YASMEEN SULTANA AYLAM,RANIPET vs. ITO, WARD-2,, VELLORE

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ITA 175/CHNY/2026Status: DisposedITAT Chennai15 May 2026AY 2017-186 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO could not estimate income without rejecting the books of account as per Section 145. It also found that the assessee had discharged the burden of proving the nature and source of credits related to fixed deposit maturity proceeds.

What were the facts?

The assessee did not file an income tax return for AY 2017-18. Upon receiving information about export business, the AO estimated income at 8% of turnover. An addition was also made for unexplained money based on the cash flow statement.

What were the issues?

Whether the AO was justified in estimating the assessee's income without rejecting books of account and whether the addition for unexplained money was sustainable given the evidence of fixed deposit maturity proceeds.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 145,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI INTURI RAMA RAO

Hearing: 21.04.2026Pronounced: 15.05.2026

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 23.12.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2017-18 u/s.147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

ITA No. 175 /Chny/2026 (AY 2017-18) Yasmeen Sultana Aylam :: 2 :: 2. First we will deal with the impugned action of the Ld. CIT(A) confirming the action of the AO estimating the income of the assessee at 8% i.e. Rs.10.12.683/-. Brief facts are that assessee did not file the return of income for A.Y.2017-18. The AO got information that assessee is in the business of exports and as per Form-26AS the total business turnover of assessee was to the tune of Rs.90,38,000/-. However, since the assessee did not file the return of income, for verification of the same, the AO issued notice u/s.148 of the Act. Pursuant to which assessee filed return of income bearing acknowledgement number 500690281260624 on 26.06.2024 along with tax audit report in Form-3CB/3CD along with audited financials for F.Y.2016-17 on 25.06.2024 vide acknowledgement number 500333940250624 declaring loss of Rs.3,76,364/-.

3.

However, the AO taking note that the even though assessee has shown to have carried out exports (customs and bill of export) to the tune of Rs.1,26,58,533/- has shown loss, which according to him is not acceptable and hence he estimated the income of the assessee @8% of Rs.1,26,58,533/- i.e. Rs.10,12,683/- which was added to the total income of the assessee.

4.

The aforesaid action of the AO was assailed before the Ld. CIT(A) which has been confirmed by the Ld. CIT(A) by passing a cryptic order which again has been impugned before us.

ITA No. 175 /Chny/2026 (AY 2017-18) Yasmeen Sultana Aylam :: 3 :: 5. Having heard both the parties and after careful perusal of the record, we find that the assessee pursuant to the notice u/s.148 has e- filed the return (ITR) which fact is proved by acknowledgement number given by department of 500690281260624 dated 26.06.2024, along with it, assessee is noted to have filed/uploaded audit report in Form-3CB/CD along with audited financials for the F.Y.2016-17 on 25.06.2024 vide acknowledgement receipt given by department viz 500333940250624. Hence, we find that assessee has filed the Tax Audit Report along with audited financials. In such an event, AO could not have estimated the income of the assessee without rejecting the books of account filed by the assessee as contemplated u/s 145 of the Act, which AO has not done. Moreover, it is noted that pursuant to AO’s direction, assessee uploaded, the following relevant documents (i) copy of the ITR (ii) Tax Audit Report (iii) invoices/sale invoices, (iv) FD statement and gift deed etc along with written submissions. From the acknowledgement receipt of the department placed before us it is noted that assessee uploaded total 14 items of documents, which were attached and uploaded in the portal of the Income Tax Department which fact is evidenced by the e-proceedings response acknowledgement placed before us. In such a case, the action of the AO without rejecting the books as per Section 145 of the Act renders the estimation of income bad in law and therefore, we direct deletion of the estimated income of the assessee to the tune of Rs.10,12,683/-.

ITA No. 175 /Chny/2026 (AY 2017-18) Yasmeen Sultana Aylam :: 4 :: 6. Coming to the next addition of Rs.9,69,544/- confirmed by the Ld. CIT(A). Brief facts in this regard is that the AO perused the cash flow statement filed by the assessee and based on the cash flow statement, the AO asked the assessee to prove the nature and source, which led to the addition of Rs.15,58,544/- break up of the same is as follows:-

1.

Fixed deposit renewals – Rs.9,07,838/- (including gift from relatives) 2. Wrong credit – Rs 4,50,000/- (Pertains to the fixed deposit wrongly stated as wrong credit- statement attached) 3. Gifts from Family members- Rs.2,00,705/- 4. The fixed deposit statement evidencing the maturity of the fixed deposit proceeds of Rs.9,59,543/- credited to the bank account of the appellant is enclosed herewith. The copy of the gift deed amounting to Rs.5,89,000/- is enclosed herewith.

7.

Aggrieved, assessee is noted to have filed an appeal before the Ld. CIT(A) who gave partial relief to the assessee by observing as under: -

The second addition is of Rs.15,58,544/- as unexplained money. AO has applied Section 69A. I find that gift deed duly noterised is submitted amounting to Rs.5,89,000/-. Since these ae noterised, I accept the same and assessee gets relief of Rs.5,59,000/- for balance amount of Rs.9,69,544/-. I find no reason to interfere with AO’s decision. This amount of Rs.9,69,544/- is confirmed.

8.

Still not satisfied, the assessee is before us. And pointed out that the addition confirmed by the Ld. CIT(A) of Rs.9,69,544/- is nothing but the maturity proceeds from FD (Fixed Deposit). The Ld. AR drew our attention to the copy of the FD statement evidencing the credit of the

ITA No. 175 /Chny/2026 (AY 2017-18) Yasmeen Sultana Aylam :: 5 :: maturity amount of FD on its closure of Rs.9,69,543/-. From a perusal of the details of the credit in the bank account, on this issue, it is noted that the assessee on 27.09.2016 got Rs.4.50 lakhs on closure of the FD and thereafter on 20.12.2016 there is deposit transfer of Rs.1,25,396/- and on 24.01.2017 deposit transfer of Rs.2,67,442/- and on 23.02.2017 deposit transfer of Rs.1,26,705/- all the 3 FDs were closed. Hence, we find that assessee has discharged the burden on it to prove the nature and source of credit of Rs.9,69,544/-, which hasn’t been rebutted. Hence, we are of the view that addition u/s 69A of Rs.9,69,543/- is unjustified and hence deserve to be deleted. Therefore, we direct the AO to delete the addition of Rs.9,69,544/-.

9.

In the result, appeal filed by the assessee is allowed.

Order pronounced on the 15th day of May, 2026, in Chennai.

Sd/- Sd/- (इंटूरी रामा राव) (एबी टी. वर्की) (INTURI RAMA RAO) (ABY T. VARKEY) न्यानयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनांक/Dated: 15th May, 2026. KB आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकरआयुक्त/CIT, Chennai / Madurai / Salem / Coimbatore. 4. ववभागीयप्रविविवि/DR

ITA No. 175 /Chny/2026 (AY 2017-18) Yasmeen Sultana Aylam :: 6 :: 5. गार्डफाईल/GF

Digitally signed K BABU by K BABU Date: 2026.05.21 10:35:42 +05'30'

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