,11,004/- Other Items

Total Rs.2,19,19,494/-

ITA No. 113 /Chny/2026 (AY 2018-19) Ranganathan Sugumar :: 6 :: is duly reflected in balance-sheet as Rs.1,69,38,504/- and drew our attention to last page of assessment order where AO has reproduced the same. Thus, assessee explained that there was no discrepancy in the fixed asset schedule as well as the balance sheet of the Firm. Hence, pleaded that huge addition saddled on the assesee be deleted.

ITA No. 113 /Chny/2026 (AY 2018-19) Ranganathan Sugumar :: 7 :: AO/Ld.CIT(A)]. The AO noted discrepancy in the fixed asset schedule of the Firm which showed the cost of the land at Rs.2,19,19,494/- whereas Form-26AS, SFT showed that the assessee has paid Rs.5.25 crores to the vendor. Ex facie, we note that the AO erred in adopting the figure of Rs.5.25 crores as the cost of the property in question, whereas assessee has shown before us that the SFT of Rs.87.50 lakhs has been shown 6 (six) times (Rs.5.25 crores) whereas there was only one transaction of purchase of property for a Total sale consideration of land at Rs.1.75 crores [Rs. 87.50 lakhs in the hands of the assessee as well as the partner, totaling Rs.1.75 crores, and the total cost of land & building works to Rs.2,19,19,494/-]. The assessee has filed the list of fixed asset schedule of Firm, which shows the land at (Molachur Village) along with building cost of Rs.2,19,19,494/- and other assets totaling Rs.2,81,65,442/-. In such a scenario, assessee has discharged his part of the burden to prove the nature and source of Rs.87.50 lakhs for investing in the property in question. The AO has also found that the Firm has taken a loan and the balance amount payable to the bank is Rs.1.61,38,504/-. In such a scenario, addition u/s.69A is not warranted unless the material facts stated above are bogus or concocted or untrue. Hence, we set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of Jurisdictional Assessing Officer (JAO) for the limited purpose to (i) verify from SRO, the registered sale-deed in

ITA No. 113 /Chny/2026 (AY 2018-19) Ranganathan Sugumar :: 8 :: issue and whether the Form-26AS reflected the SFT transaction of Rs.87.50 lakhs, six (6) times because of which the AO adopted figure of Rs.5.25 crores, and (ii) verify whether the assessee’s share of investment in purchase of the property is only Rs.87.50 lakhs, and (iii) verify whether the assessee has sourced the amount from the Firm which has taken loan from the Indian Bank to the tune of Rs.1.75 crores. If the JAO finds the assertion made by assessee supra is correct, then no addition is required to be made in the hands of the assessee.

Order pronounced on the 22nd day of June, 2026, in Chennai.

Sd/- Sd/- (इंटूरी रामा राव) (एबी टी. वक�) (INTURI RAMA RAO) (ABY T. VARKEY) लेखा सद�/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 22nd June, 2026. YS 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

YASHVIR Digitally signed by YASHVIR SINGH SINGH Date: 2026.07.07 12:48:31 +05'30'